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Does technology destroy jobs or does it lead to the economic growth that produces more jobs?

robot-armThe argument is as old as mechanization.  When machines were introduced into manufacturing, they lowered costs by making it possible for the same output to be produced by fewer workers.  From water frames to spinning jennies, the machines displaced labour.  Another way of looking at it was that technology made each worker more productive, and enabled them to produce more wealth, and that wealth made more jobs possible.  Those who followed Ned Ludd and smashed stocking frames, and the Dutch textile workers who threw their wooden sabots into the machines, clearly took the former view.

Robert D. Atkinson, president of the Information Technology & Innovation Foundation, makes a strong case for the second view, arguing that virtually all economic studies have shown that “the income-generating effects of new technologies have proved more powerful than the labor-displacing effects.”  It works like this because the increased productivity brings with it higher wages and profits or lower prices, or all three, and that extra wealth provides the demand that results in new job opportunities.

Higher technology can have an immediate effect of short-term job losses, but in the longer term it results in the economic growth that makes more jobs possible.  It will probably result in different types of jobs, in that service jobs are harder to mechanize, but a growing economy creates demand for things such as “more restaurant meals, vacations, cars, houses, therapeutic massages, college educations, and 3-D TVs.”  And people will be needed to produce these things.  Far from opposing new technology that makes each worker more productive, we should be embracing it.

True, the mechanical digger does away with the jobs of 12 men with shovels, but each of those shovels does away with the jobs of 100 men with teaspoons.  And the mechanical digger makes society more productive and wealthier, leading to jobs that pay better than those involving shovels or teaspoons.

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2 Responses

  1. Bravo! Similarly, for anyone old enough, consider how much “stuff” we have at home compared to our parents or grandparents. Someone has to make it all. When I was small, nobody worked making transistor radios because they did not exist (and are now long forgotten); were the myriad modern equivalents made entirely by robots, humans still deliver them and sell them in shops, resulting in more jobs than before.

  2. Isn’t it innovation which creates more things to be produced and enjoyed and thus more jobs, not technology per se? And is not innovation less expensive than creating new technology?

    The telegraph – sending electrical pulses along wires over long distances – is very old technology, but innovation gave us telephones, fax, Internet, shopping on-line, etc and thus more jobs.

    It was innovation which put 2 000 year old technology, the steam engine, on wheels to give us locomotives and railways.

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