President Obama recently sparked controversy when he attempted to explain America’s prolonged unemployment as a consequence of automated service technologies:
There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.
The view that technology destroys jobs is not new. In one of its earliest forms, the idea was expressed by the followers of Ned Ludd who claimed that the textile machines of the early 1800s had destroyed their jobs and consequently their way of life. While Obama doesn’t propose demolishing ATMs or outlawing airport kiosks as his intellectual ancestors the Luddites would have, this perspective on production, technology and unemployment is deeply mistaken and leads to a distorted view of what constitutes genuine prosperity.
Technology may render certain jobs unnecessary because it makes labor more productive, such that the same output can be produced by fewer workers. Ultimately, it is this increased productivity that causes higher standards of living. Russell Roberts writing in The Wall Street Journal makes this point eloquently:
The savings from higher productivity don’t just go to the owners of the textile factory or the mega hen house who now have lower costs of doing business. . . .
The result is a higher standard of living for consumers. The average worker has to work fewer and fewer hours to earn enough money to buy a dozen eggs or a pair of shoes or a flat-screen TV or a new car that’s safer and gets better mileage than the cars of yesteryear. That higher standard of living comes from technology. It isn’t just the rich who get cheaper TVs and cars, plus the convenience of using an ATM at midnight.
Granted, when a new technology is adopted it often leads to a displacement of workers and a reduction or elimination of certain kinds of jobs, but this is not the same as claiming that the adoption of technology is responsible for systematically higher unemployment (For an indication of causes of the current levels of unemployment see Valery Publius’ recent piece discussing the issue). Technological advances are what make it possible to open up new avenues of production, which in turn leads to economies of vastly increased wealth and an ever increasing number of potential careers.
For example, it was the increased agricultural productivity preceding the Industrial Revolution that made it possible for the factory system to employ vast numbers of serfs fleeing the feudal plantations. Then it was the increasingly productive output of the factories that laid the foundation for an explosion in both the quantity and type of productive employment available today. Onkar Ghate of the Ayn Rand Institute observes how technological breakthroughs require the same innovative spirit from individuals if they wish to take advantage of new technologies:
This is the nature of a free society: economically, it does not stand still, it advances. It demands the same of its citizens. . . .
Those who prosper in a free society are individuals who choose, no matter how severe the change, to adapt, to expand their skills, to increase their knowledge, to grow. For this type of individual, trade and specialization—cross one’s city, state, country or globe—are acknowledged as beneficial; the progress of a global economy, including “outsourcing,” is not feared but welcomed.
There are, however, those who resent the growth that a free society demands. Typically, they pursue one of two courses of action. Either they simply cling to the old way of doing things, like a manufacturer who claims that if horse buggies were good enough for our forefathers, they should be good enough for us. Or they cry for governmental protection—and demand that the government restrict the cotton gin, steam engine, automobile, locomotive, Japanese imports, factory automation, etc.
From the Stone Age to Silicon Valley, advancing human prosperity has been the result of human ingenuity. It is only by idealizing a society of stagnant passivity that one can say that new, innovative technologies hurt our way of life. We should embrace new technology and the myriad benefits it gives us—not the least of which is avoiding lines for bank tellers and baggage checkers.
Creative Commons-licensed picture from Flickr user laverrue.