Social Policy in Ontario

You know, this internet thing might turn out to be big [employment]

Posted on September 6, 2016 in Debates

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NationalPost.com – Full Comment
September 5, 2016.   ANDREW COYNE

Maybe you’ve seen the movie Brazil, Terry Gilliam’s great dystopian satire, in which is presented a vision of the future, as imagined in the past. Which is to say it’s set somewhere in the present (or rather the past — the film was made in 1984), as it might have been envisaged circa 1948. It’s just 1940s technology, extrapolated: pneumatic tubes and filing cabinets, only more advanced.

The process is sometimes referred to as “colonizing the future.” Try as we might to imagine what life will be like, we are inevitably hostage to current modes of thought. Though in some ways we tend to overestimate how much things will have changed in future (the flying cars that were supposed to be here by now, for example), more usually we underestimate it. As some wiseacre said of Star Trek: The Next Generation, and its star, Patrick Stewart: “It’s the 24th century and they still haven’t found a cure for baldness?”

The personal computer is barely 35 years old; the internet, as a popular phenomenon, not much more than 20. We have no idea what their long-run impact will be

I’m put in mind of this reading Robert Gordon’s The Rise and Fall of American Growth, his hugely influential analysis of the marked slowdown in productivity growth observed since the early 1970s. Against the popular belief that we live in a time of unprecedented technological change, Gordon points out how much more extraordinary were the “Great Inventions” of a hundred-odd years ago: the Second Industrial Revolution that brought us everything from electricity to indoor plumbing; from the telephone to the radio; from the car to the airplane, and more.

Beside such truly life-altering advances, the computer, the internet and the cell phone look comparatively trivial. Or do they? I wonder whether Gordon’s view of past technological advances might not be a case of the past colonizing the present. They seem extraordinary to us because we have a century of experience with which to measure their impact, relative to the centuries that preceded them.

By contrast, we are only in the first faint stirrings of the digital era. The personal computer is barely 35 years old; the internet, as a popular phenomenon, not much more than 20. We have no idea what their long-run impact will be, not least since the nature of such inventions, as extensions of the human mind, is to enable us to invent still more. It took decades for the first two Industrial Revolutions to show up in higher productivity. Maybe the same applies to the third. A hundred years from now, we may decide its impact was as much as the first two put together.

A technology that gives you instant access to every book that has ever been writtent… must surely have something going for it.

Who can say, but I can’t help thinking this internet thing might turn out to be something big. The printing press is generally regarded as something of a revolution, and what did that give you? The chance to own a book — two, if you were very wealthy. If so, a technology that gives you instant access to every book that has ever been written — all of human knowledge, wherever you are, whenever you want it — must surely have something going for it.

At any rate, Gordon’s death of innovation theory rather conflicts with that other great anxiety of our times: the notion that technological innovation, far from fading, threatens to run ahead of our ability to control it, or at least to benefit from it. Artificial intelligence, we are told, if it does not altogether enslave us, will at the very least make us economically obsolete. Already it has started to replicate tasks previously thought the preserve of the human mind, from legal drafting to investment advice. Call it the Robots Will Take Our Jobs theory.

In one sense this is undoubtedly true. Technology has been replacing human labour since at least the days of the knitting machine. All that has changed of late is the nature of the labour that is being replaced: instead of low-wage physical labour, now it’s those fancy-pants “symbolic analysts” whose jobs are on the line: lawyers, bankers, maybe even, heh heh, journalists. (I joke, of course. That’s impossible.)

Where the RWTOJ thesis falls down is not in the idea that there will be jobs lost, but in its unstated corollary, that there will be no jobs created in their place. Economists call this the “lump of labour” fallacy: the assumption that there is a fixed amount of work to be done in any economy, and no more, such that any reduction in the demand for labour, as through automation, must inevitably leave some permanently out of work. The same is often claimed about increases in labour supply, as through immigration. Just so many jobs to go around, after all.

If no jobs could ever be lost to technological and other change we’d still have 80 per cent of the labour force working on the farm

But in fact there is no fixed amount of work to be done. There is no permanent list somewhere of all the goods and services consumers might want or the jobs that might be filled providing them. Consumers’ wants are limitless, as is human ingenuity: not only do we generally prefer more of what we already want, but entrepreneurs are constantly thinking up new wants we didn’t know we had. Much of today’s workforce is engaged in making goods and services that not only did not exist a century ago, but had not been imagined.

Suppose it is cheaper to hire a robot to do a certain job, say drafting wills. In competitive markets, that reduction in cost will be passed on in the form of lower prices to consumers. That leaves them with more to spend on other things, creating jobs in other sectors. That’s hard on those who have to make the transition, but there’s nothing new or unusual in it. Every year in the Canadian economy, more than three million people leave their jobs, voluntarily or involuntarily. And three million-plus take on new jobs. If no jobs could ever be lost to technological and other change we’d still have 80 per cent of the labour force working on the farm.

The past few decades have seen an endless series of blights that were supposed to condemn us to mass unemployment: downsizing, outsourcing, free trade, Dutch disease. And through it all the proportion of the adult population in employment has risen: from 57 per cent in 1976 to 62 per cent in 1989 to nearly 64 per cent at its latest peak, in 2008. (It’s more like 61 per cent now, not because more people are unemployed but because, with the first of the Baby Boomers reaching retirement age, the labour force has begun to shrink.)

Maybe my thinking, too, has been colonized by the past. Just because things have always worked out in the past, maybe they won’t work out in future. But I wouldn’t bet on it.

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Tags: economy, ideology, immigration, participation, standard of living

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