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The History of Technological Anxiety and the Future of Economic Growth: Is This Time Different?


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On anxieties over technology and the future of labor. Credits to DOI: 10.1257/jep.29.3.31.

Published in: Economy & Finance
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The History of Technological Anxiety and the Future of Economic Growth: Is This Time Different?

  2. 2. Technological Progress... ■ Is widely considered the main source of economic progress ■ Has been described as: alien, incomprehensible, increasingly powerful and threatening and possibly uncontrollable Can understanding history provide a perspective on whether this time around will be different? The Myth of Prometheus and Fire: The uncontrollable effects of technology advances Prometheus with the firebrand, 1611-1612 Artist: Pieter Paul Rubens
  3. 3. Anxiety overTechnology from the Industrial Revolution to the Great Depression ■ Analysis of the role of these three forms of anxiety during two major periods of Technological Progress: – Industrial Revolution, 9th century – Great Depression, early 20th century ■ Anxieties overTechnology can take different forms:
  4. 4. Short-Term Disruption, Long-Term Benefits ■ Short run: Displacement of Labor “substitution of machinery for human labour is often very injurious to the interests of the class of labourers . . . [It] may render the population redundant" (Ricardo, 1821) From the late 18th and early 19th century: the beginning of the Industrial Revolution… ■ Long run: Increased productivity and prosperity Technological improvements as part of a social and political process that would lead eventually to widespread prosperity. (Marx)
  5. 5. What did really happen? ■ The technological progress also took the form of product innovation and it created entirely new sectors for the economy which required new job categories. ■ Similar theories reappeared during the Great Depression over the effects of labor-saving changes, (particularly in agricultural sector) “We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes” (Keynes, 1930) Early 20th century:The Great Depression…
  6. 6. Technology and the Alienation of Labor ■ Technological innovations bring worries about the nature of work and alienation of labour – Performing the same simple operations bring the human being to degradation (Smith, 1776) – and the capitalist system alienates individuals from others and themselves (Marx, 1844) ■ Physical separation of the place-of-work from place-of-leisure ■ The disappearance of “moral economy”, making room for “market economy” Hulton Archive/Getty Images
  7. 7. Historical Perspectives on a Horizon for Technological Progress ■ The idea of progress as an enabler of moral and economic life improvement is not new ■ During the Enlightenment: Progress included material progress, or what we would think of today as economic growth … Have we already picked all the low-hanging fruit? Mill’s stationary state of development
  8. 8. Technology and the End ofWork? ■ During the Industrial Revolution, technology acted as a substitute for human/animal strength ■ Nowadays, machine are becoming capable of carrying tasks which require higher capabilities; they can compute, compare, reason, make decisions (Artificial Intelligence) Recurrent concerns ■ Large sections of the labor market to be hollowed out (Katz and Margo, 2013) ■ The robotic productivity as a complete substitute for labor (Sachs, Benzell, and LaGarda, 2015) ■ How to occupy leisure time (Keynes, 1930) Thinkstock
  9. 9. Tech and the Characteristics of Work Changes in the job market ■ Greater flexibility in when and where work takes place ■ More fragile separation between work and home life ■ More and more non-employer businesses ■ A growing sharing economy (Uber, AirBnb, …) Reuters A mixed blessing ■ Greater gender equality (Goldin, 2014) ■ Penalty for part-time work ■ Employees are expected to be always accessible
  10. 10. TheTechnological Horizon Making predictions about the future of technology or the economy is difficult ■ New problems as an outgrowth of previous technological advances (clean energy, new antibiotics, …) ■ And competition between firms/nations will stimulate technological efforts ■ Huge cross-fertilization of ideas nightman1965/istock Economic principles will continue to operate ■ Scarcity of resources, comparative advantages ■ Path of transition may be disruptive and painful ■ Public policies will be required to ameliorate the harshest effects of dislocation
  11. 11. Words ofWisdom “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” (RoyAmara) “Meanwhile there will be no harm in making mild preparations for our destiny, in encouraging, and experimenting in, the arts of life as well as the activities of purpose.” (Keynes, 1930)
  12. 12. The technological progress is an engine of development World average GDP per capita 1500 to 2003. Data from Angus Maddison's "World Population, GDP and Per Capita GDP, 1-2003 AD"
  13. 13. Today: a newTechnological Revolution ■ New industrial revolution: the revolution of the Artificial Intelligence (A.I. / machine learning) ■ In the First Industrial Revolution -> the power of the human had been substituted with the machines ■ In the Modern technological revolution -> the Artificial Intelligence is catching up and possibly replacing human cognitive skills
  14. 14. Technology as the next job killer? Employment shares, estimated proportion and total number of employees at potential high risk of automation for all UK industry sectors - PwC estimates for last two columns using PIAAC data Will robots steal our jobs? (PwC UK, 2017) ■ Impact of robots on the US job market in next 50 years (PwC, 2017) ■ Amazon Go, fast-food restaurants, autonomous driving, etc.
  15. 15. Is this time different? Robots and Jobs: Evidence from US Labor Markets - (D. Acemoglu, P. Restrepo – MIT and BU, March 2017) ■ Between 1990 and 2007, each robot per thousand workers: • Decreased employment by 6.2 workers • Decreased wages by 0.7% ■ Loss of work places concentrated on: • Routine manual workers, Assemblers, Bluecollars etc. • Education level ≤ college We are facing the same short run effect we suffered during the first Industrial Revolution Countermeasures suggested by tech entrepreneurs: ■ “Robot taxation” (BillGates, 2017) ■ Universal Basic Income (Elon Musk, 2017)
  16. 16. How to make it possible? EU: Rejected proposal to regulate the rise of robots (February, 2017) US: Steven Mnuchin, the US Secretary ofTreasury, stated [On A.I. supplanting human jobs] "It is not even on our radar screen […] 50-100 more years" away. "I'm not worried at all [about] robots displacing humans in the near future” (24th March 2017) ■ International Collaborations ■ Role of the Governments