Were the Luddites Right?

Smart machines and the prospect of technological unemployment

In 1948 Norbert Wiener, the father of cybernetics, wrote an urgent letter to Walter Reuther, the president of the Union of Automobile Workers. Wiener warned Reuther that technologies that combined computing machines with production machinery would soon yield an "apparatus [that] is extremely flexible, and susceptible to mass production, and will undoubtedly lead to the factory without employees; as for example, the automatic automobile assembly line." Wiener ominously concluded, "In the hands of the present industrial set-up, the unemployment produced by such plants can only be disastrous."

The mass unemployment that Wiener predicted did not occur. As technology advanced, the number of employed workers in the United States increased from 59 million in 1950 to a peak of 146 million in 2007, and GDP grew from $2 trillion to $13.6 trillion (in 2005 dollars) between 1950 and 2012.

Now, two centuries after Luddites smashed then-newfangled weaving frames in northern England, predictions of permanent technological unemployment are being revived. In a December working paper for the National Bureau of Economic Research, called "Smart Machines and Long-Term Misery," the Columbia economist Jeffrey Sachs and the Boston University economist Laurence Kotlikoff pose the question, "What if machines are getting so smart, thanks to their microprocessor brains, that they no longer need unskilled labor to operate?" After all, they point out, "Smart machines now collect our highway tolls, check us out at stores, take our blood pressure, massage our backs, give us directions, answer our phones, print our documents, transmit our messages, rock our babies, read our books, turn on our lights, shine our shoes, guard our homes, fly our planes, write our wills, teach our children, kill our enemies, and the list goes on."

Sachs and Kotlikoff are not alone in worrying how technological progress will affect employment. Last year, Erik Brynjolfsson and Andrew McAfee of MIT's Center for Digital Business published a small book, Race Against the Machine, that looks at trends in U.S. employment and wages. It concludes that the pace of progress "has sped up so much that it's left a lot of people behind. Many workers, in short, are losing the race against the machine." And in a 2011 article for the McKinsey Quarterly, the Santa Fe Institute economist Brian Arthur describes automation as "a second economy that's vast, automatic, and invisible." In Arthur's view, "The primary cause of all of the downsizing we've had since the mid-1990s is that a lot of human jobs are disappearing into the second economy. Not to reappear."

As evidence that American workers are losing to the machines, Brynjolfsson and McAfee point to falling real wages for unskilled workers in the United States. The Employment Policy Institute's 12th State of Working America report reveals that in constant 2011 dollars, the hourly wage for men with less than a high school education fell from $17.50 per hour in 1973 to $12.70 in 2011; wages for men with a high school diploma fell from $20.70 to $17.50 per hour; and even hourly pay for those with some college dropped from $20.20 to $19.50. In the same period, real wages for college-educated men rose from $28.50 to $31.80. Men with graduate degrees saw a gain from $31.70 to $41.30. In addition, Americans are leaving the labor force. Adult workforce participation peaked at 67.3 percent in 2000 and has now fallen to 63.6 percent. This suggests that had the labor force participation rate remained the same as it was in 2000 that the current unemployment rate would be around 13 percent instead of 7.9 percent.

Other researchers are less worried, pointing out that many of the alleged labor force dropouts are actually taking time out to upgrade their skills in school. And when you're comparing how workers fared in 1973 and 2011, you should bear in mind that the percentage of male workers without a high school degree dropped from 30 to 10 percent in the same period, while those with four years or more of college rose from 16 percent to 31 percent.

According to a recent study by the Cleveland Federal Reserve Bank, labor's share of our gross national income has fallen from 65 percent in the 1980s to 58 percent now, with the result that a larger percentage of national income is going to the owners of capital, e.g., the owners of machines. The increasing rewards to capital particularly bother Sachs and Kotlikoff. "Machines, after all, are a form of capital, and the higher income they earn based on better machine brains may show up as a return to capital, not labor income," they worry. Sachs and Kotlikoff devise an admittedly simple economic model in which the current generation of skilled owners of smart machines reaps most of the benefits of increased productivity and economic growth. This competition with the smart machines depresses the wages of young unskilled workers that, in turn, limits their ability to save and invest in skill acquisition and smart machines. Thus arises a vicious circle in which each subsequent generation of young unskilled workers faces an economy in which ever less human and physical capital is available to them, which further hammers down their wages and so forth.

If it really is different this time, what should be done? To prevent "immiserizing" young unskilled workers, Sachs and Kotlikoff argue that the government should tax away some of the "windfall" that the owners of capital gain. The government would transfer some of the taxes to the younger generation, presumably so that they could invest in skills acquisition and smart machines. In addition, the government would itself invest a portion of the taxes in smart machines and then transfer the income from the government machines to the younger generations. "With the right choice of tax-and-transfer policies," declare Sachs and Kotlikoff, "all generations can benefit from the advance of technology, while under laissez faire, only today's older generation benefits, and at the expense of all other generations." That's the theory, anyway.

Brynjolfsson and McAfee make more concrete recommendations. First, they suggest more investment in education. That is a bit puzzling, since earlier in their book they note that the education sector "lags as an adopter of information technologies." Even more oddly they don't wonder why that might be. (Two words: government monopoly.) They do, however, recognize that the rise of online schooling could have a big beneficial impact on upgrading labor force skills. They also advocate reforms such as aggressively lowering the barriers to business creation, resisting efforts to regulate hiring and firing, decreasing payroll taxes, decoupling benefits from jobs, not rushing to regulate new network businesses, streamlining the patent system, and shortening copyright terms. Such sensible reforms should be adopted whether or not technological unemployment is a problem.

Brian Arthur looks at the longer-term implications of the second economy. Smart machines will boost economic and prosperity indefinitely, but such an economy may not provide jobs. Until now, compensation for labor is how people gained access to the growing prosperity that increasing productivity made possible. "The second economy will produce wealth no matter what we do; distributing that wealth has become the main problem," argues Arthur. Perhaps we will work less. After all, in 1900 Americans worked an average of 2,300 hours per year; now it's 1,800.

Or, as has happened so far, entirely new economic sectors could come into existence, providing work for future generations. In 1985, there were just 340,000 mobile phone subscribers in the United States; today there are more than 321 million. More broadly, increasing productivity lowers the prices of goods and services, leaving consumers more disposable income that they can instead spend on other goods and services. In 1950, American families spent 18 percent of their food budgets dining out. Today they spend 40 percent. In 1972, the U.S. had one restaurant for every 430 Americans. It's 1 for every 320 today.

Brynjolfsson and McAfee argue that instead of racing against the machines, we should race with them. Of course, as rising productivity shows, that's exactly what we have been doing. In the industrial era, machines largely complemented and substituted for human brawn; now they are complementing and substituting for human brains. To better race with increasingly smart machines, we will become more intimate with them by incorporating them into our bodies and brains.

Already polls suggest that a majority of us suffer from nomophobia, fear of being without our mobile phones. Babak Parviz, head of the Google Glass project, suggests in Wired that digital displays will some day be incorporated in contact lenses. Such lenses would provide the wearer access to augmented reality in which information is overlaid on whatever she is looking at while also eliminating the need for displays on phones, computers, and televisions. Even stuttering first steps toward brain/computer interfaces are being taken today.

Our ever more productive machines will continue to reduce scarcities, thus lowering the relative prices of goods and services. If governments take the good advice offered by Brynjolfsson and McAfee, we can have a future in which tens of millions of micro-entrepreneurs provide ever more specialized goods and services to ever more discerning consumers. The resulting prosperity could well free people to employ themselves in tackling scarcities in other facets of life, such as liberty, love, and time. I wouldn't want to break the machines that would make that possible.

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  • Dr. Frankenstein||

    No they weren't. Now we can actually afford our elderly and maybe even have more stay at home parents as well. There's your mass "unemployment" right there.

  • Virginian||

    Isn't that 8% the number of people who want a full time job but don't have one?

  • R C Dean||

    More like the number of people who are actively looking for a job.

    I believe those with part-time jobs who want a full-time job are not included in the "headline" employment number.

  • Rufus J. Firefly||

    If we concede they were right does that mean the Unabomber wins?

  • Sandra M. Jones||

    before I looked at the receipt of $9572, I be certain that my best friend was actualey erning money in their spare time at their computer.. there friend brother has been doing this for under fourteen months and just now paid for the loans on there place and bourt themselves a Car. this is where I went, www.Ace60.com

  • Capt Ace Rimmer||

    Star Trek answered these questions. Somehow there is always more shit to do. If you're looking for me in the future you'll find my emaciated and semen covered corpse in the holodeck.

  • SusanM||

    smeghead

  • Capt Ace Rimmer||

    :)

  • Sevo||

    "Columbia economist Jeffrey Sachs"
    Uh:
    "Jeffrey Sachs proposes a master plan for the world economy"
    http://jeffsachs.org/
    We can ignore anything that idiot says.

  • Gladstone||

    You know who else had a Master Plan for the World Economy?

  • ||

    Marx?

  • Capt Ace Rimmer||

    Lord Humungus

  • fish_remote||

    Muad Dib!

  • JWatts||

    No, he had a Master Plan for the Galactic Economy. Much like Paul Krugman and his Foundation Fantasies.

  • SweatingGin||

    In the late nineties PBS had a series called The Commanding Heights. It's one of the things that first got me interested in economics, especially free market economics.

    Sachs was one of the interviewees that really stood out, lots about chile, etc.

    Amazing what a planner he is given all that.

  • OldMexican||

    Now, two centuries after Luddites smashed then-newfangled weaving frames in northern England, predictions of permanent technological unemployment are being revived.


    Which tells you that stupidity has not been eradicated from this Earth. Alas, it is not like smallpox - there's no vaccine for it.

  • ||

    Are you saying we may be reaching peak retard?

  • mtrueman||

    The Luddites were not stupid, and they were not anti-technology. In fact artisans of the period were among the most technologically adept of their times, making their own equipment and even the necessary tools.

    They´ve been subject to calumnies since they appeared on the scene. Originally they were smeared as Bonapartist spies. You don´t see these charges bandied about much these days. Your stupidity charge is much much more typical.

    The Luddites were involved around ensuring that new technology introduced into the workplace would be under their control, rather than the technology dictating its imperatives over those the Luddites (or other workers.)

    The Luddites of today are those like Richard Stallman and hackers who promote the freedom to tinker with our computers as we see fit. If you see stupidity at work here, I suggest a closer look, especially if you consider yourself to be sympathetic to libertarian values.

  • Red Rocks Rockin||

    Other researchers are less worried, pointing out that many of the alleged labor force dropouts are actually taking time out to upgrade their skills in school.take on even more unsustainable debt in the form of nondischargeable student loans.

  • mtrueman||

    What´s the story with the italics letters, the crossed out letters and really black letters?

  • KPres||

    "As evidence that American workers are losing to the machines, Brynjolfsson and McAfee point to falling real wages for unskilled workers in the United States."

    Any time somebody uses "wages" they're lying. Total Compensation measures income and if you're looking at an employment effect then you should use Employment Cost, ie, what is cost of unskilled labor.

  • OldMexican||

    Such lenses would provide the wearer access to augmented reality in which information is overlaid on whatever she is looking at while also eliminating the need for displays on phones, computers, and televisions.


    So it will be tailored to lady shoppers, huh? HUD information on deals and sales, and stuff...

  • Raven Nation||

    Even better when we get implants a la Peter Hamilton.

  • Red Rocks Rockin||

    More broadly, increasing productivity lowers the prices of goods and services, leaving consumers more disposable income that they can instead spend on other goods and services. In 1950, American families spent 18 percent of their food budgets dining out.

    Which doesn't explain, of course, why consumer debt is now running roughly 85% of GDP (down from its highs of 98% in 2009), as opposed to approximately 23% in 1950.

    I guess there's always bankruptcy, of course, but inferring that exponentially increasing credit expansion is "disposable income" seems rather disingenuous.

  • KPres||

    Which doesn't explain, of course, why consumer debt is now running roughly 85% of GDP

    What? No it isn't. Consumer debt is only like 15% of GDP. The rest is mortgate debt. And mortgage debt has risen BECAUSE people have more disposable income, ie, they have more money so they buy a bigger house. The average new home in 1950 was 100 sq.ft. vs 2500 sq.ft. today.

  • KPres||

    edit: 1000 sq.ft. in 1950

  • Red Rocks Rockin||

    Consumer debt is only like 15% of GDP. The rest is mortgate debt.

    Debt is debt. It has to be either paid off or defaulted on. If you think mortgage debt isn't a drag on someone's spending ability, you're kidding yourself.

    Who do you think is in a better position financially, someone who makes $50K a year but has no debt, or someone who makes $100K a year and has $200K in debt?

    And mortgage debt has risen BECAUSE people have more disposable income, ie, they have more money so they buy a bigger house.

    I suppose you missed last decade's housing bubble and the term "house-poor

  • KPres||

    "Debt is debt.

    Who do you think is in a better position financially, someone who makes $50K a year but has no debt, or someone who makes $100K a year and has $200K in debt?"

    Think about it this way. You have to buy food, clothes, gas, etc. Those are all short-term consumables. Suppose those make up 70% of your budget. That leaves 30% for a mortgage and savings. Say you spend 25% on the mortgage and save 5%. Your total debt is "only" 25%, but your house is tiny.

    Now suppose the short-term consumption only takes up 50% of your income because technology drives down prices. So you buy a bigger house and spend 40% of your income on your mortgage. Sure, you have more debt, but your standard of living is demonstrably higher.

    Forget credit bubbles and such for a minute. In general, debt isn't bad. Debt is good because debt = credit. More Credit means more money for investments and long-term durables, the things that really raise the standard of living. Debt is only bad when spent on stupid shit.

  • Red Rocks Rockin||

    Think about it this way. You have to buy food, clothes, gas, etc. Those are all short-term consumables. Suppose those make up 70% of your budget. That leaves 30% for a mortgage and savings. Say you spend 25% on the mortgage and save 5%. Your total debt is "only" 25%, but your house is tiny.

    Now suppose the short-term consumption only takes up 50% of your income because technology drives down prices. So you buy a bigger house and spend 40% of your income on your mortgage. Sure, you have more debt, but your standard of living is demonstrably higher.

    Thank you for demonstrating exactly how the housing bubble occurred.

    For retards, a house is an ATM machine, and the bigger the house, the better off you are.

    For the fiscally responsible, a house is a place to live in, and it's irrelevant how big it is.

    If my mortgage is $500 a month on a 1,000 square foot home, and $1200 a month on a 2500 square foot home, I'm more financially stable in the former AND I have more money to buy things with actual cash.

    Forget credit bubbles and such for a minute. In general, debt isn't bad. Debt is good because debt = credit.

    When did Ben Bernanke hijack your handle?

    Seriously, if you honestly can't see how debt, irrespective of the source, is a drag on personal income, there's really no reasoning with you. By your logic, the harridan in this commercial is entirely reasonable:

    http://www.youtube.com/watch?v=hPIxrzmatq0

  • KPres||

    Dude, give me some credit. The fact that there was a recent financial bubble doesn't change the underlying premise that, ceteris paribus, more credit/debt is good.

  • ||

    give me some credit.

    I see what you did there.

  • JWatts||

    "The fact that there was a recent financial bubble doesn't change the underlying premise that, ceteris paribus, more credit/debt is good."

    Uh, hell no. More debt has the potential to be good. But that doesn't mean it's always going to turn out well.

    Humans for the most part don't make financial decisions based on logic. They make them based on emotion. I've got no qualms about letting people make stupid decisions, but I'm not going to encourage it. Indeed, I'll actively discourage it.

    Buying a house bigger than what you need is not a 'smart' decision. It's a waste of resources. You would be better off buying a smaller house and investing the difference in equities. Granted, sometimes people who buy a big house profit by selling it to someone else for a profit. But any time the cost of houses goes up faster than wage growth a bubble is forming. In those cases it's not really an investment, it's a form of a pyramid scheme.

  • ||

    Who do you think is in a better position financially, someone who makes $50K a year but has no debt, or someone who makes $100K a year and has $200K in debt?

    Are you insane? If that $200K in debt is a 30-year mortgage at 4%, you're out $15 per year on it -- before the stupid tax deduction. So your disposable income is $85,000.

    Isn't $85,000 better than $50,000?

  • KPres||

    Or, even better, if that debt is a student loan and is the reason you're getting a $100K salary instead of $50K.

  • Red Rocks Rockin||

    Are you insane? If that $200K in debt is a 30-year mortgage at 4%,

    Did I say that it was just the mortgage?

    LOL at these goons arguing that debt is good. Until that mortgage gets paid off, who do you think actually owns the house?

  • ||

    Say it's more than the mortgage. Don't you realize that mortgage issuers generally want to see total debt under three to four times your annual income. So someone who has $200K debt with $100K income is under-indebted in the opinion of the people whose job it is to offer credit.

    And don't blame the housing bubble on this. The housing bubble is due principally to insufficient down payments, not to too much debt per se. The banks were essentially acting as unremunerated insurers at the government's behest, holding highly concentrated bags of pain if house prices fell. If everyone needed 20% down to get a mortgage, it would have driven away people without ability to pay, as well as the dreaded nonoccupant investor, and greatly reduced housing demand and therefore the bubble.

  • KPres||

    Yes, but the vast majority of people will pay it off, and when they do, they'll own more real capital than they would if they had bought a smaller house and spent more on dining out and big-screen TVs.

  • Aresen||

    If they had bought a smaller house and invested the extra money (or even half of it) they would have been better off than the people with the larger house.

    What do you think is going to happen when the owners of big houses decide to downsize for retirement and suddenly there is a glut of big houses on the market?

  • DarrenM||

    better off than the people with the larger house.

    I've read that over the long term, houses will generally keep pace with inflation, all else being equal. There are many factors that go into house price, of course: income, artificial control over supply, etc.

  • Rufus J. Firefly||

    Credit/debt is key to becoming rich. People don't realize or are just to conservative to try that leveraging, say, a property with a line of credit to invest in other properties is GOOD debt in my book.

    It's all we do in my family. Consolidate high interest debts we incurred to start a business and through it in a commercial line of credit and pay it down responsibly. It takes discipline but you don't become rich on "salaries." You become rich by leveraging.

  • VG Zaytsev||

    No, no and no.

  • Sevo||

    Rufus J. Firefly| 2.8.13 @ 7:27PM |#
    ..."you don't become rich on "salaries." You become rich by leveraging."

    Yep.
    Debt is a tool and a good one. Using other people's money to increase a gain and then paying it back leaves you with the gain.

  • Rufus J. Firefly||

    Bingo, Sevo.

    I was exposed to men (like my father) who did this to create wealth. I observed that they often bought land and built credit. My father didn't go the debt route because he had a business that paid him cash so he just plumped it down on land.

    Later on, to go along with this education I observed, I learned through his lawyer (who happened to be Jewish) and my clients when I was a broker that debt was an effective tool to expand and diversify your holdings.

    They sound, shrewd cats. It mostly went into properties; something that rendered income. It didn't go into adventures - that's another gig altogether.

    All the great business people of our times do this. It's a classic strategy.

    Is Zaytsev saying no to my comment?

  • Rufus J. Firefly||

    They "were" sound...

  • Sevo||

    "They sound, shrewd cats. It mostly went into properties; something that rendered income."

    This moves the issue into another realm.
    Buying a home /= properties that yield income, unless it does.
    Buying a multi-family unit and living in one of them *really* changes the leverage ratio regarding housing.
    Now you're betting on both increased base asset value and increased income, interrelated as they are.

  • Rufus J. Firefly||

    ....and that's what the immigrants did (Italians,Jews, Irish, Chinese etc.) and what they're doing now (Iranians, Arabs, along with the old immigrants).

    It's a lesson for the 'eat the rich' crowd. The only community that has any academic work on immigrants behind it (and it's scant at best) are the Italians here in Montreal. The rest is pretty much oral.

    My point is, from how the story goes,the worked menial jobs, hard labour (for the man as it were), and saved their money. They knew the only way up was to play the game by the rules of the host country and to BUY REVENU HOMES. They saved, put down cash and paid off the mortgage by the time the kids took over.

    The Italian community became asset rich that way.

    Then there's a whole added dimension of being trilingual in Quebec that further the upward mobility right past the French-Canadians who consistently get screwed over by their political masters right until this day with prejudiced, parochial and hick parties like the Parti-Qubecois.

    I digress.

    Next thing you know, the kids of Italians own land forming their own 'old money' dynasties' (started as early as the 1700s)like the old Anglo-Scots.

  • robc||

    houses will generally keep pace with inflation

    Houses decline in absolute value. They are no different that cars, other than the pace of the decline is much slower. You can keep house value up by pumping money into it (new roof, etc).

    LAND, on the other hand ....

    The housing bubble wasnt a housing bubble, it was a land bubble.

  • Sevo||

    KPres| 2.8.13 @ 6:12PM |#
    "Yes, but the vast majority of people will pay it off, and when they do, they'll own more real capital than they would if they had bought a smaller house and spent more on dining out and big-screen TVs."

    The gain here is a sort of enforced savings program. The loss is opportunity costs.
    Pretty sure the judgement is case by case.

  • hotsy totsy||

    Plus generally speaking, houses appreciate. If you didn't have a mortgage, i.e. zero debt, you would have to rent. Unless you lived with your parents or something.

  • Brandon||

    RRR, you don't seem to be factoring in that a mortgage generally takes the place of rent. Someone without a mortgage still pays rent, which goes to pay for someone else's mortgage.

  • DarrenM||

    I thought the issue was a larger house with larger debt vs. a smaller house with smaller debt. In either case, it's better to own than rent over a long period of time.

  • CE||

    Housing is an expense, not an investment.

  • Sevo||

    CE| 2.8.13 @ 7:12PM |#
    "Housing is an expense, not an investment."
    You can expense it as rent, or capitalize it as a purchase.
    The difference, obviously, is the retained value; expenses are sunk costs while capital investment results in an asset of some value.
    Whether that value is greater than the expenditure or not is another question.

  • JWatts||

    Personal housing is always an expense.

    Your almost always better off financially by buying a smaller house and investing the difference in income generating assets. Buying rental property is fine.

    Buying a 5,000 sq ft property when all you need is 1,500 sq ft is getting into a Pyramid scheme and hoping you are near the top. That's gambling not investing.

  • ||

    You guys are talking past each other.

  • Aresen||

    It has been obvious for decades that the demand for unskilled labor was going to fall as machines took on more of the work.

    Why use men with picks and shovels to dig a foundation when you can do it faster with an excavator and a trained operator? What is seldom asked is "Why would you want to condemn people to digging holes with picks and shovels for the sole purpose of calling them 'employed'?"

    Obviously, people will need to learn new skills, but we've been doing that ever since we replaced clubs with atlatls. Those who refuse to learn new skills will be left behind.

    Those willing to go on will find themselves richer compared to our generation than our generation is to Lincoln's.

  • Gladstone||

    Poor buggy whip operators.

  • Aresen||

    Funny you should mention that.

    As someone who enjoys horseback riding, I can say that the equestrian industry now supports more people at a higher standard of living than ever before, including buggy whip makers.

    That is only possible, of course, because horses have become a luxury good that people can enjoy due to the increase in their discretionary income.

    Other people have devoted their increased discretionary income to everything from surfboards to video games - more industries that could not exist unless real discretionary income had risen due to increased productivity from machines.

  • Brandon||

    ^THIS.^ Better, more useful technology makes more things possible and improves standards of living. Until technology can overcome scarcity, however, there will still be jobs for everyone who is able to hold them.

  • Aresen||

    I would argue that, from the perspective of Marx*, scarcity has been entirely overcome in modern Western societies.

    As people have more discretionary income, the number of activities they choose to enjoy will continue to increase and, as a result, so will economic opportunities.

    *I am not a Marxist, I am merely pointing out that even people in the bottom quintile in North America are vastly better off than what Marx and Engels saw as utopian goals in their day.

  • Brandon||

    Your point about scarcity is true, but I consider scarcity, in the economic sense, to be unsatisfied wants. So until we have sufficiently advanced technology to satisfy every person's wants without any human input, there will be opportunities for people to work to satisfy other peoples' wants in exchange for something of value.

  • Sevo||

    ..."So until we have sufficiently advanced technology to satisfy every person's wants without any human input, there will be opportunities for people to work to satisfy other peoples' wants in exchange for something of value."...

    Pretty sure that "until" is a constant X00 years away.
    Remember Watson's claim that there was a market for 4 or 5 computers in the world?
    "Wants" expand as products do, whether those products are physical things o, say, software (i.e. games). Or services; some folks (not me) get their hair cut weekly!
    Hell, I didn't know I couldn't live without Sirius radio until a year or so ago.

  • Gladstone||

    Was Tom Paris right to abduct Janeway and turn into salamanders in order to further the natural course of human evolution? I want a Bailey article on that.

  • phandaal||

    "Economics in One Lesson" by Henry Hazlitt has a pretty concise rebuttal of this theory based on actual historical data.

  • Gladstone||

    The resulting prosperity could well free people to employ themselves in tackling scarcities in other facets of life, such as liberty, love, and time.

    Unfortunately modern prosperous society is more interested in sacrificing that in order to get Moar Free Shit.

  • CE||

    What exactly is entailed in "employing themselves tackling scarcities in.... love"? Isn't that illegal in most states?

  • KPres||

    According to a recent study by the Cleveland Federal Reserve Bank, labor's share of our gross national income has fallen from 65 percent in the 1980s to 58 percent now, with the result that a larger percentage of national income is going to the owners of capital, e.g., the owners of machines.

    It's incredibly dense to claim that capital = machines. Owning debt is a form of capital, but has nothing to do with machines. And given the fact that this change in labor-to-GDP began in 1990, I'd speculate that it has more to do with the rise of finance and the debt bubble than with technology.

  • Left-Libertarian||

    Of course the right-libertarians engage in vulgar libertarianism in assuming that the Corporate welfare patent situation with enclosures is the natural order of things.

  • KPres||

    What the hell are you even talking about? Sole proprietorships and partnerships can't own patents?

  • Sevo||

    Not sure what this thing is. the rants always include "vulgar" and hate for business, but that's about as much as you can say.
    It certainly doesn't pass the Turing test.

  • Juice||

    Why isn't a large portion of the economy devoted to robot development and manufacture? Then it can shift into a robot based economy? Robots will do damned near everything and people can shift into a culture of philosophical contemplation and casual sex.

  • Aresen||

    F**k the 'philosophical contemplation'.

  • ||

    You underestimate the breadth of subjects capable of philosophical contemplation, and overestimate the amount of depth necessary for a philosophical discussion. Star Trek or Star Wars? Deep dish or thin crust? Zombies or robots?

  • Sevo||

    "Star Trek or Star Wars? Deep dish or thin crust? Zombies or robots?"
    No.


    (sorry, just couldn't pass it up)

  • JWatts||

    "into a culture of philosophical contemplation and casual sex."

    +1, if by "philosophical contemplation" you mean Margarita's and good beer

  • ||

    Would you rather be an Eloi or a Morlock?

  • DRM||

    Okay, this one generation accumulates all the wealth while the poor can't.

    You know what happens next? The old generation keeps getting old and dies.

    I mean, seriously, even if these guys are right, it's an inherently temporary problem anyway.

  • CE||

    Until old people stop dying. But young people tend to be more adept with technology anyway, so they will just get the old people with capital to invest in their ideas, and split the profits.

  • DarrenM||

    It seems to me there would be a basically 3-tier society. There will be those who have the skills to get ever more income just as you would expect, including those who own the capital for production. There will be those belonging to a kind of service class in the middle. There will alwasy be jobs robots can't replace. There will be those in an underclass living off transfer payments and welfare, which wouldn't necessarily be a bad living. Just speculation.

  • CE||

    "Smart machines now... kill our enemies..."

    We don't really need to worry until the smart machines start killing THEIR enemies...

  • waaminn||

    Man that dude over there seems to have it totally going on man!

    www.U-Got-Anon.tk

  • ||

    How many people's jobs did you take away this week?

  • ||

    What did I just say?

    I'm glad you are doing the spam drudgery so a real person's scarce labor can be employed somewhere more valuable!

  • Hyperion||

    Were the Luddites right?

    NO

    Technology is the only thing that has ever improved the condition of humans, and it will always be so.

    And what's the biggest hindrance of technology today? Politicians!

    Now what do we need to do away with? The machines or the politicians? I don't need to think about it for even one minute more.

  • Josua||

    I think Alphabet and McAfee are using this subject as a prop for advocating their predetermined position in favor of socialism. Just two more idiot leftists in academia.

    - If you subsidize ignorance, you will get more of it, not less.

    - Genetic algorithms, machine learning, and robotics might fundamentally change society.

    - There is nothing we can do to prevent whatever fundamental changes are on the way from genetic algorithms, machine learning, and robotics. Such things are competitively advantageous and will "percolate" to the top over time.

    - Some of the first people to experience a change in the job market will be skilled technology professionals. When programs write programs better than you, who needs you to write programs?

  • ||

    They also advocate reforms such as aggressively lowering the barriers to business creation, resisting efforts to regulate hiring and firing, decreasing payroll taxes, decoupling benefits from jobs, not rushing to regulate new network businesses, streamlining the patent system, and shortening copyright terms.

    My god, what a socialistic nightmare! If only they were advocating for free-market reforms instead!

  • Josua||

    Read, halfwit:

    "With the right choice of tax-and-transfer policies," declare Sachs and Kotlikoff, "all generations can benefit from the advance of technology, while under laissez faire, only today's older generation benefits, and at the expense of all other generations."

  • Sevo||

    Red Rocks Rockin| 2.8.13 @ 6:07PM |#
    "LOL at these goons arguing that debt is good."

    Just sayin, debt is no better or worse than cash. It's an instrument of finance; a hammer or a screwdriver.

  • JWatts||

    "Just sayin, debt is no better or worse than cash. It's an instrument of finance; a hammer or a screwdriver."

    No, that's wrong. You get an F in Personal Finance for ignoring the human factor.

    Debt is a fiscal multiplier. It can be useful, but it's always more riskier than cash. The multiplier works both ways and many smart people fail to grasp emotionally that that multiplier can be negative.

    Debt that is used to increase future income is a positive. Debt that is used to increase current consumption is a negative.

    People that recognize the difference and practice the former tend to prosper. People that practice the latter tend to spend their life on a treadmill.

  • Sevo||

    Thank you, Mr. Pedantic.

  • ThatSkepticGuy||

    The socialists and the Luddites and the dirtworshippers spent the last century preaching this doomsay about everything from factory lines to computers.

    Not only were they Dead Fucking Wrong, but these evil techonoligcal advances have had the exact OPPOSITE result to a spectacular degree.

  • ||

    But... but... but... this time it's totally different!

  • Sevo||

    ThatSkepticGuy| 2.8.13 @ 8:48PM |#
    "Not only were they Dead Fucking Wrong, but these evil techonoligcal advances have had the exact OPPOSITE result to a spectacular degree."

    Ehrlich sticks his fingers in his ears, and screams: I CAN'T HEAR YOU!

  • ThatSkepticGuy||

    Such people think of jobs strictly in the sense of some over romanticized, salt-of-the-earth folk song factory unionists.
    They never consider the receptionist, the engineer, or the immigrant who can become a cabbie because cars and parts are made more affordable.

    Well, that and they need to scapegoat the effects caused by state intrusion onto things they hate, namely capitalism, scientific advancement and convenience.

  • Rufus J. Firefly||

    Liberals too, we can add to the mix, generally tended to be wrong when it came to rationalizing political events in the 20th century particularly in Germany and Italy.

  • Colin||

    "In 1985, there were just 340,000 mobile phone subscribers in the United States; today there are more than 321 million."

    How is that even possible given that the population of the country is 314 million? Are there huge numbers of people with multiple cell phone contracts?

  • Mark000||

    There's another thing to consider. Employers replace humans with machines because machines are cheaper, which lowers employers' costs. This results in the price of that good or service coming down. So, although automation exerts downward pressure on wages, it doesn't matter because the cost of living is falling even faster. This is why you can't look at wages and conclude anything about quality of life.

  • ||

    If comparative advantage works for international trade, I don't see why it wouldn't work for humans and robots.

    So the robots replace all human labor they can. Then we have excess human labor which can be devoted to doing other things - in some cases maybe things that only humans can do, or things that humans have as yet been unable to do because we've been too busy doing all thr grunt work that will now be provided by robots. Maybe we'll have a vast rise in mental health services consumption as people buying $1 robot-made clothing suddenly find themselves with disposable income to see a therapist. Or we'll all become world peace ambassadors and travel around resolving disputes. Who the hell knows?

    Then of course there will be some people who can't do anything that robots can't do better. But still there comparative advantage should work. The humans do whatever the humans are least bad at, and the robots are devoted to producing goods in such abundance that even these people benefit from them.

    Ultimately, I think the key issue is energy, since robots consume only energy. The cost of a robot-made product will tend to settle at the marginal price of energy needed to produce one more unit. If a human can't even produce enough to generate the income equivalent to the energy going into producing the product then they'll be unable to afford it.

    From that, I predict a lot of unskilled labor will go into energy production. We'll need energy to power all the robots.

  • ||

    [Morpheus holds up a Duracell battery.]

  • Peyton32||

    my best friend's half-sister makes $76/hr on the internet. She has been without work for 6 months but last month her check was $15690 just working on the internet for a few hours. Read more on this web site http://www.FLY38.COM

  • T o n y||

    Shouldn't we be striving for a post-labor world? If robots can do it, why make people? Then of course we'd have to rethink our preconceptions about how one "earns" the ability to feed oneself. I'm all for high "unemployment," so that people can be employed bettering themselves (and the rest of humanity). I think libertarians would resist this future--they can't stomach the idea of someone being able to eat without first contributing to GDP or doing something they deem "productive"--always defined as productive for someone else, a strangely collectivist view.

  • Rufus J. Firefly||

    The collectivist view as argued by liberals and socialists is a coerced one. I can't stand hearing "we're in this together" garbage.

    Libertarians just believe all actions should be VOLUNTARY. So if a community chooses a collectivist route - for example, rationally building an economy from the BOTTOM UP for the betterment of each - VOLUNTARILY without the threat of fines, taxes and jail time, then so be it.

    You're approach is a paternalistic, coerced TOP-DOWN model that is so beyond illogical it's incomprehensible to me and perfectly fine with you.

    THE ECONOMY IS A SELF-ORGANIZING, SELF-REGULATING ENTITY. Tinkering with it as the Krugman's of this world constantly do to laugable levels is what messes it up. If an economy gets whacked on its own free of external influence (ie the government), then it will heal itself over time. Too many competing self-interested minds at work to let it rot for too long. This is when greed becomes "good."

    Liberals just can't accept this possibility. The belief in free human activity with minimum regulations and essential laws. When you have excessive laws, you have a corrupt society.

    Right now, there are too many laws, too many regulations, too many corrupt politicians raping the coffers and too many non-informed voters who out number the intelligent ones thus creating a stupid, stupid situation.

    A river doesn't run through Obama.

  • T o n y||

    The economy self-organizes and self-regulates only to a point. There are many examples of economies breaking down even under clean rules, and then there's the occasional intrusion of reality. A natural disaster occurs, and you are not best off waiting around for the economy to organize a response organically.

    And we live in as voluntary a society as you could reasonably hope for. How else are hundreds of millions of people going to get along relatively peaceably without organizing some kind of system more or less comparable to the ones that have been established?

    My question is whether libertarians think a post-capitalist society is desirable, or whether their entire worldview depends on lumping people into categories of productivity like so much moral nannyism.

  • ||

    Nonsense.

    As the price of goods falls due to robot labor, you will need to do less and less to be able to earn enough to purchase what you need to live.

    But that still doesn't mean you can force someone else to give you free shit, so that you can produce zero instead of the tiny amount you need to afford it.

    I really don't care if someone sits on their ass all day producing nothing, as long as whatever they consume isn't being extracted from someone else by force.

  • T o n y||

    Life is force. I care more whether people are able to eat than whether the arbitrary current distribution of resources stays exactly where it is for no good reason. It didn't get here by a pristine and perfect series of rational exchanges, that's for sure.

    One of the worst race riots in the country's history happened in my home town. We had the wealthiest black population in the country. Their wealth was pillaged and they were killed. Now you guys get all huffy if anyone dares entertain a redistributive tax that might help someone who didn't benefit from random natural accidents like having white skin. Life is force. You are not more morally entitled to hoard your luxuries than a starving person is to steal them in order to eat.

  • Chesapean||

    If by some magic the value of money (unit per unit/dollar per dollar) remained constant over generations, the disruptive effects of new technologies would be greatly ameliorated. People could respond to change in effective ways, relying on life experience to guide them.

    But we live in a world where the unit value of money is in constant decline. Because of this there are continually fewer economic options at low income levels.

  • Josua||

    What they are talking about is something much more fundamental. The possible direction of technological development MIGHT cause very big changes in how wealth is produced. Not money, wealth: Goods and services. It might eventually be possible for software and robots to begin completely replacing even the most skilled technical and professional workers, not to mention laborers.

    The question will then be, (if such a thing happens), "What do we do with ourselves?"

    If, in the future, all software is written by other software, and all robots and designed by software and manufactured by other robots, then what do people do? How do we decide then how to distribute resources? In other words, will technological progress eliminate individual human productivity and thereby obliterate our ways of addressing material wealth?

    I'm not sure that this end state will happen in the lifetime of anyone currently alive. However, it does seem, intuitively, to be probable at some point. Software patents are already a problem, and as machine learning and genetic algorithms find more practical applications, I think the economic effects of these technologies will become more apparent. This goes way beyond anything we have invented before. Nothing is comparable from our past.

  • T o n y||

    It goes without saying that the useful tool of capitalism will have become obsolete.

  • mtrueman||

    Is the lack of contact lens displays really a scarcity that warrants attention over scarcities in liberty, love and time?

    Does anyone agree with what the author seems to be proposing?

  • Max||

    Considering that a techno-leisure society is part of the SMILE platform of Libertarians, what is the point of thus clueless article?

  • ||

    A disabled or lazy person costs taxpayers thousands in survival benefits. The downtrodden do not have to protest, all they have to do is show up at the welfare offices and emergency rooms. The wealthy entrepreneur and the middle class worker are slowly being strangled by a growing number of deadbeats. Unfortunately genocide will become the universal solution to the problem of a billion useless sponges.

  • Quimby||

    my classmate's aunt makes $79/hr on the computer. She has been out of a job for seven months but last month her pay check was $15402 just working on the computer for a few hours. Read more here http://www.FLY38.COM

  • JohnD||

    My cousin has found your aunt and plans to rob her because she makes so much money. You're next.

  • Quimby||

    If you think Alfred`s story is unimaginable..., last munth my cousins step dad basically also brought home $5919 sitting there sixteen hours a week an their house and their classmate's aunt`s neighbour has been doing this for three months and got more than $5919 in there spare time on their computer. follow the information from this site, http://www.FLY38.COM

  • NYC80||

    There will be more unemployment going forward, and it is due to technology. We have to accept that IQ is mostly genetic and upgrading skills requires higher IQs. We've crossed the Rubicon, and in the new world intelligence is a prerequisite for success.

  • JohnD||

    But...but...but.. President Obama said unemployment is cause by ATM machines.

  • rabid penguin||

    "The second economy will produce wealth no matter what we do; distributing that wealth has become the main problem," argues Arthur.

    This is a key point here. My guess is that when automation gets so pervasive that our service-level jobs are replaced en masse, we will see some mix of two things:

    1. new markets arise that require manpower and maintain the standard work-for-wages model
    2. we may see a new theory of value emerge that ascribes value to goods and services differently- say, by placing more value on the matter that makes the goods or the ideas behind their design, rather than the labor required for production.

    You will likely see the old model mix with the new for a period, maybe in the form of a reduced work week. Maybe income will drop but the sources of income will become more diverse, like micropayments from participation in crowd-sourced funding schemes (think kickstarter but with other types of investment).

    The short (and uncomfortable) answer to the question, "What will people do for a living when robots take over our service jobs?" is simply: we won't know for sure until those jobs are displaced. We don't live in a glorious people's centrally-planned economy, so we can't consult our 5-year plan for guidance. Bureaucrats, please come save me from my economic insecurity!

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