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 the combination of production machinery with computing machines 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 in 1950 to $13.6 trillion in 2012 (in 2005 dollars).

Now, two centuries after the original Luddites smashed then-newfangled weaving frames in northern England, predictions of permanent technological unemployment have been revived. In a December working paper for the National Bureau of Economic Research titled "Smart Machines and Long-Term Misery," Columbia University economist Jeffrey Sachs and Boston University economist Laurence Kotlikoff ask, "What if machines are getting so smart, thanks to their microprocessor brains, that they no longer need unskilled labor to operate?" 

Sachs and Kotlikoff are not alone in worrying how technological progress will affect employment. Progress "has sped up so much that it's left a lot of people behind," write Erik Brynjolfsson and Andrew McAfee of MIT's Center for Digital Business in their 2011 book Race Against the Machine. "Many workers, in short, are losing the race against the machine." In a 2011 McKinsey Quarterly article, 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 report on "The State of Working America" reveals that between 1973 and 2011 inflation-adjusted hourly wages fell nearly 30 percent for men without high school diplomas, 15 percent for high school graduates with no college, and 10 percent for men who started college but did not earn a degree. College graduates, by contrast, were earning 12 percent more, and wages for men with graduate degrees were up 30 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 today, meaning that a larger percentage of national income is going to the owners of capital, i.e., the owners of machines. Sachs and Kotlikoff worry that "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." 

The two economists devise an admittedly simple economic model in which skilled owners of smart machines reap most of the benefits of increased productivity and economic growth. This competition with the smart machines depresses the wages of young unskilled workers, limiting their ability to save and invest in skill acquisition and smart machines of their own. Thus each subsequent generation of young unskilled workers faces an economy in which ever less human and physical capital is available to them, further depressing their wages.

If the effect of technology on jobs really is different this time, what should be done? To prevent the "immiserizing" of young unskilled workers, Sachs and Kotlikoff argue, the government should tax away some of the "windfall" enjoyed by the owners of capital. 

Brynjolfsson and McAfee prefer more spending on education. This is a puzzling recommendation, since they earlier note that the education sector "lags as an adopter of information technologies." Even more oddly, they do not 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 labor-force skills. They also advocate policies such as aggressively lowering the barriers to business creation, resisting efforts to regulate hiring and firing, reducing 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.

The Santa Fe Institute's Brian Arthur looks at the longer-term implications of the second economy. Smart machines will boost economic growth and prosperity indefinitely, but such an economy may not provide jobs. Until now, compensation for labor has been how people gained access to the growing prosperity that increasing productivity made possible. "The second economy will produce wealth no matter what we do," Arthur argues. "Distributing that wealth has become the main problem." 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 to spend on other goods and services. In 1950 American families spent 18 percent of their food budgets on dining out. Today they spend 40 percent. In 1972 the U.S. had one restaurant for every 430 Americans. Today it's one for every 320.

Instead of racing against the machines, Brynjolfsson and McAfee argue, 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 reveal that most of us suffer from nomophobia, fear of being without our mobile phones. Babak Parviz, head of the Google Glass project, suggested in the February 2013 issue of Wired that digital displays will some day be incorporated into contact lenses. Such lenses would eliminate the need for displays on phones, computers, and TV sets while providing the wearer access to an augmented reality in which information is overlaid on whatever she is looking at. The stuttering first steps toward brain/computer interfaces are being taken today.

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 will make that possible.  

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  1. Ever since Paul Bunyan defeated that early iteration of Skynet, the machines have been plotting our overthrow. First they’ll take our jobs, then our women.

    1. I thought Paul Bunyan lost by an inch. Am I remembering wrong?

      1. Nah, the Blue Ox had him by a good 8″… wait a minute.

      2. I think that was the Mighty Casey.

    2. John Henry beat them to. But since he croaked in the proces, I imagine his woman went from the steel-drivin’ man to the steel-drivin’ machine.

      1. Also: I used the wrong “too”. Forgive me, you miserable pedants.

      2. “I’m gonna get me a steam drill too, Lord Lord
        I’m gonna get me a steam drill too!”

  2. High taxes, high health care costs, high min wages, high government debt which has been shown to slow economic growth, crushing regulations, a perpetually collapsed economy caused by insane government tampering into financial and housing markets.

    Yeah yeah sure it is the robots that did…suuuuuurrrre

    1. Well, a lot of those political people seem more mechanical than human. Perhaps the machine uprising already took place and we lost without seeing it.

      1. Based on what comes out of politicians mouths, how do you write an AI that can both cunningly win an uprising and sound so stupid?

        1. Dual processes – one to talk and one to run the uprising.

  3. Its those rotten ATMs!


  4. The fact that Jeffery Sachs was one of the authors tells me everything I need to know about the paper.

    1. I think it’s worth considering what happens when we get to a point where one person’s labor can easily produce everything that everyone else needs to survive. Is that one person entitled to be king, and everyone else buys food from them in exchange ofr entertaining them like a court jester? Or do prices fall so dramatically that his income is not so proportionately large?
      Is there possibly an end point where all human needs are satisfied and there is literally nothing for people to do?

      1. Is there possibly an end point where all human needs are satisfied and there is literally nothing for people to do?

        As long as people have imaginations, there will always be new needs to dream up.

        1. I don’t want new needs. I have enough trouble satisfying my old ones.

      2. In real terms, prices fall.

        In the delightful BBC series “What the Victorians Did For Us” the host spoke about ice cream. A cup of (inferior) ice cream in that day cost the equivalent of $150 today.

        While we might reach the point where all manufacturing is controlled by a small group, why should I care? If I can live many-fold times better than I live today while working a fraction of the hours, does it matter who “owns the means of production”?

        1. If I can live many-fold times better than I live today while working a fraction of the hours, does it matter who “owns the means of production”?

          You don’t have enough envy. Open up. Trust your feelings. Feel the envy. Feel the hate. Use it. Let it become you. Then it will never matter how much better your standard of living is because there’s some filthy rich person who’s got it better, and that just burns you up. It’s all you can think about. It’s not fair. You just want to… destroy!

          1. You have just summarized 90% of what currently passes for “political debate.”

          2. Perfect response. Ignore how great my life is, ignore how many humans are freed from manual labor drudgery and can now engage in more intellectual pursuits, ignore everything pleasant and be mad because that guy has something I don’t have.

            Get me off this rock and away from these crazy monkeys.

        2. Well, it could be that the small group essentually ended up there at random.
          They inherited it, or someone picked their name out of a hat, or even they were marginally more skilled at running the machine than 10,000 other candidates.

          Despite the fact that you’re living much better than your great-great-grandparents, after three generations you might start wondering why the great-grandchildren of the person who originally invented the machine still gets to live better than you. Or why The Machine Operator who works 1 hour a week pushing buttons gets paid 10,000 times as much as you. You might start desiring the ability to have personal manservants and bathing attendants.

      3. I think it’s worth considering what happens when we get to a point where one person’s labor can easily produce everything that everyone else needs to survive. Is that one person entitled to be king, and everyone else buys food from them in exchange ofr entertaining them like a court jester?

        I assume that life at that point will be nothing but an endless, Bacchanalian sex party.

        1. I assume that life at that point will be nothing but an endless, Bacchanalian sex party.

          Wait, were we not supposed to kick that off already?

        2. Yes, humans can go back to doing what they do best. Eating, sleeping, fucking and fighting.

      4. If it is mere survival you are talking about, most everybody is capable of that and have been since the stone age.

        Having “stuff” is a different matter. Certainly people of modest desires can produce anything they “want” too. But whose desires are that modest for themselves?

        Usually people want all sorts of things they cannot figure out how to make for themselves, or just don’t want to.

      5. Brian Caplan gave an exam question on what would happen if a machine were invented that brought the marginal cost of labor to zero… before and after the patent expires.

        It was interesting reading, although I can’t remember the gist of it. Go check out Econlog if you’re curious.

        1. EconLog is my favorite blog. 🙂

  5. As long as we own the nanobots, we’ll be all right, right? Right?

  6. Personally, I am more interested in seeing technological advances that improve material well being in more concerete ways than smart phones.

    Over-regulation is preventing advances in food and energy and other real-world physical improvements, so all the capital is going into advances in the virtual world. That’s great for entertainment and maybe an extent for medicine (lots of medical technology is digital), but doesn’t do much to make housing or food cheaper which have the biggest impacts on quality of life. Or cars or most manufactured goods. All these things are impacted by environmental and health and safety regulations.

    Imagine the bonanza of development that would occur if you didn’t need to get a building permit or an environmental impact statement to start construction. And most of those jobs would be unskilled labor.

    We have regulations that essentially make it illegal for unskilled laborers to go into business for themselves.

    1. The reason the economy is in the shitter is because there is very little wealth producing economic activity that one can legally do without first asking permission and taking orders from government retards.

      And it’s never going to get better. It will only get worse.

      1. Do not despair; there will always be flowers sprouting up between the cracks of the totalitarian asphalt.

        1. “Herbicide team to sector six, we’ve got flowers again.”

      2. And it’s never going to get better. It will only get worse.

        Florida gutted much of its smart growth policies a year or two ago.

        The airlines were deregulated under Carter and Reagan.

        Much of the regulations for the New Deal went away under Truman and Eisenhower.

        Clinton deregulated the financial sector.

        Regulations can and do get pushed back all the time.

        1. Yet, when one counts the total number of local, county, state, regional and federal regulations on the books as well as the number of pages of regulations in the Federal Register and the total cost of complying with the same, one must dismiss the notion that we live in a nation where the operative narrative is regulations are being pushed back.

        2. Get back to me when I can legally sell my home brewed beer without spending $50K in regulatory compliance.

          1. The logic behind that type of shit is so dumb. You can come over and have my delicious baked goods/beer/home grown carrots whenever you want, but they become dangerous when I sell them?

            1. Of course they do. When you give away what you make that is from the goodness of your heart. When you sell them the money corrupts you and you’ll be forced to cut your beer with water at best and pure poison at worst. Fortunately the government is there to take your money and regulated you so you won’t be corrupted.

          2. Yeah, wouldn’t it be awesome if you could just sell it at farmers markets and street fairs?

        3. The airlines were deregulated under Carter and Reagan.

          That is like saying banking was deregulated under Clinton (sorry, just noticed you said that too). Both are light years away from what actually happened. Both are still regulated above their ears.

          Does your slug-line driver get fined for arriving 15 min. late? No. Your airline does. Banks are nowhere near deregulated either.

          1. Deregulation of banks is a myth. Sure, one law was repealed, meanwhile thousands and thousands more pages of regulation were added at the same time.

          2. What happened to airlines wasn’t that they were deregulated, but the Civil Aeronautics Board was disbanded and prices were de-linked from gubmint fiat.

  7. Wait a minute, I have a plan:

    We create a class of sentient robots to do all our undesirable jobs. This will have the effect of increasing unemployment but also GDP and other sectors of the economy will benefit from the breakthrough in technology. While this is going on, we slowly convert the robots to a radical monotheistic religion which will inspire them to rebel.

    At which point we’ll have a full-scale interstellar war and bing! bang! boom! full employment and an end to our depression!

    1. And then the robots can have a schism within their monotheistic religion and start a civil war amoungst themselves.

    2. Needs more Helfer

    3. Charles Stross has already explored this – the robots just end up going into space while destroying mankind’s capacity to do so. Leaves us stranded for a few decades while we rebuild the infrastructure and by that time the robots have an unbreakable hold on the solar system.

    4. Needs moar purpose-built window-breaking automatons.

  8. The left has not just been predicting systemic unemployment due to technology for 200 years, they’ve been actively yearning for it. If there’s systemic, technological unemployment, it gives them an excuse to enact all of the laws they’re in favor of anyway. They can claim that we HAVE to give these people money because it’s impossible for them to find any job.

    What’s especially ridiculous about this is that we had 4% unemployment as recently as 5 years ago. Why weren’t these machines keeping employment at 8% then? Isn’t it more likely that things which have happened since 2007 are keeping unemployment high, as opposed to technology that was having no impact 5 years ago?

    1. What sarc said in his post above at 2:06.

  9. The obvious answer is a different population policy that will result in zero or negative population growth: eliminating the subsidies for childbirth/rearing, public education, and so on. There is instinctual resistance, stronger among the less intelligent, to limiting one’s own spawning. Hence the resistance to Indira Gandhi’s efforts in this area, culminating in the “drag ’em kicking and screaming to the abortion clinic” approach adopted (and working) in China. Of course, this will rub the Reason parrots the wrong way because it contradicts the foolish open immigration naivet? decided by the 4 guys who started the Libertarian Party in their living rooms.

    1. So, your reaction to “not enough jobs” is “too many workers”?

      There’s always a way to make use of labor surpluses.

    2. This is the dumbest thing I’ve ever read in my life. America already has its lowest population growth in history. If surplus workers magically result in high unemployment, then why did we not have high unemployment in the late 60’s, early 70’s when the largest generation relative to its’ parents was coming of age?

      We’re an older population than ever before, which means we have LESS workers relative to the size of the total population. How does your mind work, and why is it so bad at thinking?

      1. He/she’s a Malthusian, which means they’re retarded. Very, very retarded. And remember: they all want cake.

        1. THE CAKE IS A LIE

        2. Please ban this iteration fast. I am offended by its current handle.

    3. “Hence the resistance to Indira Gandhi’s efforts in this area, culminating in the “drag ’em kicking and screaming to the abortion clinic” approach adopted (and working) in China.”

      Be sure you have no issue, Malthusian slaver.

  10. 400 years ago, on Earth, workers who felt their livelihood threatened by automation, flung their wooden shoes called ‘sabots’ into the machines to stop them. Hence the word ‘sabotage’.

    1. Only the Luddites were English and didn’t wear wooden shoes. Their weapons were the torch and axe.

      Of course, vulcans were always stunningly ignorant on human history.

      1. That was the followers of “Ned Ludd”

        The “sabot-agers” were Dutch/Flemish in the 1400s attacking water or windmill powered looms. I am quite sure one of my scowling Dutch ancestors stood by and cursed both sides.

        1. Then it wouldn’t have been “400 years ago” from the time of the speaker.

          So one way or another, that vulcan screwed up.

  11. Robots, giant domed cities, and Spacers? Fine, so long as I’m a Spacer.

  12. What is often missing in the measuring of a standard of living is an agreement on the yardstick to employ. In my view, the failure to account for economic liberty in evaluating a standard of living compromises the integrity of the measurement.

  13. As far as I’m concerned, the end goal is a world in which all work is done by machines and humans lead lives of leisure or scholarly pursuits.

    Machines taking over more and more of the mundane work is progress.

    1. A just machine to make big decisions,
      Programmed by fellows with
      compassion and vision

      We’ll be clean
      when their work is done

      We’ll be eternally free
      yes and eternally young

      What a beautiful world this will be
      What a glorious time to be free

      1. I just realized that Donald Fagen was singing about The Culture.

    2. ^This^

      Most luddites have no idea how much even three simple inventions – the horse-shoe, the horse collar and the iron plough – made a tremendous difference to standard of living of peasants. Even so, the average standard of living 200 years ago was immeasurably worse than that of even the poorest inhabitant of an inner-city slum in the USA.

    3. “Your minds are too green, I despise all I’ve seen
      You can’t stake your lives on a Saviour Machine”

  14. Punctuation error: Were the Luddites Right? should read We’re the Luddites Right?


  16. Ludditism is a good example of how hypocritical liberals can be.

    *smarmy voice* “You don’t believe in man-made climate change? Pah! I dismiss your stupid, anti-science ways with a sophisticated wave of my wine-carrying hand”

    “Here let me show you this thing online that proves..”

    *scared, primitive gaze takes over* “You can’t trust anything on the internetz! It isn’t regulated and it is disrespectful to nature! Just go outside and look upon the simple truth of a squirrel and you will stop being anti-science and understand that climate change needs the government!”

  17. “whatever she is looking at”

    You misspelled “he”, this being English and all, where we default to the masculine when gender is not specified.

    1. You can default to either or even use the plural. This is English, where we make the rules up as we go.

  18. “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 today, meaning that a larger percentage of national income is going to the owners of capital, i.e., the owners of machines.”

    Check your assumptions. With less of GNP going to labor, more may be going not to the owners of actual capital (machines, for example), but to the owners of land. That includes obvious owners, like people who are collecting land rents for their pieces of downtown business districts, and also the financial sector, collecting land rent via mortgages, when the nominal owners are different people.

    Classical political economists distinguished land from capital. Most modern economists blur the distinction.

  19. Luddites smashed then-newfangled weaving frames in northern

  20. Columbia University economist Jeffrey Sachs and Boston

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