Did you think that when Jonas Salk discovered the polio vaccine in 1955, he worried about all the people he was putting out of work? The people who made, sold and repaired iron lungs. The doctors and nurses and attendants for the ill. The morticians. All those children will still die, eventually, but not for decades, and even an undertaker has a family to feed today. Did Salk ever think about that?
No, I’m guessing Dr. Salk did not worry a single second about the effect his vaccine would have on unemployment, if only because he wasn’t a sociopath.
But a writer with the truly adorable name of Chunka Mui, writing in Forbes did catalog all the people — hard-working Americans, as any elected official would call them — who will lose their jobs when another technological advance, self-driving cars, comes to market:
The fact is that a driverless car would slash hundreds of billions of dollars of annual revenue, or even trillions, from all sorts of entities: car makers, parts suppliers, car dealers, auto insurers, auto financiers, body shops, emergency rooms, health insurers, medical practices, personal-injury lawyers, government taxing authorities, road-construction companies, parking-lot operators, oil companies, owners of urban real estate, and on and on and on… Emergency rooms would lose millions of patients a year, and hospitals would have hundreds of thousands fewer people who needed to stay overnight. Health insurers would have to give up revenue as car-related injuries plummeted.Personal-injury lawyers would see car-related cases all but disappear.
Mr. Mui — I don’t know him well enough to call him Chunka, though I’d love to — isn’t being callous, just thorough. He isn’t wrong, but for reasons I’ll discuss, his point is largely irrelevant.
Automobile accidents in the US cost between $100 billion and $200 billion a year (depending on who you believe). And that’s just medical expense, property damage, and so forth. The 32,367 traffic fatalities in 2011 would presumably prefer not to have died, even if were free.
As Chunka (what the Hell) points out, “One man’s savings are another man’s lost revenue.” That $200 billion went into the pockets of ER doctors, body-shop owners, insurance companies, and so forth. Once self-driving, virtually accident-free automobiles become the norm, that gold stream will slow to a trickle.
But here’s the thing — the frustratingly obvious, utterly irrefutable fact that economists have been shouting into the ear of a stubbornly deaf world for 200 years — one man’s savings may be another man’s lost revenue, but they are the gained revenue for a third man!
So a computer-driven car brakes quickly and avoids running me over, and therefore I don’t have to pay $1,000 to an orthopedist to set my broken leg. I don’t celebrate my narrow escape by piling that thousand dollars in a little heap and setting it on fire. No, I spend the money on steak or a vacation or going to 130 movies. The $1,000 the orthopedist didn’t make goes towards creating jobs in ranching or the hospitality industry or Hollywood. The doctor is worse off but I am better off for not having my leg broken, and the cowboys, desk clerks, and Brad Pitt are better off for having my business.
The difference may be that the orthopedist knows why he’s losing out. This is his business, after all. He follows the numbers, he knows a precipitous drop in traffic accidents means an empty waiting room. He might have to become a dermatologist, or a plastic surgeon, or heck, a garbage man. He knows there’s much less money in orthopedics than there used to be.
The people raising beef or operating hotels of course don’t know why their business has suddenly picked up. The effect is too removed and, as it is spread over the whole economy, too subtle to be tracked down.
A blogger with the disappointingly average name of Andrew McAfee gets this important fact explicitly wrong. He shows a drop in manufacturing — well, not a drop but lackadaisical growth and concludes:
The number of hours worked, however, has increased by only 2.8% over that same time, and the total number of jobs by 1.9%. Those latter two numbers are pretty close to zero. Is it so hard to believe that a realistic future combination of fast automation and relatively slow GDP growth could cause them to turn negative?
So if we assume that automation destroys jobs, is it unreasonable to believe that someday automation will destroy jobs? No, Andrew, tautologies aren’t hard to believe.
But his antecedent is off: automation, and technology generally, doesn’t destroy jobs, it destroys job categories. Someday, the growth in manufacturing jobs might in fact turn negative, and automation might be part of the cause. However, the very savings those lost jobs created becomes demand for other jobs in other categories: service jobs, or retail jobs, or whatever.
Obviously, if it is your job that’s at risk, you should pay close attention. If you’re an orthopedist or a factory working or a car-insurance agent, you better be thinking what else you do if the machines make your current job obsolete. The good news is, there will be plenty of jobs out there — those people not buying car insurance and paying off medical bills will be eager to hire people for other stuff.
And really, we’ve been having this same argument for 200 years. The Luddite side, those who believe that technology causes unemployment, has been perfectly consistent in two ways over all those years: they’re always wrong, and they never give up.