The arguments supporting Luddism, the belief that technology is eradicating jobs and creating unemployment, are getting subtler — but they’re still wrong.
Imagine you and your family are visiting a swimming pool, and the life-guard comes to have a talk with you. Your kids, he tells you, are at one end of the pool, and they are splashing all the water towards the other end.
You apologize for their disturbing the other bathers and tell him you’ll speak to them.
“That isn’t the problem,” the lifeguard continues. “The real problem is, they will pile all the water up at the other end of the pool.”
This is a rather confusing complaint. “What?”
“They are all at one end, and they’re splashing toward the other end. If they keep doing that, all the water will be piled up at that far end, and where they are standing will be dry.”
You check to see if the man is serious, but he appears to be. “But it’s water,” you point out. “It flows, it moves.”
“Of course, when someone splashes it. But there’s no one at the other end splashing back, so we are very concerned that they’ll empty their end.”
Now you begin to question the lifeguard’s sanity. “Have you ever seen that happen in the past?”
“We’ve had some concerns. A few months ago, some professional swimmers were practicing their kicks very vigorously.”
You try unsuccessfully to keep the sarcasm out of your voice. “Did the water all ‘pile up’ then?”
“No,” he admits reluctantly. “But that doesn’t mean it can’t happen.” Now it’s his turn to sound sarcastic. “Why? Do you believe there is some magic, invisible force keeping the surface of the pool flat and level?”
Well, yes, you do. Even if you don’t have a subtle understanding of gravity and fluid dynamics, it’s certainly your experience that water does “seek its own level”, that there is an invisible force keeping the surface flat and level.
Economics can be seen the same way. If “water”, the supply of labor (or anything else) piles up in one place, while there’s a “dry area”, demand freed up by technologically driven savings, in another, the two automatically find each other and cancel each other out. Well, not “automatically” — the buyers and sellers spend a great deal of effort finding each other, but they will do so and they don’t need help from the professional hand-wringers.
I’m going to push this swimming-pool analogy a little bit in order to rebut the second generation of Luddite arguments.
A friend of mine indignantly pointed out that Blockbuster, the video-store chain, had laid off thousands of people when it went under, but Netflix, the technological innovator that destroyed Blockbuster, only hired a few hundred. Blogger Martin Ford makes a more sophisticated version of the same argument by pointing out that wages for jobs running machinery are dropping.
Both these people are misunderstanding the situation.
To go back to pool analogy, it’s a fact of fluid dynamics that if you splash water, some quantity of the splash comes right back at you (try it). But that isn’t why a pool of water will stay level. Even if you invent some smooth, highly efficient technique of splashing water, you still cannot pile up water at one end of the pool.
Similarly, automation typically isn’t free: it needs people to design the machines, build them, install them, and operate them. That fact (or usually-true fact) is irrelevant to the always-true fact that technology doesn’t cause unemployment.
Even if some new labor-saving technology is utterly free and requires no expertise or labor to use, even if it creates no demand for labor in the particular industries it’s used in, even if it utterly eradicates any need for labor in its area of application, it still will not cause unemployment. If a technology (or anything else) frees up demand (by saving money, the point of the technology) and it frees up supply (by saving labor, the complaint of the Luddites), the supply and the demand will still inevitably find each other and cancel each other out.
Several of my commenters put their collective finger on a more plausible, if lesser, possible defense of Luddism. Imagine the splashing children in the analogy were replaced with a powerful outboard motor. If you watch an outboard motor run you can see that while it is actually running, it does create a “valley” in the water right behind the prop and a corresponding “hill” a little further away.
My commenters, of course, did not torture the analogy the way I have, to make their point. They just said, in effect, what if this time, it’s different. What if the economic dislocation that is caused by technological improvement becomes so powerful, so thorough, so fast, that it overwhelms the countervailing economic forces that up until now kept the country at near-full employment — just as the powerful thrust of the outboard’s prop pushed water up faster than gravity could pull it down.
This phenomenon isn’t (unlike most of the other propositions of the Luddites) utterly fictitious, but you can see how weak it is. Even in the modern world, technological change occurs over years and decades; finding new jobs can occur in days or weeks.
And unlike the outboard motor example, technological doesn’t only eliminate jobs. It also improves the efficiency with which new jobs are created and once created, found.
A Midlands textile worker in 1830 might very well curse the mechanized loom that put him out of work, but he should also have blessed the newspaper that could tell him about new jobs and should have blessed the new steam ships and steam locomotives that would carry him to new factories and carry the products of those factories to new markets. A travel agent today might be upset that online ticketers destroyed his vocation, but he should remember that online educators allow him to train for a new career, and online social networks and publishers allow him to find a job in that new career.
This balance, between the disruption caused by technological change and the improvements in calming the disruption, isn’t automatic the way the supply and demand are automatically in balance, but the experience so far is that improvement side is actually winning: it’s getting easier to find new jobs faster than old jobs are being chewed up. It might change in the future, but it might not.
There’s a third, much more interesting argument, about what might happen as technology gets better and better, but this column has already run on too long. I’ll just say, the third argument is right.