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If there is one thing people seem to agree on in these tumultuous times, it is that a root cause of much of the tumult is the emergence of revolutionary new technologies that are roiling labor markets as never before. Technologists themselves concede this point. “The pace of technical change is accelerating,” says a leading scientist in the field of artificial intelligence, in an apparent understatement. Indeed, many economists view the prospect of continuing breakthroughs in AI to be cause for genuine alarm. One Nobel laureate argues, “we are beginning a gradual process whereby over the next 30-40 years many people will be displaced, creating massive problems of unemployment and dislocation.”
Business leaders have alerted the White House to this issue, with one group writing that “a new era of production has begun,” in which there may soon be no more need for a vast pool of workers. These alarms have touched a nerve in the administration. The Secretary of Labor says forebodingly, “we must ask ourselves, is automatic machinery … going to leave on our hands a state of chronic and increasing unemployment?” It’s a problem that is clearly on the president’s mind, too. “I regard it as the major domestic challenge,” he said in a press conference, “to maintain full employment at a time when automation, of course, is replacing men.”
But before we go on: That president was John F. Kennedy, speaking in 1962; the Labor secretary was James Davis, who was serving under President Calvin Coolidge in 1927 when he wrote those words; the business leaders were the so-called Ad Hoc Committee on the Triple Revolution, writing to President Johnson in 1964; the Nobel laureate was Wassily Leontief, writing in 1983; and the AI scientist was Nils Nilsson, who cited Leontief in a 1984 essay on “Artificial Intelligence, Employment and Income.”
They and many others before and after them have sounded alarms very similar to the warnings we hear today from the likes of Klaus Schwab, chairman of the World Economic Forum, who has taken stock of ongoing advances in AI, robotics and automation, and has concluded, “the speed of current breakthroughs has no historical precedent.” Except that it does—including the sweeping changes that came with the steam engine, the railroad, electric power, agricultural mechanization, the telegraph and telephone, the automobile, and commercial aviation, to name just a few. Leaps forward have always been disruptive, to be sure, yet labor markets have always adapted. So, before we give into fears that an eventual last human worker will have nothing left to do but turn out the lights, it is well worth remembering that we have seen this movie before, and it has never ended the way people expected it would at the time.
When Nils Nilsson observed in 1984 that “the pace of technical change is accelerating,” he argued that to prepare, “we must convince our leaders that they should give up the notion of ‘full employment’ as a goal for the postindustrial economic system.” This echoed an earlier assessment that mathematician, philosopher, and cybernetics pioneer Norbert Wiener issued in 1950: “Let us remember that the automatic machine … is the precise economic equivalent of slave labor. Any labor which competes with slave labor must accept the economic conditions of slave labor. It is perfectly clear that this will produce an unemployment situation, in comparison with which … the depression of the thirties will seem a pleasant joke.”
As economist George Terborgh made clear in his compelling 1966 book The Automation Hysteria, a common thread in this sort of foreboding over the years has been the mistaken notion that technology will make the economy so productive that it will outrun society’s capacity to consume—that is, only part of the labor force will need to work to produce everything that everyone else could ever need or want. So, the rest of the population, perforce, will have to remain idle. That has never yet come to pass, and it is unlikely ever to happen in the future. Yet the urge to prepare for it never seems to subside.
The president and chairman of U.S Industries, Inc., John Snyder, testified to the U.S. Senate in 1963 that, “it is entirely possible … we will have a permanent segment of our society unemployed, but which will have to be provided for.” And the following year, the Ad Hoc Committee on the Triple Revolution, in its letter to President Johnson, urged “that society, through its appropriate legal and governmental institutions, undertake an unqualified commitment to provide an adequate income as a matter of right.” These days, many in Silicon Valley are again supporting the idea of a universal basic income—and legislators are taking note. Meanwhile, in a further echo of Norbert Wiener’s half-century-old theory that machines are the equivalent of slave labor, luminaries such as Bill Gates have called for taxing robots, an idea that also has been gaining traction.
Let’s be clear: Universal basic income (a.k.a. “UBI”) is a bad idea. Automation does not raise unemployment rates (observe that the unemployment rate is currently just a tick above 4 percent), but UBI surely would, because it would both encourage people not to work and divert spending from activities that would create more jobs for people without them. And taxing robots is an equally bad idea. It would pump the brakes on technological progress by saddling it with a financial disincentive. We are far better off, as we always have been in the past, when we accelerate the pace of innovation.
The economist David A. Wells got it right in 1888 when he wrote, “while … cases of displacement of labor appeal most strongly to human sympathy, and pre-eminently constitute a field for individual or societary [sic] action for the purpose of relief, it should be at the same time remembered that the world, especially during the last century, has had a large experience in such matters… All experience shows that, whatever of disadvantage or detriment the introduction and use of new and improved instrumentalities or methods of production and distribution may temporarily entail on individuals or classes, the ultimate result is always an almost immeasurable degree of increased good to mankind in general.” This is because, as Senator Paul H. Douglas wrote in 1930, “improved machinery and greater efficiency of management do not throw workers permanently out of employment. Instead they raise the national income and enable the level of earnings and of individual incomes to rise.”
We certainly can and should reform worker-training and adjustment policies for the current era of technological change. But as the White House Council of Economic Advisors noted in 1964, “To yield to apprehension that the machine will become our master, that we are unable to absorb and adjust to rapid change, that we must deny ourselves the continued rise in material well-being that ever-growing knowledge and understanding place within our grasp and the increased freedom it brings to pursue higher goals—such a defeatist view is both unworthy of our heritage and unjustified.”