June 13, 2017

21st Century Automation: Is This Time Truly Different?



In recent years, a great deal has been written about the effect of automation on employment. On the one hand, the pessimists predict that we’re nearing a tipping point, where the wealth created by robots will be reserved for an elite few, while a permanent social underclass will remain forever unemployable. Alternatively, the eternal optimists portend that we are on the path to a post-scarcity world, and that the road ahead may be long, but the journey of a thousand miles begins with a single step. All in all, the optimists probably get a lot more right than the pessimists give them credit for. Unfortunately, much of that optimism tends to ignore the many bumps on the road to increasing abundance and, more importantly, disregards how those bumps could derail progress.

In a recent article for Reason, Ronald Bailey paints an optimistic vision of the future, reviewing much of the recent economic literature on automation and job dislocation. He concludes, as many others have, that although we can’t know what jobs will emerge in the future, the apocalyptic visions offered by technologists and pessimists are unlikely to emerge. Quoting the MIT economist David Autor, he answers the question of whether this time might be different:

Of course this time is different; every time is different. On numerous occasions in the last 200 years scholars and activists have raised the alarm that we are running out of work and making ourselves obsolete. …These predictions strike me as arrogant.

Bailey, in channeling Autor, has a point. More likely than not, it’s probably true that robots won’t eat all the jobs. As Marc Andreessen once wrote:

We have no idea what the fields, industries, businesses, and jobs of the future will be. We just know we will create an enormous number of them. Because if robots and AI replace people for many of the things we do today, the new fields we create will be built on the huge number of people those robots and AI systems made available. To argue that huge numbers of people will be available but we will find nothing for them (us) to do is to dramatically short human creativity.

Andreessen, too, gets a lot of this right. It may be true that this time isn’t fundamentally different and, like in times past, new jobs will emerge to replace those lost to automation. In fact, it’s highly likely that this will be the outcome of the wave of automation sweeping the world. Unfortunately, many optimists miss the broader picture baked into these discussions over the future of work. The debate is often cast between the “job elimination deniers” and the apocalyptic doomsayers, but there is a great deal of substance and nuance that is lost in such a (mis)characterization. The real questions are what the intervening period of dislocation looks like, who gets hurt the hardest, and what the short-term political ramifications of this dynamic transformation means for the people experiencing those changes first hand.

To answer those questions, it might be worthwhile to examine what things looked like the last time people thought “this time, things are different.”

The Real Problem is When—Not If—There Will Be Jobs

The First Industrial Revolution is widely cited as the genesis of the modern economic growth miracle. People often pay homage to that era as the point at which everything got better for most people. Broadly speaking, that narrative is accurate. But a closer examination of the early days of industrialization might lead us to hope that this time is, in fact, different.

The gains from the early 19th century didn’t materialize overnight. In fact, this period saw unprecedented social disruption, stagnant wages, uncomfortable adjustments to civic life, and greater environmental pollution for the people living through it. Quality of life and overall living standards during this time have been a hotly debated topic. Economists have long argued over how much the standard of living for the working class actually improved over the course of these decades. Writing at Econlib, Clark Nardinelli succinctly summed up this debate:

The standard-of-living debate today is not about whether the industrial revolution made people better off, but about when. The pessimists claim no marked improvement in standards of living until the 1840s or 1850s. Most optimists, by contrast, believe that living standards were rising by the 1810s or 1820s, or even earlier.

A 2013 article from The Economist echoed and expanded on this point, arguing that “while the Industrial Revolution ultimately led to big increases in wealth, progress was unsteady. For much of the period, the average person was not reaping the benefits of economic change.” For example, much of the early growing pains in Britain were the result of mass influxes of people into metropolitan centers (those “uncomfortable adjustments to civic life” mentioned earlier). The result was a very difficult era of adaptation, particularly as it related to public health. “In almost all British cities,” the article goes on, “mortality conditions in the 1860s were no better—and were often worse—than in the 1850s. In Liverpool in the 1860s, the life expectancy fell to an astonishing 25 years. It was not until the two subsequent decades that rises in life expectancy were found.”

The difficult experiences in expanding urban centers also resulted in significant social disorder, as evidenced by the emergence and popularization of socialist ideology during this period. The early 19th century saw Robert Owen export his theories of communal living to the United States, erecting an experimental community of non-propertied denizens sharing in the successes, and hardships, of socialist life. Charles Hall wrote “The Effects of CIvilization on the Peoples in European States” in 1805, criticizing what he viewed as capitalism’s negative effects on the working poor. In 1845, Friedrich Engels published “The Condition of the Working Class in England,” recounting his observations of daily life in mid-century Manchester, England. In 1848, he co-authored “The Communist Manifesto” with Karl Marx. That same year, Europe succumbed to the “Year of Revolution,” in which the continent was engulfed by revolutionary fervor and social upheaval. It was only in the years that followed that centrists and liberals finally saw their way to instigating piecemeal reforms that would help temper the fervor of socialism—at least temporarily.

In short, things were pretty bad until they started getting better. The growing pains were numerous and significant, and there was never any guarantee the state of affairs wouldn’t slip back to pre-Industrial levels or plateau and stagnate. If the early years of the Industrial Revolution were the origins of the unprecedented economic growth that has characterized modern times, they were also the period in which the ideologies that reflexively responded to the worst effects that growth wrought emerged. Europe muddled through, but the ideologies that emerged in the wake of industrialization would go on to imprison millions in economic stagnation for much of the 20th century.

Fascism. Socialism. Communism. Totalitarianism. All these ideas were incubated in the First Industrial Revolution. They were the long-term costs incurred by a world that failed to address the short-term problems created by 19th century progress. Fast forward to 2017 and we can see similar cracks in the social order beginning to swell.

Right-wing nationalism and populist uprisings are spreading across the Western world. From Donald Trump here in the United States to Hungary’s Viktor Orbán, the same social upheaval that culminated in 1848’s Year of Revolution is once again bubbling to the surface. While Mr. Trump and others on the populist right used global free trade as their lost jobs scapegoat, the evidence is pretty clear that it was the robots to blame. What happens when people start identifying robots and technology, not the Chinese, as the cause of their financial woes? While the long term vision of technological progress looks bright, what costs might the world suffer in 10, 20, or 50 years if we fail to address emerging concerns?

Conclusion

If the robot revolution helps fuel the continuing rise of populist reactionary politics here in the United States and abroad, that’s a bad thing. The same social turbulence that plagued the early days of the First Industrial Revolution could very likely return—and the state of technological progress could actually aggravate, rather than extinguish, the current political and social malaise.

Given current political trends, one could imagine a future where unemployment skyrockets, leading displaced workers to embrace increasingly populist politicians. That populism, in turn, could lead to any number of knee-jerk policy responses that inhibit, rather than accelerate, whatever gains may have resulted from automation. That’s why it’s so important to focus on policy prescriptions that can hedge against the worst-case scenarios, however unlikely, that may emerge due to automation. We shouldn’t simply write off these concerns because we’ve managed to muddle through periods of technological change in the past.

As The Economist article concluded, “[e]conomic history is not just about hard economics,  but also about how people experience economic change.” How people experience those changes will dramatically affect how they perceive the nature of progress. The more we can do to ensure that this time it is different for those most at risk, the more likely society will experience a smoother transition to a more prosperous world—for everyone.

In a follow up blog post, we’ll address some policies that can help ease that transition.