tl;dr Technology creates efficiency and leverage. The rise in automation serves to empower the workforce just as machinery, electricity, and computing did previously.
At a wedding reception dinner recently, I engaged in a fascinating conversation with a good friend. The conversation was spurred by the report that Uber will replace drivers with self-driving cars. The debate was whether the self-driving cars will destroy taxi driver jobs. Here is the gist of my argument.
Recall that Luddites were first born in the Industrial Revolution’s as “textile artisans who protested against newly developed labour-saving machinery”. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, written by Erik Brynjolfsson an MIT economist, paints an interesting perspective for modern Luddites. Technology universally improves economic standard of living. The net effect can be difficult to understand, as the first order will be an automation of manual jobs.
Brynjolfsson argues that the key to growth and prosperity is to “race with the machines”. He presents many examples where continued progress with digital technologies fundamentally improves society. Technology creates wealth in the way Paul Graham defines it – “stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on.”
But like the Industrial Revolution, which took generations to improve the steam engine, it will take time for industry to embrace new digital technology. Remember Time magazine declared the personal computer its “Machine of the Year” in 1982. For anyone interested, Professor Brynjolfsson’s TED Talk, The key to growth? Race with the machines is a provocative response to Robert Gordon’s The Death of Innovation and the end of Growth.
In Kevin Kelly’s 2012 Wired article, Better than Human: Why Robots Will – And Must – Take Our Jobs, highlighted the same premise. Embracing the technological changes and leveraging new abilities will create unimagined jobs much in the same way the Industrial Revolution transformed society.
Similarly, Marc Andreessen recently had a flurry of “robots eat the jobs” tweetstorms. His argument, as Milton Friedman, human wants and needs are infinite – driving ever increasing demand, automation and technology leverage is fundamentally good – driving costs down for everyone, and finally humans will always be able to do things that technology cant.
Technology creates efficiency and leverage. Just as a loom enabled a textile worker to create higher quality goods, faster, modern technology platforms create leverage for individuals. Open source technology, public cloud infrastructure like AWS, established distribution channels like app stores, web search and ad networks enable a small team of engineers to create new companies for increasingly less capital. Automated technology will continue to serve as a force for greater efficiency and leverage whether it is Amazon’s delivery or Uber’s fleet of self-driving cars. For people who can understand and use it, technology gives the ability to create a leveraged amount of wealth beyond just manual labor.
In John Aziz’s Prepare Yourself for the Robot Economy Revolution, he argues “while robots may add exponential amounts of productivity to the economy, they will also cost human jobs, at least to begin with. Humans displaced from their jobs by robots will have to find new jobs in new fields, and that process may be slow and difficult. That means inequality between the rich and poor could remain stubbornly high as the rich capture the majority of the early gains from robotics.”
I’m less pessimistic. By 2020, nearly everyone will have a smart phone with a broadband connection to the internet. This technology means that there will be universal access to unlimited information and communication. Unfettered access to information and thus skill acquisition in a free market should drive new skilled labor, like the industrial revolution before.