There Is Work To Be Done: AI And The Future Of Work

(Source: www.forbes.com)

Workers, policymakers, and the media are concerned with the idea that automation, or technological change, will displace millions of American workers—and they are partially right. Andrew Yang, an early 2020 Presidential hopeful is already running on the idea that “the robots are coming” – though the story is not so simple.

There have been, and will continue to be, technological breakthroughs that replace workers and reshape our economy. The next big worker-displacing technology is supposedly artificial intelligence (AI), which is thought to have the potential to replace millions of workers performing routine and menial tasks.

But those workers are only permanently displaced if we think there is a fixed amount of work to be done in the economy. This idea, which gives rise to the notion that an increase in the amount each worker can produce with the help of technology, actually reduces the total number of jobs an economy can support, is known as the “lump-of-labor fallacy.”

Think about the personal secretary. The advent of the computer, combined with advances in software, has lead to the decline of the profession. This undoubtedly displaced hundreds of thousands of workers. Do these workers permanently leave the labor market? Are those jobs gone forever, never to be replaced by other jobs?

If we think there is only a fixed amount of work to be done in the economy, we would rightly want to bash these machines. After all, they will take all the work! But that is not how the real economy functions. Despite automation, work is not going extinct.

First, our economy is a dynamic one. Every month, new jobs are created as other jobs are destroyed. When we read the monthly headline numbers from the U.S. on job creation, what we are seeing is the difference between jobs created and jobs destroyed.

In 2017, the economy destroyed 62.6 million jobs, but it also created 64.7 million—meaning that the economy added 2.2 million net jobs. The economy will continue to destroy specific jobs, but that is not necessarily a bad thing for the overall economy. On average, the economy destroys low-productivity jobs and replaces them with higher-productivity jobs—opening the door for higher wages and rising living standards. In the end, as a recent Deloitte report argues, technology creates far more jobs than it destroys.

Second, we do not know what the jobs of the future are. A generation ago, people would not have predicted that information technology (IT) jobs would be where they are today. It is clear from the media reports that the fear of destroying jobs sells. This narrative detracts from the reality: We can change the rules and ensure that automation serves the many rather than simply enriching the few.

Third, the mistaken belief that there is a set number of jobs in the economy misdirects public policies. Arguments are frequently made that we need to bring back old jobs or rejuvenate declining industries like coal–one of Trump’s favorite rally stumps. Given the destruction of communities in the wake of increased trade, not to mention the potentially sizable job losses in select communities associated with Trump’s new tariffs, and an economy transitioning away from coal and general manufacturing, such arguments are understandable. To be sure, the personal consequences from losing a job can be catastrophic. But policies directed to look backward instead of forward are deeply misguided.

The answer to Americans’ fear of robots is in building public policies for the future. Progressive Democrats have been waking up to this reality, arguing for true full-employment through a federal job guarantee, revisions of intellectual property law, public guidance in technological development, work sharing programs, and free higher-education.

The fatalism perpetuated by the lump-of-labor fallacy, inciting fear that the economy cannot create new and better jobs, leads to a decline in public pressure on policymakers to help create an economy with full employment and rising wages for all. Policymakers must recognize and adapt to the fact that the economy is dynamic, but also that getting the policies right is essential to the creation of new and better jobs. After all, the level of unemployment and wages in our modern economy is largely dictated by policy choices.

As long as there are unmet needs in society, there will be work to be done.

More Info: www.forbes.com

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