Friday, September 30, 2011

Outsourcing to Robots

Farhad Manjoo asks, "Will Robots Steal Your Job?" and says, "You're highly educated. You make a lot of money. You should still be afraid."  This is a longstanding fear that increasing productivity will impoverish us all.  So far in the past century it has increased leisure time and raised living standards.  It is ironic that people are afraid that productivity growth could create massive unemployment AND that the growing future population of unemployed senior citizens is another future trend to be afraid of.  However, the fear of productivity is due to a serious potential problem: inequality.  The reason unemployment is a huge social problem is due to the inequality it creates and productivity growth does raise an important question:  Who will get the gains of the productivity increases?  Sometimes the gains of technological improvement go to labor (like in the past century), sometimes they go to the landowners (like agricultural improvements in past centuries), and sometimes they go to the owners of capital (like some kinds of industrialization which replaced skilled occupations with largely unskilled workers).  In the future, there is more potential for greater consumption to run up against inelastic natural resource constraints whether they are water, fossil fuels, or some mineral.  Then the gains could mainly go to the owners of scarce resources rather than to labor.  Intellectual property could create artificial scarcity which increases inequality. 
Productivity growth need not increase inequality.  The 1940s-1960s featured high productivity growth and high equality.  The 1970s-2000s featured lower productivity growth and higher inequality again. 

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