Recently there has been a number of books and articles written about the end of the work including one in the Atlantic called World Without Work or the book Rise of the Robots.
It’s a problem that I have been thinking about for a long time and to me its probably the greatest economic threat facing the Western world. For the past few years one of the major issues topic of discussion has been the rising income disparity in most western society. While the problem has been discussed, not enough effort has been directed at understanding the causes of the problem. While a clear and immediate cause has no doubt the drop in income taxes and estate taxes. However that only explains part of the problem, another part of the problem is no doubt the percent of the economy that the Financial sector takes which has risen from from 2% to 6%. Much of the rise of the financial sector was made possible only because of computers. No one could be making any money doing high speed trading if it was not for computers, and there could be no mega banks without their computer systems.
The largest culprit however, is the raising roll of computers in society. Whether it’s replacing factory line workers, the book store workers who no longer have jobs because of Amazon, or even the para legals who are now being replaced by computer programs, the world needs less workers to do more. Today, there are few jobs that cannot be replaced by computers. This has resulted in a fundamental shift in the balance between Capital and Labor. For centuries there has been a balance between the two, to create products you needed both- labor needed capital to buy equipment- capital needed workers to produce the products so there remained a balance between the two.
Today with enough capital you can accomplish almost anything. Very few people with very little infrastructure, can accomplish very much. Google is an example of that shift- Profits that were distributed over hundreds of newspapers and tens of thousands of workers are now concentrated in the pockets of Google who now earns more then the whole newspapers industry together all thanks to its massive computing power and brilliant algorithms.
Many times in the past people have lamented new technologies and the jobs that have been lost. I believe that this time it’s different, we are not expanding the muscle power of humans, by giving them mechanized plows or making them move faster by giving them trains and planes, we are replacing the human brain with the fruit of technology.
The politicians of the world spend their time debating, lowering or raising taxes, tariffs and trade agreements, while missing the much larger story right in front of us. The implications of these shifts are too large to fully calculate, but require serious examination. They will also require a complete change in our social and economic policies. It will not be enough to just retrain workers we will need to rethink the very nature of work and income.
This past week I had to pre tape my weekly radio appearance, which usually covers Foreign Affairs, but since we did not know what would happen in intervening days we decided to talk about the future of work instead.