1/17/2020

Is There a Technology Trap?

"The key elements of Keynes’ argument must be that either (1) labor displaced by technology in one area, such as agriculture or manufacturing, will find well-paid applications in other sectors, or (2) people will simply work less, and substitute paid work for leisure, or construct communities of meaning around voluntary group activities. And that’s a useful way of briefly summarizing the argument in C. B. Frey’s timely book, The Technology Trap. Frey argues that there is no evidence of effect #2. In fact, the work hours of the most highly paid members of society are going up, not down. And the evidence on effect #1 is even less promising, with wages rapidly declining or jobs simply disappearing in sector after sector. It’s not just that Keynes was wrong, but that we are on the verge of a job crisis, according to Frey.

His core claim is that the nature of the technology now being deployed is different from analogous technological changes in the past. For many centuries, improved “capital” mostly meant better tools, which improved productivity of people such as blacksmiths or shoemakers, increasing their wealth. The Industrial Revolution, on the other hand, because of its economies of scale, created dramatically increased inequality. My own go-to observation on this difference comes from Upton Sinclair, who said: “Private ownership of tools—a basis of freedom when tools are simple—becomes a basis of enslavement when tools are complex.”"