Comment by crabbone
1 day ago
Well, it's the same problem with all sorts of free-market capitalism and derivatives. They all believe there's infinite "somewhere else" that resources can come from, or the customers, or the funding etc. But reality is very much finite. And so instead of the theoretical equilibrium we get monopolies and collusion to manipulate markets.
The article, actually, addresses your claims:
> The optimists will tell you this is just productivity gains. The economy has absorbed automation before; agricultural employment collapsed from ninety percent of the American workforce to two percent and civilization continued. David Autor at MIT has shown that roughly sixty percent of today’s jobs didn’t exist in 1940. New technologies create new categories of work. True. But there’s a difference between an observation about the past and a law of nature, and the optimists consistently confuse the two. The agricultural transition took a hundred and forty years. Carl Benedikt Frey at Oxford has documented that the Industrial Revolution took seventy years before wages and employment recovered for the workers it displaced. In the interim, wages stagnated, the labor share of income collapsed, profits surged, inequality skyrocketed, and the political consequences included the Chartist movement and widespread social upheaval. As Frey puts it: “Most economists will acknowledge that technological progress can cause some adjustment problems in the short run. What is rarely noted is that the short run can be a lifetime.”
So, the author believes that the problem with your reasoning that it will take a long time for the niches you are talking about to be filled (lifetime, maybe more), meanwhile things will look quite bad for most those involved.
I am even less optimistic than the author. The new aspect of this workforce displacement is the centralization. Of course, previous advances in automation also caused a degree of centralization, but AI is posed to become super-centralized if you will. There will be just a handful of suppliers and nobody will be able to challenge them, similar to situation we have with microprocessors today. Needless to say this is absolutely not a healthy situation for the world's economy.
Carl Benedikt Frey at Oxford has documented that the Industrial Revolution took seventy years before wages and employment recovered for the workers it displaced.
I can’t imagine what claim this sentence is intending to describe.
Obviously individual workers can’t “recover” their wages: 70 years later they’re no longer working.
It also can’t make sense as a recovery of labor in displaced industries, since those are largely gone once they’re supplanted by labor-saving technology.
It means it took 70 years for the average income and employment rate of socio-economic class of people who used to work those jobs (presumably formulated as some percentile of society by income) to rise back to the the same level.
Employment rates are weird bags of demographics and culture (think women’s rate of workforce participation) as well as economics, so I’m not sure how you extract that particular signal.
70 years to restore income levels across any strata is still not plausible: Even godawful economic growth would compound way too much. Maybe relative share of income for some decile? But now we’re back to asking why we should care about that if absolute real incomes are rising.
I guess I have to go find the research.
I read it, but I don't think it's compelling. "the short run can be a lifetime" is kind of a throw away phrase not backed by evidence.
We've seen rapid growth of knowledge work at the same time as increased productivity, and there doesn't seem to be any compelling reason that greater productivity will reverse this persistent trend.