Job Loss to Technology

Today it is pretty much accepted that technological development at an ever increasing rate has displaced and will continue to displace workers. Automation is replacing workers on the factory floor and artificial intelligence is replacing clerical, engineering, finance and management personnel. More and more mining is done by machines, assembly by robots and soon driverless vehicles will be transporting people and goods. The optimistic view is that as in the past, the new technologies will create new jobs. I’m not so optimistic. The loss of these jobs on the surface looks like something that will only affect the working classes. However, in reality, it will affect everyone. The profits will initially increase as the productivity improves but ultimately, without money in the hands of the population as a whole to spend on widgets manufactured at ever greater efficiency, profits will drop. (A teacher asked one of my ten year old grandson’s class what would they do if they had all the money in the world. To this my grandson replied that he would not want to have all the money because then people would not have money to buy the stuff they need to make the things he would want to buy.) I attended a seminar about 30 years ago headed by Edward Deming, the person who introduced statistical quality control to Japan and who, through that effort, made a significant contribution to Japans growth in the seventies and eighties. In his presentation he pointed out that automation only makes sense if there is a labor shortage or it improves quality. Across the globe today we are far from a labor shortage. The Conservative’s claim that a tax cut for corporations and the wealthy will create jobs reminds me of the mantra back not too many years ago calling for more money in the hands of “job creators”(the wealthy), as a way to create jobs. In my mind the real job creators are the customers of Wall Mart and the like, since their demand is what creates jobs. In all my experience running a manufacturing company I never had a banker or a potential investor ask what we paid for taxes but how are we going to grow our customer base and how will we differentiate our product and service. I have proposed a couple of solutions in previous posts like all workers in an enterprise sharing in its profits so that as efficiency improves so does their buying power. There is nothing sacred about the forty hour work week so also reduce hours as efficiency improves. Henry Ford, the father of the production line, recognized that it didn’t do much good to make cheap cars if the masses couldn’t afford to buy them and increased salaries on the production floor to get enough money into the hands of his employees to buy the cars they mass produced. Another post suggested instituting a universal draft and making a key function of the military, not war, but to do all the work that no one wants to do that is needed to make people’s lives better and more interesting and thus greatly reducing the amount of labor in the market, increasing the demand and raising its value. There is no question in my mind that technology will displace workers in manufacturing but significantly those in administrative, engineering and management jobs. Currently our administration is focusing on red herrings instead of the real issue. They want to renegotiate trade agreements, ignore climate change and increase coal mining just to name a few. Instead they should be working tirelessly on strategies for increasing money in the hands of the masses during a time when technology is rapidly improving efficiency and the world population is continuing to grow. To do this effectively will require cooperation with all our neighbors and not nativism and isolation. If not, we will solve the problem through massive world wars thus improving the labor market by building more weapons, increasing the size of military and loosing soldiers on the battle fields and civilians in their homes.