Will Technology Cause Massive Unemployment? The Lessons of History

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Posted: May 30, 2019 12:50 PM

“Experience keeps a dear school, yet fools will learn in no other.” — Ben Franklin

I must be some kind of fool because I’ve learned a lot from history and my own experiences on Wall Street over the past 50 years.

For example, I’ve learned to be skeptical of claims that automation and technology will cause massive unemployment. Yes, computers will replace jobs, but they also will create new jobs.

I remember reading an article in U.S. News & World Report in the 1960s about how “Automation Will Destroy Jobs.” Yet, new technology ended up creating more new forms of employment with the cost-effectiveness of labor-saving machines.

Joseph Schumpeter called it “creative destruction” — new technology destroyed old jobs but created more new jobs.

The introduction of automobiles in the early 20th century destroyed an estimated 623,000 jobs but created 7.5 million new jobs.

But, maybe it’s different this time?

In the past year, many pundits have suggested that the threat of job loss by computers is very real. In 2017, a report by the McKinsey Global Institute predicted that by 2030, as many as 800 million jobs could be lost worldwide to robots and computers. Of course, the consulting firm McKinsey claimed that technology also will create new jobs, but will it be enough to offset the millions of losses?

Now we are getting some answers. The latest cover story (May 31, 2019) of The Economist magazine headlines, “The Great Jobs Boom.” The newspaper reported that the Organization for Economic Cooperation and Development (OECD) world is enjoying “a jobs boom of unprecedented scope.” Moreover, average wages are going up.

Regarding automation, The Economist states, “Across the OECD as a whole, a jobs apocalypse carried out by machines and algorithms, much feared in Silicon Valley, is nowhere to be seen.”

Why? According to The Economist, “populations are becoming more educated. Websites are more efficient at matching vacancies and qualified applicants. And even more women work.”

It also points out that welfare reform has also led to new employment.

Good investing, AEIOU,

Mark Skousen

Meet Vince Foster, Chairman of MAIN, in Person at FreedomFest!

Main Street Capital Chairman Vince Foster — Image courtesy of Main Street Capital

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You Blew It!

Boycott Slideshow Ads

An online news item caught my attention with some sad news about the Osmond family.

But as soon as I clicked on the page to read the story, I realized I was caught in another one of those idiotic time-consuming slideshow ads that force you to go through a dozen short slides before finding out the “sad news.” What a rip off.

Advertisers and publishers like AOL and Facebook love slideshows and the “next” button because they generate tons of advertising revenue. This is another example of a disconnect between what businesses want and what consumers want. We want content that is presented simply instead of being broken up into small, artificial chunks.

As one critic states, the readers “love the photos and information in slideshows, but the incessant clicking that is required to get to the end and the annoying ads that pop up in the middle all make for a bad user experience — and lessen the likelihood they will share it.”

Similarly, people who watch YouTube videos are often forced to watch a short ad before the actual video starts. This was annoying. Publishers have solved the problem by allowing you to “skip the ad” after a few seconds. They should do the same for the slideshows — allow us to skip to the final frame for the headline story.

Until they do that, I’m boycotting all slideshows, no matter how enticing the headline. If it’s real news, I can simply google the story.

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