In this week’s Economist Free exchange column entitled “Remember the Mane”, Ryan Avent asks why productivity lagged while technology adoption is on the rise. Reading the article, I can’t help but wonder whether we are focusing on the right things.
Firstly, many commentators tend to lump all types of technological progress under one header, but this leads to rather blunt analysis. There are many types of automation for instance; sensors, machine learning and robotics, just to name a few. These affect the rate of replacement of labour and productivity differently within each industry.
With each passing year, the price of sensors as well as their sizes get smaller and smaller. At the same time, coupled with better computer processing power, the fields of machine learning and robotics are advancing in leaps and bounds. Sensors may replace factory workers in charge of checking for defective products or fruit sorters in the farms. On the other hand, better machine learning may one day replace accountants, lawyers and journalists. (Economists, of course, are irreplaceable and safe from automation.) Like so much in economics, we need more micro and less macro!
Secondly, what if we don’t view this issue from a Luddite vantage point and concentrate instead on the possibility that we don’t make the breakthroughs required for society to thrive. What if the government and politics, or a whole hosts of other factors get in the way and cause a slowdown in technology? What if self-driving for instance, gets such a bad reputation through a series of unfortunate events that it becomes socially unacceptable to implement? What if genetic engineering degenerates into a war of patent lawsuits and stalls?
Living with “less work” plus “more technology” is a clear trend. Although we should worry about both parts of that equation, we should perhaps put greater emphasis on how to ensure the “more technology” part remains sustainable instead of attempting to mitigate the consequences of “less work”.
Thirdly, we are still at the point where the economy is able to afford automation, which unfortunately, replaces those under employment or keeps the remaining unemployed. What if one day, the economy cannot sustain the renewal of technology despite the availability and innovation of new technology. Much has been written about potential solutions for the unemployed, e.g. UBI, taxing robots, reducing working weeks etc. However, something that has not come up before could be the crystallisation of old technology.
What would such a world look like? Well, picture Cuba that was once rich. In the 1960s they were driving the latest American cars, but after a sharp drop in purchasing power they’re still driving those cars well past their normal asset life. In other words, automotive technology has not advanced for fifty years on the island, it has crystallised. One could argue that if technology deflation happens at a faster rate than the rate of fall in earnings we can keep holding off this effect, but then again, who knows?