Automation and Future Unemployment


The impact of cheaper and more sophisticated forms of automation has recently been examined in this report by two researchers from Oxford University’s Programme on the Impacts of Future Technology:

CarlBenediktFreyandMichael A. Osborne, “TheFutureofEmployment: How Susceptible are JobstoComputerisation?,” September 17, 2013.

Some summaries of the report can be read here:

JoshLieberman, “HalfOf U.S. Jobs Are AtRiskOfComputerization: Which 10 Are TheLeastSafe?,”, September 25, 2013.

MarkHoffman, “Study: HalfofAllUSJobsCould Be atRiskofComputerisation,”, September 27, 2013.

NearlyhalfofUSjobscould be atriskofcomputerization, Oxford Martin Schoolstudyshows,” September 19, 2013

RichardEskow, “The Robots Are ComingNowWhat?,” September 26, 2013.

MichaelSnyder, “OxfordProfessors: Robots AndComputersCould Take Half Our Jobs Within The Next 20 Years,” September 29, 2013.

Their main conclusion is that 47% of US jobs might be lost owing to automation in twenty years, with similar trends in many other nations.

Also, they conclude:

“Our model predicts that most workers in transportation and logistics occupations, together with the bulk of office and administrative support workers, and labour in production occupations, are at risk. These findings are consistent with recent technological developments documented in the literature. More surprisingly, we find that a substantial share of employment in service occupations where most US job growth has occurred over the past decades …, are highly susceptible to computerisation. Additional support for this finding is provided by the recent growth in the market for service robots … and the gradually diminishment of the comparative advantage of human labour in tasks involving mobility and dexterity.”
Carl Benedikt Frey and Michael A. Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?,” September 17, 2013. pp. 43–44.

And also of interest was this part of the paper:

“Our paper is motivated by John Maynard Keynes’s frequently cited prediction of widespread technological unemployment ‘due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour’ (Keynes, 1933, p. 3). Indeed, over the past decades, computers have substituted for a number of jobs, including the functions of bookkeepers, cashiers and telephone operators … . More recently, the poor performance of labour markets across advanced economies has intensified the debate about technological unemployment among economists. While there is ongoing disagreement about the driving forces behind the persistently high unemployment rates, a number of scholars have pointed at computercontrolled equipment as a possible explanation for recent jobless growth.”
Carl Benedikt Frey and Michael A. Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?,” September 17, 2013. pp. 43–44.

While it is absurd to deny that the surge in unemployment across the Western world since 2008 has been fundamentally caused by the aggregate demand shocks stemming from the Great Recession, nevertheless there would appear to be underlying structural unemployment problems caused by automation as well.

Market economies have no tendency to full employment equilibrium, and there is no necessary reason to think that the issue of structural unemployment will be solved by magic market solutions.

And there are also other issues: with the fall in prices and factor input costs, possible commodity deflation could put downward pressure on wages in other industries, which means debt deflationary problems as goods prices, wages, nominal debt and asset prices are grossly distorted in relation to one another.

The solution to these problems is: full employment macroeconomic policies, maintaining of a basic level of income for all (especially the unemployed), and policies to detect and deal with debt deflation.

Keynes, J. M. 1933 [1930]. “Economic Possibilities for our Grandchildren,” in John Maynard Keynes, Essays in Persuasion. Macmillan, London. 358–373.

Frey, Carl Benedikt and Michael A. Osborne, “The Future of Employment: How Susceptible are Jobs to Computerisation?,” September 17, 2013.

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