Will automation take away all our jobs? | David Autor

Introduction

The speaker introduces the topic of automation and its impact on employment.

Automation and Employment

• In the 45 years since the introduction of ATMs, the number of human bank tellers employed in the US has roughly doubled.

• Many inventions over the last 200 years were designed to replace human labor, yet there are still many jobs.

• The fraction of US adults employed in the labor market is higher now than it was 125 years ago.

Why Are There So Many Jobs?

The speaker explains two fundamental economic principles that determine why there are still so many jobs despite increasing automation.

The O-ring Principle

• Automating some tasks doesn't make other tasks unnecessary; it makes them more important.

• Most work requires a multiplicity of skills, technical expertise, intuitive mastery, perspiration, and inspiration.

• As routine cash-handling tasks receded due to ATMs, bank tellers became less like checkout clerks and more like salespeople.

The Never-get-enough Principle

• Human insatiability or greed determines how many jobs there actually are.

• As productivity increases due to automation, people's wants and needs also increase.

• People always want more goods and services than they can afford.

Conclusion

The speaker concludes by summarizing his explanation for why there are still so many jobs despite increasing automation.

Key Takeaways

• Automation doesn't necessarily eliminate jobs; it changes them by making certain skills more valuable.

• People's insatiable wants and needs ensure that there will always be demand for new goods and services.

An Ingenious Metaphor for this Tragic Setting

The speaker introduces the concept of automation and its impact on employment. He uses a metaphor to describe the current state of affairs.

Automation and Wealth Creation

• Automation creates wealth by allowing us to do more work in less time.

• There is no economic law that says we will use that wealth well, which is worth worrying about.

• The challenge is not that we're running out of work. The US has added 14 million jobs since the depths of the Great Recession.

Two Countries, Two Outcomes

• Norway and Saudi Arabia are both oil-rich nations, but they haven't used their wealth equally well to foster human prosperity.

• Norway invests in building a society with opportunity and economic mobility while Saudi Arabia raises living standards while frustrating many other human strivings.

• The difference between these two countries is not their wealth or technology but their institutions.

Employment Polarization

• Employment growth in the United States looks like a barbell with increasing poundage on either end of the bar.

• High-wage jobs like doctors, nurses, programmers, engineers, marketing and sales managers have robust employment growth as do low-skill jobs like food service, cleaning, security, home health aids.

• Middle-class jobs like blue-collar production and operative positions and white-collar clerical and sales positions are shrinking due to automation's ability to codify rules and procedures increasingly executed by computers.

• This phenomenon creates what economists call employment polarization which knocks out rungs in the economic ladder shrinks the size of the middle class and threatens to make us a more stratified society.

Encouraging News

• We have faced equally momentous economic transformations in the past, and we have come through them successfully.

• In the late 1800s and early 1900s, when automation was eliminating vast numbers of agricultural jobs, the farm states faced a threat of mass unemployment.

• Rising to this challenge, they took the radical step of requiring that their entire youth population remain in school and continue their education to the ripe old age of 16. This was called the high school movement, and it turned out to be one of the best investments the US made in the 20th century.

The Importance of O-Rings

In this section, the speaker discusses the importance of institutions and the O-ring production function.

The O-ring Production Function

• The O-ring production function is a series of interlocking steps where every link must hold for the mission to succeed.

• Improvements in the reliability of any one link in the chain increases the value of improving any of the other links.

• The reason why the O-ring was critical to space shuttle Challenger is because everything else worked perfectly.

Never Get Enough

In this section, the speaker talks about how technology can eliminate jobs and how it affects our economy.

Technology and Jobs

• If any link fails, then everything comes crashing down.

• Technology can eliminate jobs, but what's true about a single product or service or industry has never been true about the economy as a whole.

• As automation frees our time, we invent new products, new ideas, new services that command our attention, occupy our time and spur consumption.

Material Abundance

• Material abundance has never eliminated perceived scarcity.

• Invention is the mother of necessity.

Two Principles to Consider

In this section, the speaker introduces two principles that need to be considered.

The Two Principles

• The first principle is that automation and technology are increasing productivity and making our lives easier.

• The second principle is that investing in education and skills is crucial for a prosperous society.

Our Fates Are Decided by Us

This section discusses how our fates are not decided by machines or the market, but rather by us and our institutions.

Our Fates Are Decided by Us

• Investing in education and skills a century ago with the high school movement made America a more prosperous society.

• Our fates are not sealed by machines or the market, but rather by us and our institutions.

Technology Magnifies Our Leverage

This section explains how technology magnifies our leverage, increases the importance of our expertise, judgment, and creativity.

Technology Magnifies Our Leverage

• Technology magnifies our leverage, increases the importance of our expertise, judgment, and creativity.

• Endless inventiveness means there's always new work to do.

Adjusting to Technological Change

This section discusses how adjusting to technological change creates real challenges seen most clearly in polarized labor markets.

Adjusting to Technological Change

• Adjusting to the rapid pace of technological change creates real challenges, seen most clearly in our polarized labor market and the threat that it poses to economic mobility.

• Rising to this challenge is not automatic, costless or easy. But it is feasible.

The Future Is Not Decided by Us

This section discusses how every time is different and how predictions about running out of work are arrogant.

The Future Is Not Decided by Us

• Every time is different. Scholars and activists have raised the alarm that we are running out of work and making ourselves obsolete on numerous occasions in the last 200 years.

• These predictions strike me as arrogant. These self-proclaimed oracles are saying if they can't think of what people will do for work in the future, then you, me and our kids aren't going to think of it either.

• The speaker doesn't know what people will do for work a hundred years from now but hopes humanity finds something remarkable to do with all its prosperity.

A Farmer's Perspective

This section discusses how a farmer's perspective on progress has changed over time.

A Farmer's Perspective

• If an economist from the 21st century teleported down to a farmer in Iowa in 1900 and said agricultural employment would fall from 40% to 2%, purely due to rising productivity, what would happen?

• The speaker hopes he would have had the wisdom to say "Wow, a 95% reduction in farm employment with no shortage of food. That's an amazing amount of progress. I hope that humanity finds something remarkable to do with all of that prosperity."