The Technological Unemployment Problem

Jon Perry has written an interesting post listing some strategies for dealing with the Technological Unemployment Problem.

The Technological Unemployment Problem is the issue of technology replacing humans to the point that there is massive unemployment.

My own feeling is that there will be an increase in unemployment, which will mean a change in society. I think that a number of the proposed strategies will happen:

  • We will become a “Frugal Maker” society. Food will be grown using efficient techniques such as aquaponics. We will be using machines to produce goods for ourselves. People will use technology to reduce their discretionary spending.

  • People will also be augmenting themselves with technology in order to become more productive. You can see this already with smartphones and tablets.

Unfortunately I think that these changes will be accompanied by wide-spread social unrest.

2 Replies to “The Technological Unemployment Problem”

  1. Simplified and condensed analysis. Now try and make your views applicable to the millions laid off in the fast food industries. Quick let’s all augment these people so they’ll become “productive” again.

    I am not holding my breath. This will end very badly.

  2. Part I:Alright I guess I might as well try to get this addressed once again. Won’t lilkey get a response, but can’t hurt, right?I think that maybe you are overlooking the impact of a “structural” issue: The interest in the private sector to maximize profits through increasing productivity *as the direct result of reducing labor costs.* This is a matter of directionality. We see it all the time: I go into a Home Depot and look around for a knowledgeable employee to help me buy a pipe to repair my kitchen sink. I can’t find any, so I walk out in frustration without buying anything. An opportunity for cross-selling with some related product is lost. Or I buy the wrong product and return it eating up labor cost in the process of doing so (customer support for the return process, restocking the shelves, etc.). Compare that to walking into your mom and pop hardware store years ago when the old man behind the counter went to the back to get your part even before you finished describing the problem. Companies reduce employees and labor cost to create profitability even though in the process, productivity gain is marginalized. I would buy more products at Home Depot if I had better customer service. In the end, the company could make more profit and be more profitable through markup on selling more products to me, but they pass up that form of profitability because they see cutting labor cost as low-hanging fruit. This process necessitates an ever continuing upward pressure on unemployment. A more traditional model is that you take an existing ratio of employee cost to profit and increase the profit in an absolute sense by adding more labor and producing more product (of course, there is a limit to that approach). I think that model is less prevalent than it used to be. Why? One reason is probably because of an increased emphasis on maximizing the return to the employees at the top of the corporate ladder at the direct expense of employees further down the corporate structure as seen by the dramatic increase in the ratio of CEO salaries to the average worker’s wages. This change is a manifestation of a larger shift in business methodology that filters down throughout all levels of business models: There is less emphasis on selling a product for a good price and more emphasis on creating a balance sheet that attracts investors because employees at the top of the chain benefit directly from stock performance. The value of leveraging the input of human capital as a benefit to the company has been diminished. Within certain bounds, increasing the $ in profit can be obtained in various ways. One way is to hire more employees and produce more product.

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