Are the robots taking enough jobs?

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automationThe Bank of England’s chief economist, Andy Haldane, has warned that new technologies could replace up to 15 million British jobs.
As I blogged, last week, he went as far as to openly wonder whether the Luddites “had a point after all”. And it turns out he wasn’t the only prominent central banker to be fretting about this.
Speaking in London, the governor of the Bank of Italy, Ignazio Visco, trod much the same ground. Both policymakers are taking the threat of computerisation – leading to high unemployment, suppressed wage growth and rising inequality – seriously.
They aren’t the only ones. Berkeley professor Brad Delong has, as Haldane noted, pondered whether just as the 1910s saw “peak horse” in the US economy, we may be approaching “peak human”. If computers can, in the future, do many of the tasks now reserved for people, will the economy require as many workers?
Historically and over the longer term, waves of new technology have created as many jobs as they have destroyed.
The “displacement effect” of labour-saving technology (the fact that by its very nature, labour-saving technology means that fewer workers are needed) has been out-weighted by the “compensation effect”. That is to say, the rising level of productivity has pushed wages higher, creating demand for new goods and services and ultimately, new jobs.

Is this time different?
Of course this time might be different, the next wave of labour-saving technology looks to be replacing human brains, rather than human brawn, and the impact could be far more wide-reaching.
And, even if this time isn’t different, then the adjustments caused by rapid change have, in the past, led to a generation or more of economic pain. A generation is of course a long time and one worth policymakers taking seriously.
Haldane speculated on some possible policy responses last week under the broad headings of relax, retrain and redistribute. Rising productivity and falling demand for (human) labour could be met by a (considerably) shorter working week: that’s the relax option.
Or efforts could be put into retraining those whose jobs are lost. Perhaps most radically, he returned to the theme of corporate governance, or how companies run themselves. This is a topic he discussed in a Newsnight interview with me this summer.

Source: bbc

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