Wednesday, August 12, 2009

"Technological Unemployment" Redux

by the Sandwichman

A while ago, an anonymous commentator on this blog made the sage observation that the phrase "technological unemployment" is an unfortunate one and a distraction from the real issue -- "a feint to blame on technology what is simply a matter of economic policy."

The Sandwichman agreed with the point but was resigned to continue using the phrase. No longer. Last week in a Washington Post op-ed, Gregory Clark demonstrated the utter infelicity of the idea behind the phrase. In Clark's fevered imagination, robots were on the brink of permanently displacing human labor of the more ordinary sort and the only solution was to increase taxes on the "winners" to support the "losers".
So, how do we operate a society in which a large share of the population is socially needy but economically redundant? There is only one answer. You tax the winners ... to provide for the losers.
Clark's dystopian musings evoked a colossal harrumph from the usual free marketeer suspects such as Will Wilkinson and Tim Worstall, including the charge that Clark committed a lump of labor fallacy.

In this case, the Sandwichman upholds the objection. Clark commits the fallacy! Perhaps he got his future scenario from the Flight of the Conchords send up:
The distant future, the year 2000...

The future is quite different to the present.
Yes, what with there being no more stairs and all.
And most importantly, no more humans.
Finally, robotic beings rule the world.

The humans are dead,
The humans are dead.
We used poisonous gases
And we poisoned their asses.
The humans are dead.
(Yes they are dead.)
The humans are dead.
(I confirm they are dead.)
It had to be done
(They look like they`re dead)
O.K., let's reboot this untechnological unemployment misnomer.

Technology doesn't destroy jobs. What technology does is make possible and make necessary either increased consumption, increased leisure or both. Unemployment results not from a quantity of jobs deficit but from an adjustment deficit. Unemployment results, that is to say, from a failure to establish a new income, consumption and work time regime commensurate with the new production potential offered by the technological advance.

Furthermore, adjustment is no more "automatic" than is technological change. Hello? Has anyone ever heard of "patents"? Or of government financial subsidies to research and development. On the contrary, adjustment should be considered an inherent part of the reciprocal process of technological innovation.
Why it is not treated as such by so-called economists is a question 26,000,000 unemployed and underemployed Americans deserve an answer to.


run75441 said...


I am curious as to how you derived the 26MM people unemployed and underutilized. U6 is ~13% or ~20MM (Civilian Labor Force) and Shadow Stats at ~20.5% comes in at ~30MM.

Been following your posts on Chapman, Labor, and Unemployment. Thank you.

Sandwichman said...


U6 in July was 16.8%, which I calculate as roughly 26.5 million. That still doesn't account for people working full time at jobs that don't fully use their qualifications.

And thank you for appreciating the Chapman posts.

Rdan said...


Thanks for the U6 reference. If you can put together the string of posts on Chapman, I will be glad to pass them along to our readers.

Anonymous said...

What color was Sojourner Truth's unemployment line...

run75441 said...


I must have been reading something else when I was looking at the U6 numbers. You are right . . . "unfortunately." Too bad it is that high.

Sandwichman said...


Actually, if you add up the raw totals rather than calculating from the reported percentages, as I did -- and IIRC I used the seasonally adjusted 16.3% rather than the unadjusted 16.8% when I did my calcs -- the total is even higher: 30,500,000, not seasonally adjusted. That's roughly 15,000,000 unemployed; 9,000,000 economic part-timers; and 6,000,000 discouraged or 'marginally attached'.

Anyway, it's huge.

Tim Worstall said...

"Unemployment results not from a quantity of jobs deficit but from an adjustment deficit"

Good grief, that's almost Austrian of you......if you go on to make the point that recessions are those periods of adjustment.

We'll have you harrumphing along with the usual free marketeers sson enough.....

reason said...

But Tim - he did say something about adjustment not being automatic.