Technological progress isn’t always a good thing.
A paper out this month concludes smart machines, such as robots, have the potential to destroy good-paying jobs and damage the economy.
“In other words, technological progress can be immiserating,” Boston University’sSeth Benzell, Laurence Kotlikoff and Guillermo LaGarda, and Columbia University’s Jeffrey Sachs write.
The study, “Robots are Us: Some Economics of Human Replacement,” is careful to note that’s not the only possible outcome. But it does predict a long-run decline in labor’s share of income, a cycle of tech booms and busts, and a growing dependency on past software investment rather than continued.
Economists have long debated the role of technology and the future of the economy. And clearly automation is playing a bigger and bigger role in daily life.
Messrs. Benzell, Kotlikoff, LaGarda and Sachs look specifically at the creation of software code that powers machines used to produce goods–that is, robots. Their worry is that the stock of good code will grow during a boom to the point that the demand for new code will decline, leading to lower wages in the high-tech field. That, in turn, means less savings and investment, and the accumulation of fewer assets.
“The long run in such a case is no techno-utopia,” the authors say. “Yes, code is abundant. But capital is dear. And yes, everyone is fully employed. But no one is earning very much.”
During the ensuing bust, consumption falls and not enough capital accumulates for the next round of investment.
“In short, when smart machines replace people, they eventually bite the hands of those that finance them,” the authors say.
Read more » The Wall Street Journal
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