AI, Tech Innovations Unlikely to Result in Job Losses

Suddenly, there is a lot of debate on whether Industry 4.0 with a strong underpinning of AI and machine learning is going to result in large scale unemployment. This seems a bit odd because neither technology nor automation are twenty-first century phenomena.

The battle between man and machines goes back centuries. At one point in time, the worry was whether spinning machines would replace weavers and whether steam engines would edge out horse carriages. In more recent times, we have moved on to worry about the impact of self-driving cars, automated checkout counters and other applications of Artificial Intelligence. The central theme of the debate has always revolved around whether technology is replacing humans or just easing workload.

The debate has often been lopsided and has focused on job losses induced by technology changes simply because these tend to attract more attention, and the cause-effect factor is more pronounced here.

On closer examination, you will find that most innovations in technology have been about being able to do something that could not be done before; or doing something on a scale not seen earlier. They have rarely been about completely replacing what one individual was doing. Take the case of the famous “Spinning Jenny”. Weavers went out of business as a result but this innovation helped clothe the world, to a degree that would not have been possible otherwise. The price of clothing dropped to such a low level that even the poor could afford clothing. Steam engines put horse carriages out of business but reduced the cost of transport. So much so, that along with subsequent innovations, it transformed the world into a global village. It allowed people to travel further and take up work far from their places of birth. This transformation would not have been possible with horse carriages. 

Earth digging machines, along with dynamite, did not replace human labor. On the contrary, they helped humanity build dams and skyscrapers that would otherwise not have seen the light of day. Bigger projects such as the Suez and Panama canals were then undertaken and the need for human labor grew at an unprecedented rate. Most innovations in the field of medicine resulted in more advanced procedures and treatments than were conceivable earlier. This created room for the growth of super-specialty hospitals along with employment for doctors, nursing staff, technicians, and medical equipment manufacturing staff.

What the apostles of doom are missing

This brings us to a very interesting point: the apostles of doom have ignored the most important variable in the whole equation, which is the elasticity of human needs. They assume that human needs are limited and the number of jobs fixed. They see human society playing a zero sum game. Therefore, if an individual is replaced by a machine, it is one job lost. The reality is that human needs are infinitely, and I repeat infinitely, elastic. When one need is fulfilled, many new needs are created. Without this phenomenon, life would be one boring affair. The other phenomenon that these apostles are missing is that one innovation spawns another, resulting in a continuous web of innovation. This web of innovation is continuously, and rapidly, enlarging the pie of goodies available to society. 

In Conclusion

However, new jobs are replacing old jobs. And new skills are replacing older skills. The risk of existing skills (and therefore professions) being replaced by new skills (and professions) has always been there. However, when one avenue closes, others open up. While there will be short term winners and losers at a micro level, at a macro level, technological advancements and innovation will continue to benefit society even when they end up creating intelligent machines and algorithms.

I am with Peter Thiel when he says that machines created by humans are most likely to complement what humans do and not replace them. This has always been the case, and I believe, will be true in the future as well.

This article first appeared in The Times of India 19 June 2019 https://timesofindia.indiatimes.com/business/india-business/ai-tech-innovations-have-short-term-impact-on-jobs/articleshow/69859972.cms