Essay by Benedict Evans: “…We should start by remembering that we’ve been automating work for 200 years. Every time we go through a wave of automation, whole classes of jobs go away, but new classes of jobs get created. There is frictional pain and dislocation in that process, and sometimes the new jobs go to different people in different places, but over time the total number of jobs doesn’t go down, and we have all become more prosperous.
When this is happening to your own generation, it seems natural and intuitive to worry that this time, there aren’t going to be those new jobs. We can see the jobs that are going away, but we can’t predict what the new jobs will be, and often they don’t exist yet. We know (or should know), empirically, that there always have been those new jobs in the past, and that they weren’t predictable either: no-one in 1800 would have predicted that in 1900 a million Americans would work on ‘railways’ and no-one in 1900 would have predicted ‘video post-production’ or ‘software engineer’ as employment categories. But it seems insufficient to take it on faith that this will happen now just because it always has in the past. How do you know it will happen this time? Is this different?
At this point, any first-year economics student will tell us that this is answered by, amongst other things, the ‘Lump of Labour’ fallacy.
The Lump of Labour fallacy is the misconception that there is a fixed amount of work to be done, and that if some work is taken by a machine then there will be less work for people. But if it becomes cheaper to use a machine to make, say, a pair of shoes, then the shoes are cheaper, more people can buy shoes and they have more money to spend on other things besides, and we discover new things we need or want, and new jobs. The efficient gain isn’t confined to the shoe: generally, it ripples outward through the economy and creates new prosperity and new jobs. So, we don’t know what the new jobs will be, but we have a model that says, not just that there always have been new jobs, but why that is inherent in the process. Don’t worry about AI!The most fundamental challenge to this model today, I think, is to say that no, what’s really been happening for the last 200 years of automation is that we’ve been moving up the scale of human capability…(More)”.