McKinsey has another report that curdles the blood – the robots are going to steal billions of our jobs by tomorrow morning. Or perhaps more accurately, 800 million globally and 73 million in the United States alone by 2030.
This is, to use the technical jargon, pish — in the vernacular, perhaps tosh. The report entirely misses two things, the first being how jobs are created and destroyed, the second being that we’ve been doing this for the past 250 years anyway, and there are more jobs than ever. That second is a pretty big thing for a group of management consultants to miss.
Their calculations are straightforward enough. Look at all the jobs out there, estimate how easy it will be for robots or algorithms to do them, declare those jobs to be at risk. Therefore, government needs to invest massively in training and demand management and job creation and possibly even a universal income.
I happen to think the last of those is an excellent idea, but on the grounds that it will be better than the current welfare system, nothing to do with the robots. The rest of it is pish.
The report is missing the important thing about job destruction and creation. As it happens, about 10 percent of all jobs in the U.S. are destroyed each year (through layoffs, bankruptcy, and downsizing — not quits where people jump ship of their own accord). About 16 million jobs just go “poof” every 12 months. As you’ve noted, the number of unemployed doesn’t rise by 16 million, or 10 percent of the workforce, each year. That’s because the same economy also creates 16 million (near enough) jobs each year.
No, there is no miracle whereby the new technologies create as many jobs as they extinguish, factories do not blossom because one fails either. Nor is there any careful balancing item in the economy. What does happen is that we humans have unlimited desires and wants – this is an axiom of economics, it is not arguable. So, we work out how to sate one of them using the machines and that means we need less labor.
What happens next is that people, the “entrepreneurs” we call them, note that there’s now labor available to sate some other human desire. So, they get employed to do so. This is how we went from 40 percent of the population growing food to 12 percent working in hospitals – we couldn’t have the healthcare if we didn’t have the tractors doing the food.
That is, people turfed out of jobs by robots go on to do something else.
All of that job destruction includes some of that technological shift as people move jobs. Sure, the redundant coal miner doesn’t jump directly into app coding, but we do indeed all shift along the spectrum all the time. Note how much of this there is. About 10 percent of all jobs a year, 208 million expected in the U.S. alone by 2030, and they’re predicting Armageddon from 73 million? Pikers, aren’t they? Especially if we add the other 208 million jobs changes we expect from quits, all of which will also include some technological change. We’re to have 500 million job changes, and they’re worried about less than one-sixth of that?
Which is where it should be apparent that this is tosh. For we have been doing this for 250 years now. It’s pretty much what the “industrial revolution” means, that we replace human labor with machines. We’ve had the occasional burp here and there as the rate jobs are eaten at becomes too fast to be sure (1930 wasn’t a fun time). But they have been blips and there’s absolutely nothing at all in front of us that tells us that this time is going to be different.
The standard definition of a management consultant is someone who borrows your watch, tells you the time then presents his invoice. If only they were all that useful, eh?
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute.
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