Technology and Unemployment

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Posted on 21. Jan, 2010
Categories: Featured, Trends

I’ve written on a few occasions about some of the dangers that I see approaching with technology changing at such a rapid pace. Most recently, I wrote about dating sites excluding people who were no longer beautiful. While I am hardly a Luddite, I do see problems with where things are going and am reading a few books about the subject. (More on that in future posts.)

Along these lines, I recently watched the excellent film Up in the Air. I can see why this film did so well last night at the Golden Globes. Really well done. Like most of my favorite movies it made me think.

Movie Summary

In a nutshell, George Clooney plays Ryan Bingham, a professional traveler and corporate assassin. You see, he goes from company to company, city to city, laying off employees deemed unnecessary by their employers who lack the courage–or will–to do it themselves. He eventually has an epiphany about his lifestyle, but I really don’t want to give too much away.

For a proper review of the movie, check out Roger Ebert’s here.

Creative Destruction

I know that technology has always destroyed jobs while creating others, aka creative destruction–a term originally coined by German economist Joseph Schumpeter. I have seen this first-hand as an IT consultant, as one of the chief reasons that many employees resist new technology is that they fear that they will become expendable, that a computer will make their position irrelevant.

Additional examples abound:

ATMs made bank tellers a virtually extinct species
Sites like Travelocity had a similar effect on the travel agent profession
Journalists
Ever see a switchboard operator (outside of Mad Men?)
Nobody makes typewriters anymore

I have been wondering, though, has technology been doing more destroying and less creating? Of course, the housing meltdown and Great Recession make it impossible to determine the exact role of technology in explaining why unemployment exceeds ten percent, a figure that does not count the “underemployed.” Economists would have to use some pretty sophisticated statistics to begin to address that question. I’m certainly not going to attempt it here.

All of this brings me back to Up in the Air. Clooney’s Bingham resists his company’s plans to “automate” the terminate process by using hi-tech terminals aided by impressive videoconferencing technology. Again, even the displacers are being displaced. This is more than a little ironic.

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http://www.lourg.com Louis Rosas-Guyon

You bring up an interesting point that I have also been considering for the past few years. As tech progresses, it replaces workers in highly repetitive tasks. As these positions disappear, unemployment naturally follows.

The industrial economy is predicated on access to cheap, unskilled labor. However, the information economy has no need for these folks and therefore works to replace them with automated systems.

Further, the Internet has eliminated the problems of distance allowing for many tasks to be outsourced to cheaper countries. Ergo, many knowledge worker jobs are also fleeing.

And behind it all, technology bears the brunt of the blame. However, as you mentioned, technology is always disruptive. The task confronting our generation is to finalize the transition from an industrial economy to an information economy. That means more economic pain and turmoil lies ahead.

Great post! Keep them coming.
http://philsimonsystems.com philsimon

Louis-

Thanks for the comment.

I’m not throwing technology under the bus. In fact, I’d say that it all comes down to money.

I am very much in agreement with you on the Internet and distance learning. The former enables the latter. I have even heard of some saying that a college education is no longer a good investment because you can “learn” most of what you need to know online.

I can’t agree with that but perhaps the vast array of content available online, along with e-learning options, will stop the annual 5% increases in tuition.

Technology giveth and technology taketh away….

Phil
j

Type your comment here…At MIT, scientist and researchers are reverse engineering the brain and eventually we will have computers that are more capable than the human brain, plus the computers will be smaller faster. This is all according to Ray Kurzweil, brilliant person. This trend of high tech technology will take and expand and eventually lead to more unemployment, the better the technology the smaller the workforce needed to run operations. As for money, we need to either change how money operates or just simply take our training wheels off and not use money and enter a more mature paradigm of thinking.
Erik

Interesting post! I have also thought a lot about creative destruction, which is an interesting phenomenon. However, I like the post picture a lot, and I would like to ask you whether or not I could use it on a blog on which I am about to post a similar article on. Would it be ok to use the image?

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