Automation frees up money for new jobs
Your editorial cartoon of Tuesday, March 25, perpetuates the pernicious myth that automation or computers generate unemployment. It shows a man taking a driverless car to the unemployment office while reading a newspaper with the headline “Future economy: Many will lose jobs to computers.” The plain fact of economics is that jobs are created by the money to pay for them. The history of capitalism has always been that of creative job destruction. From way back when the Luddites tried to smash the power looms because they destroyed the jobs of the hand-loom weavers. But every advance in technology and automation frees up money to pay for more productive jobs somewhere else in the economy.
Admittedly, these jobs are not necessarily created in the same locality where jobs were eliminated, but that is not the fault of the system. In the 1990s, when there was so much concern about jobs moving overseas, the actual unemployment rate was as low as it had ever been. And in 2007-08, when the unemployment rate shot up, it was not because of automation or the migration of jobs overseas, but because when the housing bubble burst, a trillion and a half dollars disappeared from the economy. Jobs were lost because the money to pay for them was lost. And the unemployment rate has been slow to decline because Congress has refused to create the money that would create enough new jobs.
If all our present jobs were eliminated by computers, automation, and cheap foreign labor, the money saved would still be in the economy, creating jobs we never dreamed of, just as increasing productivity has always generated new jobs we never dreamed of.