Technology: the Most Dangerous Business Partner

Brooke Landry HB

 

As the world’s economy continues to develop, countries do everything in their power to increase their GDP (including maximizing utility and expanding their production possibilities curve). Self- driving cars replace Uber drivers and ATMs are more efficient bank tellers, open 24 hours a day. Government officials constantly ask the question, “What is the most efficient way?” often sacrificing the environment and causing creative destruction to advance the economy.[1] But what happens when instead of using creative destruction to give jobs to more people in a new field, they eliminate jobs altogether?

With advancements being made quickly, growing exponentially in the past decade, the long term effects of automation, although drastically important, is unclear to our world today. An estimated 45% of jobs are in the process of being automated with the current technology we have today, eliminating almost $2 trillion in annual wages. [2] Replacing human jobs with machines is a dangerous feat, for machines, although more efficient, will leave a hole in the job market leading to a poorer society and ultimately causing a negative effect on the economy.

Technology, being a factor of production, is a very important innovation to develop, especially if the US wants to keep up with its global partners. By improving technology, the Production Possibilities Curve expands, which in turn increases the country’s GDP, making the country better off. But when is this technological advancement too much? By taking advantage of this innovation, we in turn eliminate the thousands of jobs of drivers, bank tellers, and cashiers once needed. This process of replacing old with new and better production units is called Creative Destruction, and although “a tremendous positive force in the long run” and “something that must happen,” can rapidly spiral out of control and hurt society. [3] By the time the country has developed its current economic systems, the short run negative effects will have out developed the long term solution.

When discussing Creative Destruction, Wheelan points out that “competition is always best when it involves other people.” [4] But with machines completely replacing humans in their jobs altogether, is this “competition” best for our economy? How easy will it be to find work if jobs are disappearing altogether, not just being displaced to another field? Some would argue that only low skilled workers are affected, but even high skilled jobs such as CEOs and physicians are affected by this advancement, with over 75% of their job description classified as automatable.[5] High skilled workers live off of high wages, and with the sudden loss of a job because of a machine, this leaves them unemployed and unable to find a job that meets their skill level. Unfortunately, the original Creative Destruction shift from a farmer to a mechanic position now comes into play with the ones who replaced the initial famers.[6]

With advancements in technology being an inevitable part of the future of the United States’ economy, it is important for future generations to anticipate the shift into automation NOW. By being proactive and developing methods to ease the stress on the economy, it is possible for the economy to pick back up quickly after the shock hits. Although machines allow for more efficient and cheaper means of production, their overwhelming presence in society will cause a shock and negative effect on the job industry.

 

[1] Charles Wheelan, Naked Economics: Undressing the Dismal Science (New York: W.W. Norton & Company, 2010), 197

[2] Michael Chui, “Four Fundamentals of Workplace Automation,” McKinsey & Company, November 2015, http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/four-fundamentals-of-workplace-automation

[3] Charles Wheelan, Naked Economics: Undressing the Dismal Science, 47-48

[4] Ibid

[5] Michael Chui, “Four Fundamentals of Workplace Automation,” http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/four-fundamentals-of-workplace-automation

[6] Charles Wheelan, Naked Economics: Undressing the Dismal Science, 47

Photograph: Brain and Gear Heads. Digital image. World of Innovations. April 16, 2013. https://worldofinnovations.net/2013/04/16/innovation-at-school-combining-robotics-with-poetry/

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s