I should just get a macro for my computer so that when I type “Control T” it writes “Tom Friedman is wrong because” since he so often is, as I pointed out here. But in Today’s New York Times Op-Ed he does it again, only maybe even worse; blaming technology for joblessness. When will he and others realize this is not the case. He writes that information technology “is more rapidly replacing labor with machines.” Well, if this were true, how does he explain the fact that productivity growth rates were much higher in the last five years of the 1990s than the last five years of the 2000s? And yet, unemployment was much lower in the 1990s period.
He then goes on to quote Davidson’s equally incorrect article in The Atlantic which rightly points to the devastating loss of U.S. manufacturing jobs in the last decade and blames technology. No. As we point out, it was the loss output due to decline in U.S. competitiveness, not automation, that was responsible for the big loss of manufacturing jobs. Manufacturing experienced about the same rate of productivity growth in the ’90s as it did in the 2000s and yet only lost one percent of jobs in the ’90s, but 32 percent in the 2000s.
But in typical Friedman fashion he goes even farther with “analysis by anecdote.” He tells us that there are now iPads that let people order their meals from their table without a waiter. And writes “you ain’t seen nothin’ yet” when it comes to IT automation.
I could write a full report on why Tom is wrong (well actually we did) but suffice to say three things. First, the economic evidence. If Tom had bothered to review it, it is unambiguous that higher rates of productivity lead to more jobs in the medium to long term, not fewer jobs. As the OECD states in a definitive review of studies on productivity and employment, “historically, the income generating effects of new technologies have proved more powerful than the labor-displacing effects: technological progress has been accompanied not only by higher output and productivity, but also by higher overall employment.” Second, the most serious challenge facing the U.S. economy over the next 25 years is the declining worker to population ratio as the baby boomers age. The ONLY way to ensure that either their after-tax incomes don’t go down or retirees expected incomes don’t go down is by seriously boosting productivity, and the single best way to do this is through the use of IT. Tom, you ought to be celebrating the iPad in the restaurant, not engaging in neo-Ludditism. Finally, if we want to raise the living standards of Americans now holding low wage jobs, the best way to do it is to increase, not decrease, automation of these jobs. When a job can only produce 10 dollars an hour in value, there is no way to pay more than $10 per hour. If we can use technology to boost the productivity of many low wage, low productivity jobs, we can pay more for these jobs and workers who move out of these occupations can move into higher value added ones.
In short, it’s time to bury the myth that technology causes job loss and that we should fear it and resist it. It does not. And we should welcome it and encourage it.