Ritchie and economic forecasts

So, he’s wondering about automation and the fourth industrial revolution:

Second, there is much discussion in some quarters of the impact of technology on jobs. This is from the European Trade Union Institute and is drawn from well researched sources:

(Chart showing that 40-60% of jobs are at risk of automation over next few decades)

No one was taking this into account in their forecasts.

So, third, Richard G Larsen asked, what does this do for any forecasts except suggest that extrapolation from current experience os of almost no use at all?

Well, actually, all sensible people are taking this into account in their forecasts and all sensible people are using extrapolation from current experience to do so. Meaning that this following is simply tosh:

So what of resilience? By this I mean our capacity to adapt to this change if it is to happen. I stress that adaption is both technical and social: here I am dealing with the technical aspect. By this I mean can we put in place the mechanisms to handle the consequences of change? These would include the need to tax the enormously increased returns to capital that would be earned in this country even if the legal ownership was elsewhere; the need to address the massively increased inequality in society that these changes could result in unless addressed appropriately by way of, for example, a universal income, and the need to reduce the free flow of capital to avoid taxation of capital that would otherwise undermine the capacity to reclaim tax from the economy.

The point being that all sensible people know that 10% or so of all jobs in the economy are destroyed every year. And 10% are generated again in slightly different fields or in slightly different companies. Thus, over three decades say, we expect 300% of all jobs to be destroyed and recreated.

We can also add in quits (people leaving a job for another one) which is another 10% of all jobs each year. So, actually, 600% of all jobs extant now will not be in 3 decades. And yes, most such job changes do incorporate some technological change. And that’s actually how technological change happens. Not every buggy whip maker laid off on a Friday afternoon forever more to roam the labour exchange wailing of their woes, but gradually the sector shrinks and people gradually move from buggy whip making to curing the leather for car seats.

The speed at which this happens can cause problems, sure, as Keynes noted that the mechanisation of agriculture was causing in 1930. The process itself though not so much.

And that’s why serious people aren’t paying much attention to these automation claims. Just because they’ve considered the issue and realised that it’s not actually all that important. But knowing that would require a knowledge of economics beyond the attention span of a 0.2 of a professor of international political economy. Obviously.

9 thoughts on “Ritchie and economic forecasts”

  1. Why the excitement now? In the early sixties there was much fuss about the effect of automation and cybernetics. The effect didn’t prove remotely as damaging as governments, trade unions, and so forth.

  2. I would think a few bits from a pile of broken toasters wired up to a Raspberry Pi and a printer would make a fairly competent replacement for Murphy.

  3. This guy no doubt advocates the minimum/living wage and a high one at that. Of course the moron does not realise that the higher it goes the faster automation will happen. Has he factored in that? I am sure he has not.

  4. With tech unicorns, I presume the shareholders (including founders and VCs) all pay shed-loads of Capital Gains Tax, or whatever the U.S. equivalent is. Or do they shelter their capital gains offshore?

  5. “Less and less work has to be done, and more and more things are free.”

    The nightmare scenario of the puritans, control freaks and misanthropes in general.

  6. Bloke not in Cymru

    And in the last week Mercedes announced they were reducing automation as the number of variations in car models meant it was better to use people in some areas, good timing on Ritchie’s part there.
    As for jobs destroyed I suggest he gets his fat arse out of Norfolk and go visit the Welsh valleys and see how many people are employed doing the same jobs that were employing people 30 years ago, along with large parts of the rest of the country where heavy industry was once dominant.

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