It is debatable whether Ned Ludd ever existed. But the movement he gave his name to certainly did. In the early 19th century, Luddite mobs of English weavers took to smashing the new automated looms they blamed for threatening their livelihoods.
Today, Luddite fears are seeing a resurgence. Admittedly, no one is yet torching factories full of industrial robots or taking their baseball bats to banks of computers running “artificial intelligence” deep learning algorithms. But recent months have seen a spate of warnings that these sophisticated new technologies will put millions of people out of work and force down incomes for those lucky enough to keep their jobs.
For example, a study last year by Oxford University researchers concluded that by 2033 almost half the jobs in the United States will have been automated out of existence. Another study by US economists estimated that each new industrial robot costs six jobs.
A 2016 paper warned that the effect will be even more pronounced in Asia, with 69 per cent of India’s jobs and 77 per cent of China’s threatened by automation. Worldwide, warned consulting firm McKinsey & Company last year, hundreds of millions of workers will find themselves forced out by robots.
The result of all this, according to many researchers, will be a massive increase in global inequality, as most workers suffer and only a handful of wealthy capitalists – those who own the robots – benefit from the new technologies.
Happily, all these warnings of mass unemployment and falling incomes are complete rubbish. Not only will advancing automation create rather than destroy jobs, the jobs it creates will be better paid than those of today.
As the story of the Luddites shows, automation is nothing new and neither are misconceptions about the economic effect of machines. For example, in 1930, the great Cambridge economist John Maynard Keynes forecast that by the end of the 20th century, advances in technology would cut everyone’s working hours to just 15 a week.
Instead, of course the opposite happened. Despite all the fears, the advance of technology in recent decades didn’t cause mass unemployment. In many economies today, unemployment rates are at their lowest in a generation, or even two generations.
And far from enjoying all the extra leisure time Keynes foresaw, we are working harder than ever, with innovations like smartphones and email ensuring we are always on call, any hour of the day or night, every day of the week.
Nevertheless, you can see why so many people are worried about what Keynes termed “technological unemployment”. Technology is developing rapidly. In past years, automation was only thought to threaten repetitive manual jobs, like attaching plastic grommets to metal widgets on a factory assembly line.
But today, advances in deep learning mean that machines can outperform humans not just at repetitive manual tasks, but increasingly at “brain work” that has long been considered the preserve of highly qualified professionals.
To cite just one example, you may have thought the legal profession was one of the sectors least susceptible to automation. But at many law firms deep learning algorithms are already proving more effective than junior lawyers and legal assistants at reviewing case histories and identifying precedents.
So why won’t the rise of the machines throw millions of white-collar professionals, including lawyers, out of work and onto the breadline over the coming decades?
The short answer is that automation increases productivity – the output produced by each worker for each hour worked. And greater productivity means higher incomes and cheaper products. In turn, that virtuous combination of higher incomes and lower prices adds up to more demand. And more demand means more job creation.
Yes, some workers will be temporarily displaced. But even as automation destroys old jobs, it creates new ones. And the new jobs tend to be focused on the sort of non-routine tasks requiring great mental agility that computers are lousy at, which means they pay more.
So the advent of industrial robots means fewer low-paid assembly line workers fitting grommets to widgets, but many more well-paid software developers and programmers.
And because these techno-geeks are more highly paid than grommet-fitters, they generate more demand for goods and services in the broader economy in a spillover cascade effect which supports overall employment levels. In total, estimates the Asian Development Bank, for every three jobs in the region destroyed by automation, four more are created.
If you doubt that automation creates jobs, look at the evidence from China’s electronics sector. Since 2013, China has emerged as the world’s biggest market for industrial robots, with roughly 500,000 operating by the middle of this year up from close to zero in the early 2000s.
And over the past few years, the biggest driver of that growth, outstripping even car factories, has been the electronics manufacturing sector.
Remember all those stories about Foxconn replacing its human workforce with robots? Well, if that was really happening, employment growth in the sector would have stalled. Instead, it has accelerated. Between 2000 and 2015, the number of workers in China’s electronics factories increased from 16 million to 38 million. More to the point, while the number of workers doing repetitive tasks doubled, the number doing more high-value, non-routine jobs almost tripled.
In short, automation doesn’t lead to unemployment. It creates more and better jobs.
And if you are still sceptical, consider the story of Flippy. In March, a California restaurant installed the robot as a short-order cook to flip hamburgers. Unfortunately, Flippy’s human colleagues couldn’t keep up with its output, and the restaurant’s managers had to take the robot off the job while they recruited additional workers and gave them special training.
Within weeks, Flippy was grilling again, supported by a dedicated new kitchen crew, and business was brisker than ever. The Luddites were wrong. The future is Flippy and his friends. ■
Tom Holland is a former SCMP staffer who has been writing about Asian affairs for more than 20 years