Is Obama right to say that technology destroys jobs?

From the Wall Street Journal, a rebuttal to the community organizer’s latest episode of economic illiteracy.


Today, a couple of workers can manage an egg-laying operation of almost a million chickens laying 240,000,000 eggs a year. How can two people pick up those eggs or feed those chickens or keep them healthy with medication? They can’t. The hen house does the work—it’s really smart. The two workers keep an eye on a highly mechanized, computerized process that would have been unimaginable 50 years ago.

But should we call this progress? In a sense it sounds like a deal with the devil. Replace workers with machines in the name of lower costs. Profits rise. Repeat. It’s a wonder unemployment is only 9.1%. Shouldn’t the economy put people ahead of profits?

Well, it does. The savings from higher productivity don’t just go to the owners of the textile factory or the mega hen house who now have lower costs of doing business. Lower costs don’t always mean higher profits. Or not for long. Those lower costs lead to lower prices as businesses compete with each other to appeal to consumers.

The result is a higher standard of living for consumers. The average worker has to work fewer and fewer hours to earn enough money to buy a dozen eggs or a pair of shoes or a flat-screen TV or a new car that’s safer and gets better mileage than the cars of yesteryear. That higher standard of living comes from technology. It isn’t just the rich who get cheaper TVs and cars, plus the convenience of using an ATM at midnight.

Somehow, new jobs get created to replace the old ones. Despite losing millions of jobs to technology and to trade, even in a recession we have more total jobs than we did when the steel and auto and telephone and food industries had a lot more workers and a lot fewer machines.

Why do new jobs get created? When it gets cheaper to make food and clothing, there are more resources and people available to create new products that didn’t exist before. Fifty years ago, the computer industry was tiny. It was able to expand because we no longer had to have so many workers connecting telephone calls. So many job descriptions exist today that didn’t even exist 15 or 20 years ago. That’s only possible when technology makes workers more productive.

This is discussed more in Jay Richards’ book “Money, Greed and God“, which is an excellent little introduction to economics meant for Christians. The chapter you want is on “The Materialist Myth”, which is the idea that wealth is only ever shuffled around, and never created.

13 thoughts on “Is Obama right to say that technology destroys jobs?”

  1. Great article! I heard on the news that Obama said ATMs were one of the reasons for high unemployment. Yeah, OK that makes sense. Automation, as the article pointed out, as helped spur growth not reduce it.

  2. You’d think Obama would realize that if machines do work formerly done by people, then some people have to make those machines and design them to do the stuff the people did.

    Maybe he thinks machines will “evolve” out of metal in the scrapyards and magically self-assemble and take over the world. After all, if humans don’t need a designer neither does a machine, right?

    I must get me Richards’ book sometime.

  3. not technology ….but greed and exploitation.
    There is nothing better in this world for real job creation than a free market society.
    But is it, globally, a free market? What happens, when the free market takes advantage of unfree systems for profit increase?
    In the older days, we called it slavery.
    Today we call it outsourcing.
    When companys like HP, Cisco, Apple…. produce their products in countries where people make less than a bug an hour to sell it in countries with $7 to $8 minimum wage, thats not free market, that’s modern slavery, that’s exploitation. It is devastating for the development in these countries and devastating for ours.
    I don’t even want to start on the environmental impact, but just a thought: The carbon footprint that most of todays products are responsible for, is often to 60% and more nothing but shipping. Everytime you order online, instead of buying local, you’re killing jobs and the invironment. Everytime you buy “made in China” you are not only killing local jobs and the invironment ….you’re killing the hopes and dreams of the chinese people to one day enjoy the same freedom that we do…
    … creates jobs …the “destroyer” is our modern system of slavery….but that’s maybe above his “paygrade” ?? …I have my doubts …;-)

  4. Obama did not blame ATMs (or technology) for unemployment. That’s how Fox News (and the WSJ) boiled down his comments, but if you read his full comments, you’ll see that he was suggesting that businesses are investing more heavily in automated machines than in hiring new employees, which is a view shared by economists.

    Here’s the exchange. I think everyone who jumped on the bandwagon should read it and stop bashing our pres for Fox News’ interpretation. Here it is:

    ANN CURRY (host, NBC’s Today): You’re here encouraging private sector hiring. This just after The New York Times just past — this past Friday reported that since the recovery began, businesses have spent just 2 percent more on hiring people, while at the same time spending 26 percent more on equipment. So why, at a time when corporate America is enjoying record profits have you been unable to convince businesses to hire more people, Mr. President?

    OBAMA: Well, I don’t think it’s a matter of me being unable to convince them to hire more people. They’re making decisions based on what they think will be good for their companies. A couple of things have happened. Look, we went through the worst crisis since the Great Depression. We are now in a process where the economy is growing again, and we’ve created 2 million jobs over the last 15 months. But it’s not as fast as it needs to be to make up for all the jobs that were lost.

    The other thing that happened, though, and this goes to the point you were just making, is there are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM; you don’t go to a bank teller. Or you go to the airport, and you’re using a kiosk instead of checking in at the gate. So all these things have created changes in the economy, and what we have to do now — and that’s what this job council is all about — is identifying where the jobs for the future are going to be; how do we make sure that there’s a match between what people are getting trained for and the jobs that exist; how do we make sure that capital is flowing into those places with the greatest opportunity. We are on the right track. The key is figuring out how do we accelerate it. [NBC, Today, 6/14/11]

    1. You may not agree with that summation of Obama’s quote, but that does sound like a reasonable interpretation– made all the more annoying because ATMs and airport kiosks have been around and popular since last century (my grandfather, a banker that died when I was tiny, thought that ATMs were…well, he wouldn’t say “cool,” but that’s the concept.)

      Would you prefer “Obama can’t figure out why all the successful businesses do what is good for them” or, perhaps, “Obama thinks a committee is the best way to figure out what is good for business”?

      Or maybe, “Obama thinks efficiency is bad”? (That one would explain why he likes gov’t work so much, but I digress…)

      1. Let’s focus on the issue. You (and the news media) don’t want to accept what the president said on face value. You’d rather create an entire story about your interpretation of what he said.

        That’s not news, F. It’s twisting news.

        1. Let’s focus on the issue.

          That would be a nice change!

          You (and the news media) don’t want to accept what the president said on face value.

          You’re the one trying to interpret away exactly what he claimed, even when it’s right there in your own quote.

          Now, we could go the main stream media route, and use that quote to claim that Obama didn’t know ATMs and airport kiosks existed before he came into office, but we’ve got higher standards than the New York Times.

          1. Well, “Einstein,” I know the word “standards” in that context means “code of behavior,” and I also know that the Pulitzer is not authoritative, and that it’s awarded to authors rather than publishers.

            I can also recognize an allusion when one hits me over the head with it.

  5. What’s that old quote? Something like “mass production didn’t mean that the rich women had more silk stockings– it meant shop-girls could afford silk stockings.”

    I know that it’s really nice that my folks can manage a ranch that produces from 250-350 certified black angus yearlings a year with an average of four people working. (translation to normal human speech: two hundred and fifty meat cows that need a few months in the feed lot before they’ll be butchered; they consist of males and the females that aren’t selected for breeding; the non-organ meat of a finished cow I’d estimate is enough for a family of four for a year. The average part is because fence fixers are hired during the summer, and neighbors help each other on cattle drives and sometimes branding.)
    They do this in an area where, because the cattle have to be fed in winter, I can’t even calculate how much more man power it would take– haying without motorized technology is INSANELY manpower intensive. Feeding the cows they have without a tractor I can figure, because an uncle tried it with a much smaller herd for a while; I think it would take four mules, a driver and at LEAST four men moving the hay off, and it would probably take the better part of a day between loading and feeding. Might work if they split it into two teams, with four to eight mules and ten men…. then there’s the issue of using a sled or a wagon…

    I don’t even want to THINK about calving without a ranch pickup, probiotic paste, replacement milk for motherless calves and either a four-wheeler or those hummerfied golf carts. It definitely couldn’t be done by two Boomers and a guy in his 40s.

    I’m pretty sure I’ve mentioned before that my husband’s job didn’t exist when he was born, and at least half of it didn’t exist when he graduated high school!

  6. Mary, Pulitzer Prizes for journalism are awarded jointly to reporter and newspaper, without which the content would not be funded, edited and published. And yes, these are authoritative, the highest honor for journalists and for newspapers, and an accepted measure of journalistic excellence, at least among serious media professionals.

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