Is Technology Really Costing Us Jobs?

Hank Williams brought up an interesting issue on his blog today:

The problem is that we are in this awful in-between phase of our planets productivity curve. Technology has vastly reduced the number of workers and resources that are required to make what the planet needs. This means that a small number of people, the people in control of the creation of goods, get the benefit of the increased productivity. When we get to the end of this curve and everyone can, in essence, be their own manufacturer, things will be good again. But until we can ride this curve to its natural stopping point, there will be much suffering, as the jobs that technology kills are not replaced.

This is a subject I’ve written about before. From a purely economic perspective, as technology and innovation increase, economically we ALL should be richer. The same technology and innovation that makes some jobs unnecessary, enables everyone to buy / get more with less input. Whats interesting, as Hank points out, though, is that it appears that this hasn’t been the case for the vast majority of people in the last decade (or at least the gains haven’t been distributed very evenly).

The truth is, that we have all been getting richer (particularly in terms of the technology, food, clothes, etc… we can all buy for less money). However, much of the increase in our purchasing power has been eroded by manipulation of the money supply. So if in theory we should have seen on average a 30% (just using this as an example) deflationary change over the last 10 years (i.e. each of us can buy 30% more stuff with our existing salaries) instead we’ve seen a 30% inflationary change (we each can buy 30% less). That 60% net change then gets transferred from the everyday money holding american public to large banks and debt issuers that have first access to borrow money from the government at a subsidized rate.

What this means is that the problem isn’t that we’re in the “in-between” phase, its that the the “in-between” phase only has a certain capacity to overcome harmful external forces. At some point Hank is absolutely right, technology based deflation will push the cost of all production to $0 (think Star Trek replicators) and currency will likely be irrelevant. We’re obviously some time off from this though, and until that happens it would be nice if everyone shared fully in the gains that technology and innovation bring to the world.