In America, the combination of high unemployment and the start of the presidential election process has sparked a great deal of debate about how jobs are created, and lost. Nothing new there. Similar academic and populist debates have been part of every modern recession, as society seeks both strategies – legislation, fiscal and monetary policies – and scapegoats – corporations, machines, trade, foreigners, etc.
What's different today is that information technology is now at the centre of the discussion. Over the decades, we have grown used to thinking of IT as an engine of economic growth. But in the current marketplace of ideas, IT's ability to eliminate jobs is getting a lot more attention than its capacity to create them. Whether this shift in attitude is warranted or not, it's a potentially huge change in the way our industry is perceived. Moreover, unless the national unemployment picture improves considerably, concern over IT's effect on jobs will likely increase sharply in 2012 and beyond.
President Obama moved the issue into the mainstream media in June 2011 when he remarked: "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 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." Never mind that ATMs have been around for decades (or that airport kiosks are used at check-in, not the gate), the President of the United States essentially said that technological progress is eliminating jobs, resulting in "some" level of structural unemployment, a potent phrase in economic circles.
First I completely agree that these debates are part of every economic cycle and upheaval (e.g. recession) we go through.
Historically, the largest of these waves (often referred to as Kondratiev waves) have involved the commoditisation and disruption of past industries, rapid growth of new industries, changing practices, attempts by incumbents to retain the status quo (e.g. SOPA or early attempts to ban A/C) and the appearance of new organisational forms.
This holds true whether we talk about the changes caused by commoditisation of electricity, the means of mass communication (the internet) or today's cloud (commoditisation of discrete IT activities).
There is nothing in principle new about this cycle, it has been occurring for a significant period of time. However in past cycles, we had principles such as Fordism where high local wages was seen as beneficial to society. The Government approach was more progressive and Keynesian (e.g. FDR and the new deal) and philanthropy was almost considered a civic duty. Today, there is a significant difference due to the spread of Friedman's ideals.
Take the example of Apple, which whilst the increased cost of production in the US can be considered relatively marginal compared to profitability of the company, has shown no intention of manufacturing in the US. Something which could be considered the anti-thesis of Fordism.
Take the example of the US Government, which has embarked on significant monetarist policies of Quantitative easing with scant evidential support in favour and considerable against (see the past failures of Japan etc). It is almost comical how such policies are even described as Keynesian (which they are not) in order to deflect attention.
Take the prevailing use of Friedmanism (from removal of regulation, nationalised industries to the dismantling of the state) which even its kindest critics would say that after Chile, Argentina, Russia and the UK / US can only be linked with declining social mobility and reduced cohesion.
Even Adam Smith wrote on the importance of progressive taxation and the role of Government and this is where the distinction lays - we seemed to have lost the perspective of the free market as an economic tool that needs to be actively managed.
There is nothing unusual about this economic cycle, which invariably will create disruption whilst new industries form. Those industries we can no more name than a gas lamp lighter could envision the formation of consumer electronics.
Electrification (commoditisation of electricity to an abundant and well defined resource) destroyed jobs (both directly and indirectly through reduced barriers to entry) but also created new industries ... the same is happening today.
What is different in this cycle is our socio-economic policies.
So, an excellent discussion.
Yesterday's Wall Street Journal had a cover article that provides some personal stories to illustrate the impact of tech on job growth (attached below). Over the last week, National Public Radio has had a series of features on how technology is transforming manufacturing.
Wall Street Journal
Tuesday, January 17
http://online.wsj.com/article/SB10001424052970204468004577164710231081398.html
Man vs. Machine, a Jobless Recovery
U.S. Companies Are Spending to Upgrade Factories but Hiring Lags; Robots Pump Out Sunny Delight
By TIMOTHY AEPPEL
One has to ask how many of them actually know what IT really is and does (to build on Howard's point that it is not one single element). In the current context of SOPA and PIPA one has to ask if political leaders and industry lobbyists really think that the way IT allows sharing (the internet is not much more than a giant global digital sharing and copying machine, really) is a jobs threat sufficient to mandate such draconian legislation.
Clearly the music/movie industries see it as a threat to their income (and it is easy for lazy thinkers to assume income = jobs, when of course it does not, not that it is a threat to their income, either come to that).
So the cynic in me asks if Obama's concern over IT destroying jobs is in any way driven by any wool being pulled over his eyes by the movie/music dinosaurs, among others. It seems to me that they would say jobs are destroyed by piracy, meaning fewer artists can make a living (within the industry's outdated business models), when the truth is that many more artists may be able to make a living courtesy of the internet, if only new business models (e..g. micropayments) could prevail more effectively than currently.
Anyway, to get back to the point ... if we are concerned about a possible risk that politicians will see our industry as a threat to jobs, we'd better start doing a better job of educating them about what it is and what the art of the possible future might be, and be more proactive about educating them about the risks inherent (real risks to real jobs) in things like PIPA and SOPA, which some - in their folly - feel to be a good solution to such job threats. Sorry to focus on the movie/music/piracy thing but I do feel there is a wider lesson in there for us in this context of IT's perceived threat to jobs.
"... appropriate strategies are pursued at each level of our growth/competitiveness value chain" must include education of the political class, surely.
I think that the IT employees try to develop his or her work with the objective to have the best results, but it can decrease the job positions in some areas.
On the other hand the CEO's and managers need to take decisions to conserve employments for the people. and at the same time reach the goals of the companies.
Regards,
Cruz