Not a Luddite fallacy

John Kay, inventor of the Fly Shuttle, is fleeing rioters breaking in to smash the loom. People do not take threats to their livelihoods sitting down.Painting by Ford Maddox Brown in the Manchester Town Hall. Wikipedia
John Kay, inventor of the Fly Shuttle, is fleeing rioters breaking in to smash the loom. People do not take threats to their livelihoods sitting down.11Painting by Ford Maddox Brown in the Manchester Town Hall. Wikipedia

Wealth (in the sense of valuable resources, not money) is created from a recipe: take some of this, some of that, put it together to get something useful – a road, a sandwich, a house, a massage, a garden, clean water, or a good story.

Many wealth-creation recipes use people as a vital ingredient. For example, when we build a road, a human drives the truck that delivers the asphalt. These jobs tend to be given to humans either because nothing else can perform the function or because we are the cheapest way to perform the function.

Humans are, in general, smart, flexible, and adaptable compared with current technology.22More specifically, humans have several natural abilities that technology has yet to match:

But technology is evolving much faster than humans are and with increased computing power and better software, autonomous robots33With robots I mean both autonomous machines that manipulate the physical world and autonomous software that manipulates information only.

are slowly starting to take off.

There are still many challenges for robots – reasoning, adaptability, dexterity, battery life, teachability – but as these improve (and they are improving), robots will become more compelling as alternatives to humans in our wealth-creation recipes.

That means existing jobs will disappear and we are unlikely to develop enough new people-heavy recipes to make up for all those recipes that we will rewrite to use robots instead of humans. Since jobs is a key strategy for distributing our wealth (largely created by technology), a significant decrease in employment rate means we will want to rethink how we distribute our wealth.

The Luddites believed that:

Labour-saving technologies increase unemployment by reducing demand for labour.

Economists refer to this as the Luddite fallacy, because, they argue, if it were true, we would already see massive unemployment from two centuries of increasing productivity. What they fail to realise is that so far people, by and large, have been able to compete well with technology. We have simply moved to types of jobs that technology could not yet do (or not do economically). We used the human smarts, flexibility, and adaptability that technology lacked. However, there is no reason to believe that we will be able to keep up with technology, given the pace of innovation.44There is an interesting question around the possibility of humans becoming cyborgs, but I doubt that is going to be a solution to the issue in the short-to-medium-term.

That means that the Luddite fallacy is not a fallacy and we should expect the employment rate to decrease as humans find it harder and harder to compete with technology.