Is Automation the Handmaiden of Inequality?

In Technology Review, Christopher Mims asks if the increasing automation of US industry has contributed to growing inequality, by bringing its gains to factory owners rather than workers.

Here’s how I would interpret the odd coincidence of these two trends: in a perfectly capitalist system, increased profit produced by automation flows to the owners of the business. Worker compensation stagnates because, while automation makes each worker more productive, it doesn’t make them any more valuable. While all these machines and IT infrastructure do require a quasi-elite caste of Mandarins to keep them running, on the whole, the skill required of individual laborers has actually gone down.

This is an important topic. Blue collar wages have stagnated in the US not only due to globalization, but also due to automation. The rise of machinery to accomplish tasks reduces the value of most workers in fields like manufacturing.

What this article misses is that this has been happening for 150 years, yet long term, wages have hugely increased. The way this has happened in the past has been through the migration of humans to higher level tasks that were not yet automated, and that saw increased productivity due to their ability to take advantage of automation.

The top long term economic issue in the US, and possibly the world, (IMHO) is the propagation of the skills, education, and training needed in the broad workforce to enable them to do ever-more useful work for others, and thus see their wages rise rather than stagnate or shrink.

(The related observation, not covered in this article, is that average wages of those with college degrees have risen steadily. The stagnation is primarily among the 72% of Americans that have a high school diploma or less.)

Is Automation the Handmaiden of Inequality? – Technology Review.

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