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The Technology Trap: Capital, Labor, and Power in the Age of Automation Kindle Edition
"An excellent analysis of past industrial revolutions, the technologies that emerged within them, and the way societies adapted to those changes."―Adi Gaskell, Forbes
"The Technology Trap may well ensnare doom-seekers’ attention with its ominous-sounding title. But it should ultimately hearten anyone who reads it."―The Economist
"A provocative, original long view on current concerns."―Andrew Hill, Financial Times
"Bracing . . . Carl Frey extrapolates from the history of the industrial revolution to offer a vision of the future in which Amazon Go, AI assistants and autonomous vehicles are 'worker replacement' technologies."―Greg Williams, Wired
"An important book. . . . Frey is erudite and thoughtful."―Joel Mokyr, Journal of Economic History --This text refers to the paperback edition.
About the Author
- ASIN : B07M8YV8PF
- Publisher : Princeton University Press; Illustrated edition (June 18, 2019)
- Publication date : June 18, 2019
- Language : English
- File size : 6253 KB
- Text-to-Speech : Enabled
- Enhanced typesetting : Enabled
- X-Ray : Not Enabled
- Word Wise : Enabled
- Print length : 483 pages
- Lending : Not Enabled
Best Sellers Rank:
#255,116 in Kindle Store (See Top 100 in Kindle Store)
- #39 in Labor Policy
- #77 in Labor & Industrial Economic Relations (Kindle Store)
- #140 in AI & Semantics
- Customer Reviews:
Top reviews from the United States
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The reader should be warned that this is a long book. Frey includes an overview of the history of technology from the 1700s till now, making some chapters feel like a condensed version of Robert Gordon’s The Rise and Fall of American Growth. It’s not a bad summary, but the best parts of this book describe how jobs and technology have collided in the past.
Here are some of Frey’s key points:
• The key distinction to make with technology is whether it assists workers with their jobs, making them more productive, or completely replaces workers, eliminating their jobs. While pattern recognition helps the dermatologist diagnose skin cancer, it doesn’t replace the dermatologist. However, speech recognition used at the drive-through at McDonald's and Taco Bell is designed to eliminate jobs. The same is true for self-driving trucks.
• Before the First Industrial Revolution, workers typically resisted any technology that would put them out of work. They usually won because the royals and landowners who held political power feared massive rebellion. Following worker riots against automatic looms in Europe, Germany prohibited the machines for 40 years. Charles I banned the casting of buckets because he didn’t want to put the traditional craftsmen out of work. Tsar Nicholas I would not even allow industrial exhibitions, to prevent new ideas about factories from spreading.
• But during the First Industrial Revolution, which began around 1769, Britain wanted to compete economically with other countries, and British cities were competing against each other. So when the silk and cotton textile industry built the first factories and automated the spinning and weaving processes, the government protected them. Parliament passed an act that made the destruction of machines a crime punishable by death. The Luddites rioted, and more than 30 were hanged.
• Factory jobs were simplified so children could be the robots of the day. In the 1830s over half of the workers in textile factories were children. The lives of the displaced artisans suffered. They lost income, died earlier, and the height of their children would be lower, indicating malnutrition. Ultimately the new factory productivity brought Britain great wealth. But it took over 50 years for the average person to see the benefits come to them.
• The Second Industrial Revolution that took place in America beginning in the 1870s was a very different experience. Electricity, automobiles, and mass production introduced new technology into the workplace. But Frey believes most workers saw this technology as helping them, not replacing them. Wages and benefits rose for the middle class, and income inequality fell.
• Since 1980, wages for the middle class have fallen behind. Unskilled factory jobs that require only a high school diploma have either been sent abroad or automated. Frey thinks this trend will continue. Jobs that require the least education and skills are the most likely to be automated by AI and robots.
Frey does not believe we will see massive job losses anytime soon. Instead, he repeats Roy Amara’s famous adage: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
The technology trap gives a highly readable account of the history of the industrial to the modern age. The author starts with a discussion of how humanity largely lived in a low growth world and that this was not the result of no innovation but rather the result of not being driven by entrepreneurial instincts. In particular world views were largely based on the idea that people had roles and concepts like economic growth as a goal for society were completely absent. As a consequence of the instincts to maintain the status quo being so strong, labor saving innovation was overlooked or heavily fought against for fears of the consequence of loss of equilibrium. The author describes how the conditions of that change as feudalism became more challenged with the growth trade and mercantilism. As countries started competing with one another, need for productivity growth to drive exports for growth became more real and so guilds lost influence to early forms of mechanization. The author describes the change in mentality to a change in political economy that incrementally laid the conditions to allow for innovation based capitalism to take roots. The author described how certain early technologies were labor saving rather than labor enabling and this resulted in its discontents. The author refers to the periods in time with such characteristics as Engle turning points. These are critical for understanding how technology and its consequences will be viewed by those affected. The author discusses how it was a short period before the labor saving technologies became labor enhancing technologies and how the productivity of labor and capital started to get shared more equally. This technology revolution created the middle class and narrowed inequality in the Western world substantially over the last century. The author notes that despite certain professions being disproportionately affected, say elevator operators, overall workers were substantial beneficiaries of the technological change. As a consequence of the spells of unemployment being shorter and the labor market growing over time, the broad working class did not see technology as an adversary. Consumer prices dropped for what historically were luxury goods while wages rose with productivity. The author notes that these dynamics started to change around 1980 where, though it was overlooked at first, labor saving technologies associated with the ICT revolution began to be more broadly adopted. The manufacturing intensity of the economy has of course gone into decline and the services sector has become the majority of the economy. The author ties the last 30 years to an era which is increasingly looking like the beginning of the industrial revolution where capital was replacing labor not enhancing it and as such increasingly it is causing deep frictions. The author discusses how politics has shifted and populism is on the rise partially as a consequence of this structural shift in growth and its composition. Capital share of income is creating frictions globally as has the expansion of the tradable sectors. The author discusses developments in AI and how they are increasingly likely to disrupt core labor pools and there is no obvious demand for those displaced. This creates a situation where technology is improving productivity but the distribution is becoming structurally destabilizing.
The Technology Trap introduces a very important viewpoint for considering the current challenges of technological disruption. Of course there are both similarities and differences to different era's in the past but the bigger picture of when technology was labor enhancing vs labor substituting is of utmost importance to consider and if today it is labor substituting, understanding the dynamics of when we saw that same phenomenon might be illuminating. In this case it is most similar to the beginning of the industrial revolution. There are certainly no obvious solutions to creating a more egalitarian system but the author highlights that if we face an increasingly unequal world that has better growth we need to discuss how to create a fairer distribution that is less destabilized. We need to think of the right policies that can deal with higher frictions caused by technology as assuming we can go backwards in time is infeasible. Definitely worthwhile to read to understand the history of technology's impact as well as the dynamics of technological disruption.
Top reviews from other countries
Its a very good reprise of the effect of technology historically. There's some interesting data on how steam, electricity and so on affected different strata of society; and for how long. There's a decent section on the effect that computers had on productivity and earnings. Then he refers to the research that he's done into what industries will likely be affected by AI; but never really summarises it very well. I don't need a research fellow to tell me that autonomous driving tech will be bad for truck drivers' jobs. What I would like to have read about is which are the industries that will be affected by AI that are not so screamingly obvious.
Overall, rather disappointed, even though I thought the historical section was really interesting. Maybe he would have been better cutting out the last bit and just calling it an analysis of the historical impact of technology on employment?
Frey points to the effect of competition between cities and nations as the mechanism allowing technology to triumph into implementation. He may thereby be stating a case for the autonomy of technology in its human nexus, but he doesn’t engage with the literature on the philosophy of technology, ranging from Heidegger to Habermas, Ellul to Feenberg, which debates this and other crucial points. This loses analytical power.
Narrative style faces the challenge of the selective criteria applied to create the account. Frey regularly refers to a stream of academic papers, (nearly always authored by two economists!), and then makes assertions and ponders interpretations without rigorous empirical test. He doesn’t offer any overall explanatory hypothesis of technology for test. This leads to a lack of synthesis and focus. Frey’s implied conclusion is perhaps that technology is beneficial if society manages its more immediate adverse outcomes.
His review of potential actions is brief. In particular he summarily dismisses basic income as a necessary resolution. Despite frequently quoting Robert Solow, Frey omits Solow’s insightful remark on basic income made in ‘Revisiting Keynes, Economic Possibilities for our Grandchildren, Lorenzo Pecchi and Gustavo Piga (MIT 2008, p92) where Solow points out that with burgeoning production from advanced technologies ‘the wage will absorb only a small fraction of all that output. The rest will be imputed to capital...the extreme case of this is the common scare about universal robots: labour is no longer needed at all. How will we then live? The ownership of capital will have to be democratised...(needing) some form of universal dividend...Not much thought has been given to this problem’.
Having described the hollowing out of the middle class and the prediction of his own joint paper that AI automation could threaten 47% of US jobs, he dismisses basic income because ‘there is little to suggest that widespread joblessness is imminent’ or ‘fears that work will disappear have always turned out to be false alarm’ (p356). This is inconsistent with his earlier argument, but also misses the point that it is not total employment which is necessarily threatened, but aggregate consumer income, whose demonstrable relative decline triggers excessive consumer debt to support expenditure, leading to consequent economic crisis. This is the economic technology trap to which a basic income funded by sovereign money is the unique and necessary solution.