Tag: technology

The Great Job-Creating Machine

As the Guardian recently reported, technology has created more jobs than it has destroyed, and the new jobs it has created have been of higher quality. Technology eliminated many difficult, tedious, and dangerous jobs, but this has been more than offset by a rise in the caring professions and in creative and knowledge-intensive jobs, resulting in a net increase in jobs.  The sectors to lose the most jobs have been agriculture and manufacturing, which are both difficult and dangerous, while work opportunities in medicine, education, welfare, and professional services have become more abundant. (For example, there are more teachers per student, improving student-teacher ratios, and there are also more physicians per person than in the past).

In 1980, almost a quarter of the world’s employment was still in agriculture. Now, only around 15% of the world’s workers are engaged in agricultural labor. Yet we are feeding more people, undernourishment is at an all-time low, and food is becoming less expensive. Technological advances liberated humanity from toiling in fields by mechanizing many processes and boosting productivity, allowing more food to be produced per hectare of land, and freeing hundreds of millions of people to pursue less grueling work.

The elimination of so many unsafe jobs in manufacturing and agriculture means fewer worker deaths. According to data from the International Labor Organization, from 2003 to 2013, the number of work fatalities in the world decreased by 61% (i.e., over 20,500 fewer deaths). This occurred even as the world population grew by over 700 million over the same time period. If the most dangerous thing you have to face at work is the threat of a paper cut, you quite possibly have technological innovation to thank for that.

Even if in the future robots steal some jobs, advancing technology will likely make several higher-quality jobs available for every job lost. As the Guardian article cited earlier says, technology has proven to be a “great job-creating machine,” eliminating toilsome work but bringing into existence more—and better—opportunities than it takes away.

But note that behind every machine, there lurks human ingenuity. As Matt Ridley wrote in his book The Rational Optimist:

It is my proposition that the human race has become a collective problem-solving machine and it solves problems by changing its ways. It does so through innovation driven often by the market.

Learn more about what market-driven technological innovation has done to improve the state of humanity at HumanProgress.org.

Internet Industry More Popular Than Ever-60% Have Favorable View

New polling from Gallup finds that more Americans view the internet industry favorably than any time since Gallup began asking the question in 2001. Today, 60% of Americans have either a “very positive” or “somewhat positive” view of the industry, compared to 49% in 2014.

Favorability toward the Internet industry has ebbed and flowed during the 2000s, but today marks the most positive perception of the industry. Compared to other industries, Gallup found that the Internet industry ranks third behind the restaurant and computer industries.

Perceptions have improved across most demographic groups, with the greatest gains found among those with lower levels of education, Republicans and independents. It is likely these groups are “late adopters” of technology and have grown more favorable as they’ve come to access it. Indeed, late adopters have been found to be older, less educated and more conservative. Pew also finds that early users of the Internet have been younger, more urban, higher income Americans, and those with more education. Indeed, as Internet usage has soared from 55% to 2001 to 84% in 2014, many of these new users come from the ranks of conservative late adopters.

These data suggest the more Americans learn about the Internet the more they come to like it and appreciate the companies who use it as a tool to offer consumer goods and services.

Please find full results at Gallup.

Research assistant Nick Zaiac contributed to this post.

Americans Have More than They Realize

According to Gallup, more Americans think of themselves as “have-nots” today than at any point since Gallup began posing the question almost thirty years ago, while fewer Americans see themselves as “haves.” (Please see Emily Ekins’s earlier post for an in-depth analysis from a different angle). But do Americans actually have less in 2015 than in 1988? Let’s dig into the data to see whether Americans might have more than they realize.

2015 is the first year when Americans spent more money dining out than they spent on groceries. Let’s examine why that might be. In 2015, U.S. GDP per person (adjusted for inflation) reached an all-time high. At the same time that average personal wealth is rising, many necessities like food are going down in price. As a result, spending on the basics takes up a smaller and smaller share of an American’s personal disposable income—dropping from 39% in 1988 to 32% in 2013. This means that Americans have more money left at the end of the day, which they can then choose to save, invest, or spend on luxuries like dining out.

Not only are Americans wealthier on average, but they are also working less. The average American worker in 2015 works 30 fewer hours in a year than her counterpart in 1988, and yet is almost $18,000 dollars richer in real terms.

HumanProgress.org advisory board member Mark Perry recently pointed out that today’s young Americans may actually be the luckiest generation in history, based on what they can buy with earnings from a summer job. And increases in real wealth do not capture technological advances, which also contribute to rising living standards. The quality and variety of available goods is improving across the board. Almost no one had a cell phone in the United States back in 1990, but today they’re ubiquitous—and more useful, with an app for just about everything.

In many ways, Americans have more today than ever before: more leisure time away from work, more disposable income left after basic expenses,  more choice in what they buy, and more advanced technologies at their fingertips.  Of course, there are still people who live in genuine need. The Great Recession and various growth-retarding policy decisions have done great harm, especially to the poor. Still, if the many positive trends that we are seeing continue, then hopefully more Americans will come to count themselves among the haves instead of the have-nots. To learn more about improving living standards in the United States and beyond, pay a visit to HumanProgress.org.

Topics:

Innovating Within an Overregulated Alcohol Landscape: A #CatoDigital Discussion

April is Alcohol Awareness Month. What better time to take a close look at one of our nation’s most heavily regulated industries and the inventive ways entrepreneurs are innovating within this realm?

The ratification of the 21st Amendment may have officially ended this nation’s failed experiment with alcohol Prohibition, but the policy hangover has had lingering effects. From dry counties to bans on Sunday sales, the sale of alcohol is severely restricted in a confusing patchwork of local, state, and federal regulations. Homebrewing was not legal in all 50 states until 2013 (and homebrewers still cannot legally sell their product). Eighteen states maintain a state monopoly over the wholesaling or retailing of some or all categories of alcoholic beverages. But, even in this stifling economy, intrepid businesses are finding new ways to serve thirsty consumers.  

One real-world example of this is Klink, formerly known as DrinkDrivers, a rapidly growing start-up with a strong foothold in the nation’s capital. The app-based alcohol delivery company relies upon the mechanisms of the sharing economy—which has faced its own share of difficulties from overzealous regulators—to navigate the treacherous legal landscape of the American alcohol industry.

The concept behind Klink is a simple one: modern consumers want the ease of on-demand goods and services, deliverable at the touch of a button, wherever they are. Yet, Klink is not an alcohol provider in the traditional sense.

Unlike many other businesses in the sharing economy, Klink is stringent in its adherence to the laws and regulations governing alcohol sales. When you place an order, the company does not itself process your payments or deliver your alcohol. Instead, Klink plays the role of middleman, partnering with licensed liquor retailers, providing an easy-to-use online platform to connect alcohol providers with customers and occasionally running localized marketing campaigns.

Tomorrow at noon, I’ll be moderating a live-streamed lunchtime discussion featuring my colleague Matthew Feeney, who is Cato’s leading expert on the sharing economy; David Ozgo, the Distilled Spirits Council of the United States (DISCUS)’s Senior Vice President of Economic & Strategic Analysis; and Klink’s Founder and CEO, Jeffrey Nadel.

We’ll be discussing the ways in which Klink is navigating the treacherous regulatory waters of both the sharing economy and the alcohol industry, the regulatory hurdles standing in their way, and what this means for the future of tech innovation and alcohol sales. The panel will be live-streamed, and at-home viewers are encouraged to participate in the Twitter discussion—and tweet their question—using #CatoDigital.

…In Which Katz Is Not Cited

The Supreme Court is gradually coming to terms with the effect information technology is having on the Fourth Amendment. In 2001, the Kyllo court curtailed the use of high-tech devices for searching homes. In its early 2012 decision in United States v. Jones, a unanimous Court agreed that government agents can’t attach a GPS device to a vehicle and track it for four weeks without a warrant.

But the Court was divided as to rationale. The majority opinion in Jones found (consistent with Cato’s brief) that attaching the device to the car was at the heart of the Fourth Amendment violation. Four concurring members of the Court felt that the government’s tracking violated a “reasonable expectation of privacy.”

What is the right way to decide these cases? Fourth Amendment law is at a crossroads.

The next round of development in Fourth Amendment law may come in a pair of cases being argued in April. They ask whether government agents are entitled to search the cell phone of someone they’ve arrested merely because the phone has been properly seized. Riley v. California and Wurie v. United States have slightly different fact patterns, which should allow the fullest exposition of the issues.

Cato’s brief in Riley, filed this week, again seeks to guide the Court toward using time-tested principles in Fourth Amendment cases. Rather than vague pronouncements about privacy and people’s expectations around it, we invite the Court to apply the Fourth Amendment as a law.

The Boy Who Cried Wolf Was Eventually Right

“We are reaching end times for Western affluence,” warns economist Stephen King (insert obligatory horror joke here) in yesterday’s New York Times. King, who has authored a book entitled When the Money Runs Out: The End of Western Affluence, joins the ranks of economic Cassandras like Tyler Cowen and Robert Gordon, both of whom have made waves with pessimistic takes on the U.S. economy’s prospects. Like Cowen and Gordon, King couches his claims in overstatements that make it easier for skeptical readers to dismiss his arguments. Peel away the hype, though, and these growth pessmists are still fundamentally correct. The wolf really is at the door this time. In other words, the growth outlook really is darkening.

Cowen put the hype right in the title of his attention-getting book: The Great Stagnation, his term for the past 40 years or so. Of course, real GDP per capita has nearly doubled since 1973, so stagnation is obviously an inapt term. It’s true that productivity growth and growth in median incomes have slowed down, but The Moderate Slowdown is a pretty boring book title. Meanwhile, Gordon saw Cowen and raised him with the highly provocative and speculative argument that technological progress is largely exhausted and, therefore, the 250-year era of modern economic growth is winding down. You don’t have to be Raymond Kurzweil to find that contention unpersuasive.

Now King warns that Western affluence is coming to an end. Well it’s not: even if all growth stopped tomorrow, today’s advanced economies are affluent beyond the wildest dreams of yesteryear.

Push past the hype, though, and Cowen, Gordon, and King are making a point that really needs to be more widely understood: growth is getting harder for the U.S. economy, and there are strong reasons for thinking that growth rates over the next decade or two will fall short of the long-term U.S. historical average. As I explain in a new Cato paper released today, you don’t have to be a pessimist about the future of innovation to be pessimistic about the U.S. economy’s medium-term growth outlook. The main source of weakness lies in demographics: the 20th century saw big increases in both the percentage of the population in the workforce (thanks to the changing role of women in society) and the overall skill level of the workforce (thanks to a huge increase in formal schooling). The rise in schooling has slowed down considerably since 1980, and the labor force participation rate has actually been falling since 2000 (it’s now back to where it was in 1979). What were tailwinds for growth have turned into headwinds.

Topics:

Barack Obama, Luddite?

In the video clip above, President Obama blames America’s current unemployment problem on… automation. ATMs and airport kiosks are singled out.

These words could only be uttered by someone who knows very little about economics or the history of human progress. In fact, they could only be uttered by someone who has never reflected on this question before in his  life. Because if you reflect for one moment, you come up with this glaringly obvious counterfactual: we use a lot more  labor-saving technology today than in previous generations, and yet we also employ far more people. Therefore, increased automation does not lead to decreased national employment.

If you do more than just think for a second – if you read an economic history book, for instance – you discover that increased automation doesn’t even necessarily lead to decreased employment in the industry being automated! The classic example is the 19th century British textile industry. The so-called “Luddites” smashed automated looms fearing that they would lead to rampant unemployment in their industry. But, as the new technology proliferated, textile industry employment rose. Among other reasons, increased efficiency drastically lowered the prices of textile goods, that shot demand through the roof, and to meet the new demand new workers were required to operate and maintain the new machinery.

There are other examples, of course, and the president will save the American people a great deal of hardship, and himself further embarrassment,  if he familiarizes himself with them. Here’s a good brief introduction from the British Secretary of State… under Margaret Thatcher.

Update:

For those having trouble viewing the video, here is a transcript of the relevant Q&A:

Q: Why, at a time of record profits, have you been unable to convince businesses to hire more people Mr. President?

A: [….] the other thing that happened, though, and this goes to the point you were just making: there are some structural issues with our economy, where a lot of businesses have learned to be a lot more efficient with a lot fewer workers. You see it when you go to a bank and there’s 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.

Pages