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Is Technology the best friend of the Rich?

Computing devices and programs written for them are rendering many people obsolete. That’s because computer can be cheaper more accurate, more versatile and more reliable for specific tasks. Currently jobs like Ticket Sales, Scheduling and many others have been automated. In future many aspects of jobs such as train conductor Bar-tending and Waiting Tables and… can be automated using technology. Is computing an industry destined to ruin the lives of those with very little education?

Opponents of this thesis would disagree and point to invention of other technologies in the past that replaced the job of many millions of people. The argument points out that Tractors, Steam Engine, Automobile, Telephone, Telegraph, and Printing Press were all displacers of jobs in their era but with increasing efficiency, the capital Formation helped to replace those jobs with other new Tasks.

It is correct to argue that when an economy creates efficiencies using Automation eventually that economy creates other jobs such as producing or services for those very machines. It is also true that there are second order and third order effects associated with more efficient production of a product or service. That is for instance video game industry is the second order effect of the computer industry. Cheap Banking is an nth order effect of personal computers, Internet and many other advances. One can argue (probably accurately) that those nth order effects can replace many of the jobs the 1st order effect had originally displaced.

However, sometimes it can take years if not tens of years for this phenomenon to take place. It seems like certain that if there are not proper re-training and social insurance programs in place; technology can be a cause for instability in a society. That’s because advances in technology industry are occurring much faster than our ability to retrain or re-purpose the displaced workforce.

The issue is that we have legions of people who have been brought up in a system which hasn’t prepared them for technology centric jobs. Yet we must admit that urgency is a great catalyst for change, meaning people will find a way to train themselves for new technology requirements. That can only be easy for younger folks who have better ability to pick up new concepts and are not invested in the old ways of doing things mentally.

It is also true that when Tractors came along to automate Farmer’s jobs world was transitioning from agrarian society to industrialization. When first round of automation took place in factories the society was transitioning to a service economy. But it is sort of questionable what sort economy we are going to transition to in this very globalized environment.

Figure 1: Economic Transitions

Diagram showing transition of economy from one phase to another.