

Economics Focus

Marathon machine

Unskilled workers are struggling to keep up with technological change

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Not quite birdymd: the reality is far more complex.

Indeed regulation has exacerbated costs (especially in the US). Not so much because of slow implementation of technology. Rather because:

1) federal regulation has resulted in a fast falling number of physicians per capita (from 3 per thousand in 1990 to 1.8 today). There are crazy numerical restrictions on the number of training places for new physicians, and the number of foreign qualified physicians that can register in the US).

2) the patent system awards monopoly rights for the production of drugs which often have no good substitute (for a given patient with particular condition, symptoms and complicating factors).

3) every employer is obliged to provide comprehensive medical insurance, the accepted definition of which typically involves coverage for any treatment given any condition. That is, those awarded monopoly rents are likely to become obscene.

Non-regulatory reasons for increased costs include changing demographics, and the introduction of new technologies which allow people to live longer (consuming yet more healthcare).

Of course, if it became legal to pass medical diagnosis, give medical guidance and perform surgery, then it might become easier for recent software and robotics innovations to reduce healthcare costs in the near future.


Education (at the higher level) will soon become very cheap and universally accessible:

CS 101 by Nick Parlante @ cs101-class.org
Natural Language Processing by Dan Jurafsky and Chris Manning @ nlp-class.org
Software Engineering for SAAS by Armando Fox and David Patterson @ saas-class.org
Human-Computer Interfaces by Scott Klemmer @ hci-class.org
Game Theory by Matthew Jackson and Yoav Shoham @ game-theory-class.org
Probabilistic Graphical Models by Daphne Koller @ pgm-class.org
Machine Learning by Andrew Ng @ jan2012.ml-class.org
AI by Thrun & Norvig ai-class.org

Mr. Bauer

You said:
"It would be strange indeed if markets, given room to experiment with new technologies, couldn’t devise ways to combine man and machine in fruitful—and profitable—new ways"

Read here the wikipedia definition of The Economist:
It is said that

As always, The Economist saying that "markets" will solve the problems, isn't there any other way to solve it ? Couldn't Universities help ?
Something good about The Economist is that it is putting the problem forward. If only world leaders pay attention !!!!! For a start, why is this not being discussed now in Australia ?????!!!!!

What about Bob

Enjoyable article. However, the author is assuming that all humans are created equal. They are not, some are smarter than others. And there are a lot of stupid ones and they can't be trained and they can't be educated to be competitive in a high tech world. Thus there will be a large segment of humanity that will be worthless and continue to multiply.

also, must keep in mind that different standards and cost of living exist around the world. Globalization has rapidly increased the effects of technology as labor now has to compete in a worldwide market.

as is pointed out by Common sense, some of this is how the political system has made the economic system to favor certain sectors.

@ Common Man: great post right up until you pulled the worthless man made climate change idea, which kinda ruined it.

climate change has been occurring on this planet for millions of years. if climate change did not happen the Human species would not exist. More historically recent during the mini-ace age, villages in the Alps were worried about the glaciers growing to fast and would cover their towns in sheets of ice. England is now once again able to produce wine as climate has warmed enough for them to resume this after several centuries being unable to.

Climate will continue to change whether it is man made or not. To attempt to have man cease causing climate change will not stop the climate from eventually changing.

Thus, while I am not advocating trying to speed up the process, but expending too much resources to try to prevent a "man made climate change" will not stop climate change. What most of the resources should be focused on it how to allow man to adapt to climate change, thus mitigate any adverse effects. Otherwise, we will try to keep a climate in a standstill and forced sudden climate changing event will occur and most of humanity will die.


The biggest myth is probably that full employment, 40 hours a week for everyone, is necessary or desirable. The rise of frivolous jobs in media, science, computing and entertainment, replacing those that provide necessities such as construction, manufacturing and agriculture, should illustrate that we are free to work less.

We need a system that encourages high quality results over high apparent effort at all levels, one that can spread innovation and progress throughout societies, and that also distributes the rewards more widely. The free market delivers on some of these counts, but intelligent government must play a larger role.


Typical of this "lost the plot" toy driven, society (for want of a better word)!
How it works; -
People work, people get paid, people spend and get taxed. Manufacturers get paid for their goods and Governments rake in the taxes from booze, smoking, betting & spending. People save money and manufacturers take out loans to develop more goodies.

How it doesen't work; -
People are replaced by new electronic systems, these sytems will be flawed because they're not 'real world tested'. Doesen't matter because it's all about this years / periods tick box achievement. Spending continues to spiral down as more and more people are "replaced" by technology.

Reality; -
People are a businesses biggest asset and biggest liability.
Technolgical Systems are one of a business potential assets and great liabilities.
Combine the biggest asset with assistance from the technological asset and the biggest liability flourishes and business benefits.
Replace your top asset with a potential asset and it will flounder fall into disrupute and join the vast multitude of white elephants sat in partial use (a shame because there is potential waiting to be realeased).
Failure plucked from the jaws of victory as the project reached its 3rd budget slash. But hey "We hit 'go-live' and the future savings will be immense! 'when did you want me to relocate and start on the Northern implementaion?'
All been /are there, haven't we!

Hami melon

After all, the high technologis are always serviced the rich, which the poor are helpless to make any changes.

We frequently heard that" it is science and technology that make people better off". But if the steps are so fast in order to get a fortune, who can keep up with you?

Our laeders tell us that we should make some be rich at first, and then the rich will help the poor. But now, look at the rich, they leave the poor far behind.

In one word, the bottom of the people is the sacrifice of the rich's wealth. Just do something for them.

Yingnam Fong

Probably the development of the ICT has done a lot of both harm and good to the ordinany people. The semi-skilled and unskilled workers have been hit hard and rendered jobless very easily due to the keen competition. Most of their jobs have gone forever because of the inception of the new skill made available in their companies. These unlucky people might rely heavily on the safety net provided by the authorities as long as the financial situation wont force a cut in this connection.

The bulk of the ICT development is aimed to enhance work efficiency and low production cost. The end products are to meet the pleasure of the consumers. Never in any case that the development would have the thought of any social responsibility on the loss of jobs and on how the workers might suffer. Though in real life, human beings get the benefit of enjoying a convenient and better life. Somehow, in many cases, the ICT development is aimed to trim down the human workforce as its goal. It is easily understood always.

Over the years, many basic necessities as well as freaky gadgets have become affordable due to mass production and competition. People actually can acquire the basic things including the food for the survival.

The author of the article has rightly pointed out that people have to spend hugely on medical and education, though he has made mention of the housing. If the science is said to be almighty, it wont take long to tame these two pricy quarters. Otherwise, many people would fall into a desperate state and tend to lower the overall life expectancy as a consequence. The only comforting news now appear to be the awareness of some rich people (out of the 1%) who has indicated their willingness to help. Would they prepare to refrain from wiping 50% of the GDP wealth in the future remains a questionmark.

Regarding the last sentence suggesting the making of a mutant, it can be a sweet dream and nightmare to become one. What a wonderful idea for anyone to choose your own configeration at will. What PhD you want?


An addendum to my comment: corporations may or may not pay for adopting technologies that gut communities and their workers. Shareholders may continue to profit richly. But should there be no conscious behind corporate policies? Is there no contract with the community from which they so handsomely profit?

Are profits by any means (technology, usury) okay? Will it make our country stronger in the long run? Populations increase greatly, available jobs decrease because Sparky the Robot is serving you your shake. You do the math.


Just because any given corporation can utilize more and more technology, that puts more and more workers out of gainful employment, does not necessarily mean they should.

Corporations, in my opinion, not only have a duty towards their shareholders, but also to the communities in which they live. Laying off workers to increase profits (or prematurely foreclosing on their home) can be seen as a redistribution of wealth.

Sometimes, when companies are not profitable, adopting some technology can be a good idea. But should they every time the opportunity presents itself? Corporations should be careful because they may unwittingly be shrinking their consumer base over the long run. At least in the U.S. And shareholders may not like that.

Juan Ocazionez

This is got to be the first time that I actually know one of the academics listed in these articles. I happen to know Tim Leunig and his family.

Steve Roth


Mechanical Turk, for example. The workers can make upwards of a couple of dollars an hour. What's amazing is that in my usage, checking it out, a huge majority of the workers who worked on my jobs are north american.


Health care costs are not going to go down for as long as the insurance companies keep paying the health care providers what ever they want - regardless of technology- Insurance companies do not bargain, they do not shop around, like a real customer would.

Health care costs (just like fixing your car) has never been more expensive than it is in current days, the insurance scheme takes the bagain part of the process and inflates costs at the expense of the end custormer. The insurance company, the health care provider/ body shop are increasingly making more money and profits, and the costs and insurance premiums are incrisingly higher and higher

neutrino123 in reply to Felipinpinguin

Insurance and lottery are the same, with the majority loser subsidizing minority winners, the only different is how winners are pick. Insurers don't shop because they are running the lottery, regardless who's winning they are profiting.

For insured, they tried to maximize their chance of winning by living an unhealthy lifestyle, or abused the system. Both insured and insurers are to be blame for skyrocketing premiums.


There's nothing particularly clever in this article - but I am pleased that TE feels the need to comment.

Faith in the everlasting superiority of the human brain is naive. It was a message sold to people in the 70s and 80s to help them accept computers into their lives (reminds me of how the health benefits of soy were sold to us later in the 80s as they GM'd it and put it into everything we eat). Now we are being told by TE (probably deriving it from Ray Kurzweil) that by merging man and machine we will become better, more powerful people, living better, more productive lives.

And yet none of this will make anyone happy. Some technophiles say things like 'when robots can do all the work, then we'll be able to do what we really want.' and of course they have no idea what they really want. Others, like Ray Kurzweil, talk about how great it will be to upload oneself in to a computer, be super-intelligent and never die. However, as nearly every story book and film shows, the bad guy is the one who wants so much power that he forgets to be a human being.

In the western world with our static or falling populations, we don't need more stuff. The trouble is that most people have no idea what they really want or how to get it (See "Stumbling into happiness" by Daniel Gilbert). So instead we let others tell us what to desire, what is good and what is not.

Personally, I have no desire to be a man-machine. What I really want is to live in harmony with my fellows, with the natural world, and with myself. In my city, I hardly talk to my neighbours, to people on the train, to people at the shops, and I spend most of my time indoors, even when I exercise. Is this how I was meant to live? Is what human beings are meant to do?

I am coming to believe that the machines are using me. I have a computer in my hands at all times. No doubt these words will be counted, put into google's great database, searched and processed.

I am encouraged by some social research being done (eg see this week's TE http://www.economist.com/node/21538658), but I look around and see that the technophiles and economists get all the attention. This may change in time. I live in hope.

This week I read about Ted Kaczynski (the Unabomber). He was a former mathematics professor who saw social problems with technology. Essentially, he became a neo-luddite. He was a bit smarter than Ludd & co. He tried killing scientists, not their machines, and had his manifesto published (you can find it easily enough). A number of serious writers and technologists have felt compelled to address his arguments- he wasn't nuts. I encourage all to read his arguments and the comments about him.

Common Man

A problem with any progress has always been the actual, tangible pain to some existing workers for the potential gains in the future that one can only take on faith will happen. Not all progress that technology makes possible is beneficial - weapons including financial weapons of mass destruction.

But you confuse progress in two directions each of which have different implications - progress that lets people better enjoy living and progress that opens up opportunities for people to raise their standard of living. It would be a mistake to assume that they are tied together in the ICT world, as they used to be in the physical manufacturing world and therein lies a critical difference.

When cars became cheaper and affordable and more people bought it, it required large amounts of labor to scale up even with technology. The ICT scaling works differently because they are very capital efficient (a primary reason for immense investments in this area) primarily by not requiring much labor to scale. And that is where that difference becomes significant and old analogies become irrelevant.

Imagine a thought experiment where the only progress was in making people get access to movies wherever they were in higher and higher definition using technological progress. It may lead to some amount of temporary labor in building more cell towers, new data centers, laying cables, etc., but those are one-time expenses that are amortized over many years and the scaling happens almost entirely in the size of data centers and number of servers. Of course, one could claim that raises the standard of living of people because now they have the freedom to enjoy the movies anywhere. But if they were losing their jobs meanwhile, of what use is additional service to make movies mobile.

This is a forced example, but makes the difference between progress that makes it possible to enjoy living and progress that allows people to increase their standard of living. It is the shrinking of the latter that is the problem and it cannot be rationalized away by progress in the former because the economics doesn't work.

One can, of course, point to technologies that made eBay possible which turned a number of individuals into independent stores to make a living that was not possible before. But did it compensate sufficiently for the jobs lost when local brick and mortar stores closed? That is the critical question.

Of course, this is not to be a Luddite and argue for preventing or hindering technology progress because it is going to happen regardless. There is no moral, ethical or social imperatives to discovering technology, it can lead to extinction of the species as much as it can lead to its survival. There is no inherent self-correcting mechanism.

So, clearly there is a need to have an overlay on top of this progress that at the minimum makes it self-correcting without leading to extinction or other undesirable side-effects such as extreme polarization (which is a prelude to extinction).

Unfortunately, people who have blind faith in the flow of capital to correct all of these problems on its own, spout a contra-factual that if there were absolutely no distortions to flow of capital, it would indeed do so but there is no intellectual or empirical basis for such a theoretical system will never exist.

It is a straw argument to suggest that technology is the reason and not the other "scapegoats" as you call it that are the reasons for this situation. What those "scapegoats" do is to distort any attempts to moderate/channel the progress of technology into a sustainable economic condition rather than creating a scorched earth policy to progress.

So, one has to look at the distortions induced by crony-capitalism, government policies that favor capital over labor, etc., all aimed at making returns on capital as high as possible at the expense of labor as potential reasons for so many people losing their standard of living, even if they are able to watch movies anywhere they can while that situation may not be on a sustainable path.

Is it any wonder that the ones most vested in capital are the ones that tend to deny any man-made effect on the climate? Is the Economist amongst others in denial of any man-made effect on the sustainability of labor?

glen polo

This world will continue to stride towards better inventions and better technology and one way for unskilled workers to have a role in this is to receive some education. In the future there will be robots that can do the tasks an unskilled worker can so everyone has to contribute in some way. Business owners will rather have robots instead of humans because they cost less in the long run and they will do the same tasks. Unskilled workers need to receive an education somewhere to help pitch in this world's stride to a better and more advanced race.


One of the most insightful things in this good article is the point that humans can use technology to extend their capabilities. Much current software is focussed on doing work that humans do not enjoy and are mediocre at, including repetitive, high volume tasks that require precision, strict adherence to rules or extensive recall of facts. As such, software should make many jobs better by stripping out less interesting portions, as well as increasing productivity through making workers better at their jobs.

RCAQ in reply to DiligenceEngine

Therein lies the issue with an insignificant amount of those available (or off radars) for work, i.e. rationality levels, skill maximum, abilities etc. are all different;

What's at stake here is being more social & assigning humans to mediocre tasks (for those being in charge of these tasks being limited by their skills, chances...) versus using IT/Robots, or, as stated in the article, ICT;

Educational systems ought to be changed or changed;


Perhaps fortunately, bureaucratic and social inertia are limiting job losses (due to even greater automation), giving us more time to figure out alternatives to wages-for-work as the fuel of the economic engine.


Technology has not been fully applied to education and health care because these are both highly politicized and regulated industries. As usual, bureaucratic constipation impedes progress and cost cutting.


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