Recent technological advances have three biases: They tend to be capital-intensive (thus favoring those who already have financial resources); skill-intensive (thus favoring those who already have a high level of technical proficiency); and labor-saving (thus reducing the total number of unskilled and semi-skilled jobs in the economy). The risk is that robotics and automation will displace workers in blue-collar manufacturing jobs before the dust of the Third Industrial Revolution settles.
The rapid development of smart software over the last few decades has been perhaps the most important force shaping the coming manufacturing revolution. Software innovation, together with 3D printing technologies, will open the door to those workers who are educated enough to participate; for everyone else, however, it may feel as though the revolution is happening elsewhere. Indeed, the factory of the future may be 1,000 robots and one worker manning them. Even the shop floor can be swept better and cheaper by a Roomba robot than by any worker.
For the developed countries, this may seem like old news. After all, for the last 30 years, the manufacturing base in Asia’s emerging economies has been displacing that of the old industrial powers of Western Europe and North America. But there is no guarantee that gains in service-sector employment will continue to offset the resulting job losses in industry.
For starters, technology is making even many service jobs tradable, enabling them to be offshored to Asia and other emerging markets. And, eventually, technology will replace manufacturing and service jobs in emerging markets as well.
Today, for example, a patient in New York may have his MRI sent digitally to, say, Bangalore, where a highly skilled radiologist reads it for one-quarter of what a New York-based radiologist would cost. But how long will it be before a computer software can read those images faster, better, and cheaper than the radiologist in Bangalore can?
Likewise, in the next decade, Foxconn, which produces iPhones and other consumer electronics, plans to replace much of its Chinese workforce of more than 1.2 million with robots. And soon enough voice recognition software will replace the call centers of Bangalore and Manila.
Job-reducing technological innovations will affect education, health care, government, and even transportation. For example, will we still need so many teachers in the decades to come if the cream of the profession can produce increasingly sophisticated online courses that millions of students can take? If not, how will all of those former teachers earn a living?
Governments, too, are shedding labor – particularly governments burdened by high deficits and debts. And, by transforming how services are provided to the public, the e-government trend can offset the employment losses with productivity gains.
Even transportation is being revolutionized by technology. In a matter of years, driverless cars – courtesy of Google and others – may render millions of jobs obsolete.
And, of course technological innovation that is capital-intensive and labor-saving is one of the factors – together with the related winner-take-all effects – driving the rise in income and wealth inequality. Rising inequality then becomes a drag on demand and growth (as well as a source of social and political instability), because it distributes income from those who spend more (lower- and middle-income households) to those who save more (high-net-worth individuals and corporate firms).
http://jewishbusinessnews.com/2014/12/31/nyu-professor-nouriel-roubini-where-will-all-the-workers-go/
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