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Archive for September, 2013|Monthly archive page

Technology Innovation and Unemployment

In Education, Interdisciplinary Science, Research and Development on September 30, 2013 at 12:48 AM

Automation has increased productivity in many areas. If you look at the assembly line or shop floor of a car manufacturer, you will see automation in its full might. Though you will still find a certain number of workers, their number is far less compared to pre-automation days. You may have also come across call center staff who deal with queries related to insurance, bank related tasks etc. Most of these queries are routine in nature and it is the same kind of information that the staff has to provide to the callers. There is recent news that companies like IPsoft are providing artificial intelligence based virtual call center staff to handle such queries. This is expected to reduce the number of people required in BPOs and call centers. 

An aprocryphal tale is about a conversation between Henry Ford II and Walter Reuther. The former was the head of Ford Motor Company while the latter controlled its union. When Ford asked Reuther how he would make robots pay union dues, Reuther asked in return if Ford could make his robots buy cars. Ford got the point that any increase in productivity has to be met with an increase in the number of consumers. Ford raised the salary of his staff so that they could afford to buy cars. 

Do you think that an increasing rate of technological innovation can lead to rise in unemployment? If you believe in this, you probably believe in Luddite Fallacy. I would rather suggest to be open to debates on this issue. This issue is far from resolved and new insights keep coming now and then. Two opposing views on this issue can be found here and here published in The Economist and Forbes respectively.

Given the fact that many engineers work on systems which are meant to increase productivity, provide better services, it is only relevant to have a look at an aspect of economics and social change that they are seldom concerned with. It is not so much about questioning what they do rather it is more about understanding the mysterious ways in which the world moves!

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