Were the Luddites right? Smart machines and the prospect of technological unemployment.

• Author: Bailey, Ronald
• Position: Columns

IN 1948 NORBERT WIENER, the father of cybernetics, wrote an urgent letter to Walter Reuther, the president of the Union of Automobile Workers. Wiener warned Reuther that the combination of production machinery with computing machines would soon yield an "apparatus [that] is extremely flexible, and susceptible to mass production, and will undoubtedly lead to the factory without employees; as for example, the automatic automobile assembly line." Wiener ominously concluded, "In the hands of the present industrial set-up, the unemployment produced by such plants can only be disastrous."

The mass unemployment that Wiener predicted did not occur. As technology advanced, the number of employed workers in the United States increased from 59 mil/ion in 1950 to a peak of 146 million in 2007, and GDP grew from $2 trillion in 1990 to $13.6 trillion in 2012 (in 2005 dollars).

Now, two centuries after the original Luddites smashed then-newfangled weaving frames in northern England, predictions of permanent technological unemployment have been revived. In a December working paper for the National Bureau of Economic Research tided "Smart Machines and Long-Term Misery,' Columbia University economist Jeffrey Sachs and Boston University economist Laurence Kotlikoff ask, "What if machines are getting so smart, thanks to their microprocessor brains, that they no longer need unskilled labor to operate?"

Sachs and Kotlikoff are not alone in worrying how technological progress will affect employment. Progress "has sped up so much that it's left a lot of people behind" write Erik Brynjolfsson and Andrew McAfee of MIT's Center for Digital Business in their 2011 book Race Against the Machine. "Many workers, in short, are losing the race against the machine." In a 2011 McKinsey Quarterly article, Santa Fe Institute economist Brian Arthur describes automation as "a second economy that's vast, automatic, and invisible." In Arthur's view, "The primary cause of all of the downsizing we've had since the mid-1990s is that a lot of human jobs are disappearing into the second economy. Not to reappear."

As evidence that American workers are losing to the machines, Brynjolfsson and McAfee point to falling real wages for unskilled workers in the United States. The Employment Policy Institute's 12th report on "The State of Working America" reveals that between 1973 and 2011 inflation-adjusted hourly wages fell nearly 30 percent for men without high school diplomas, 15 percent for...