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Table of contents
Introduction………………………………………………………………………………3
Does More Technology Create
Unemployment? ...................................................
.........4
Literature review……………………………………………………………………….….6
a. Japan case………………………………………………………………………….6
b. United states case……………………………………………….…………………7
c. Israel case………………………………………………………….……………….7
Examples of replacing human with machine………………………………………….……7
a. Computers…………………………………….……………………………………8
b. Internet…………………………………………………...…………………………9
c. Phones……… ……………………………………………………………….9
d. Television………………………………………………………………………….10
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Conclusions and analytical
thinking.........................................…………………………..10
Work cited ………………………………………..………………………………………13
Technology vs. Unemployment
Introduction
Does technology create or destroy employment is one of the
big questions that troubles people today. First, it is largely
technology that has the potential of providing the society with
the luxury to focus more on earth, and, second, technology is
often cited as the ultimate source of economic growth and
consequently job growth. What about the idea then that
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technological innovation is the continuous source of growth, and
would technology adapt itself to provide this growth in the
coming days? Technological innovations are invariably associated
with the changes in the nature of work and thus in the
composition of employment by industry and occupation. New
technologies usually give rise to fears that they will displace
labor and create unemployment. During the great automation scare
of the 1960s, the American government was sufficiently worried
that automated industries would eliminate jobs that it
established the National Commission on Technology, Automation,
and Economic Progress to investigate the impacts of automation.
Advocates of technology currently argue that it will create jobs,
on the basis of what has happened in the past, substantive
positive and negative effect on the overall level of jobs or on
the unemployment rate. Rather, technology advancements will
impact the rates of pay and the quality of jobs. Claims that
advanced technologies produce or destroy jobs miss the point on
how the economy adjusts to technological change. In the long-run,
technology affects living standards and quality of work, not
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quantity of work. If higher living standards induce people to
take more leisure, the amount of work will reduce. If the higher
real wage that technology creates induces people to want to work
more, employment and hours worked may rise. What differentiates
successful from unsuccessful societies is not the rate of
employment but GDP per capita or real wages. Employment is quite
high and unemployment rare in some developing countries that have
very low living standards.
Does More Technology Create Unemployment?
Technological change in a given sector affects the demand
for labor in that sector in three ways. First, since the new
technology almost always lowers the amount of labor that is
required in the production of products, it will reduce the demand
for labor at given output levels. If the output did not change,
this would lower employment in the affected sector. This
displacement impact of technology is what generates fears that
new technology will destroy jobs and create technological mass
unemployment. Second, however, new technology also increases the
demand for products. Productivity-induced reductions in the cost
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of goods and services and ultimately prices generate greater
demand for the product and thus greater demand for labor to
produce it. The massive decline in the price of computing power
that results from technological improvements has spurred huge
increases in the sales of computers. Whether the induced increase
in output and demand for labor overpowers the displacement of
labor due to the increased depends on the elasticity of the
demand for the product. When the prices reduce, consumers
increase their purchases massively for products with a high
elasticity of demand but increase purchases only modestly for
products with a low elasticity of demand. On the assumption that
elasticity of demand are greater for new products than the
existing products, we expect that technological changes that
create new products are more likely to increase demand for the
labor in the relevant sector than technological changes that
reduce the price of existing products (Arestis, 411).
For the past many fifty years, the displacement effect of
technological advancements has exceeded the job-creation effect
of production expansion. Employment reduced in agriculture and
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manufacturing, where technological changes is most rapid, and
shifted toward services, where technological change is modest.
Within manufacturing, employment has shifted to the more
technologically advanced sectors, and from less technologically
advanced to more technologically advanced goods, but it has been
sufficient to counterbalance declining employment elsewhere in
manufacturing. Still, there has been no adverse effect on the
overall employment or the quality of jobs. In the United States,
the wages of workers in sectors that have rapid production
advances tends to rise relative to wages of comparable workers in
other sectors (Rosenberg, 214).
Since improved technology is likely to become part of the
way many industries operate- a general purpose technology that
affects everything, analogous to electricity or information
technology- rather than a technology that creates a new industry,
it will take a long time to affect labor demand throughout the
economy. Given the dominance of the displacement effect,
successful technology- initiated improvements in production are
likely to raise the country’s manufacturing output while reducing
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employment in manufacturing or at least without creating many new
jobs in manufacturing. Technology advancements should be seen as
a productivity enhancing phenomenon that permeates the economy,
not as a job-creating. Its effect on employment will be indirect
as productivity-induced higher real wages and living standards
generate additional consumer demand for all sorts of products and
services contributing to employment growth (Arestis, 413).
The third way new technology affects demand for labor is in
its use of particular factories of production. New technologies
invariably use a different mix of factors than older
technologies. During the development of new technology, firms are
likely to have high demands for the scientists, engineers, and
technicians who have to build and integrate the new ideas into
processes and products. In addition, there is a need for
supporting labor services, which creates employment opportunities
for other people. For example, the introduction of robots will
create a robot support industry to install, service, and monitor
performance, to say nothing of design and manufacture. Jobs are
eliminated in those industries that benefit from robots but are
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created in the robot support companies. Even the most high-tech
industry hires many people in sales, clerical and office work,
and employs blue collar workers and service workers of different
types. As the technology matures, demands are likely to shift
toward workers with lesser skills. In the past few decades, new
technologies have been skilled-labor-using, which has contributed
to the increased earnings of educated workers relative to less
educated workers, despite an increase in the relative supply of
the educated (Allstetter et al, 143-144).
Literature review (what happened in other countries and what they
did)
a. Japan Case
The recession of the 1990s and early 2000s seemed to be of a
different order from those of the past. Unemployment in Japan
reached 5.4 percent in 2002, and it was the highest for 50 years.
At the start of the recession, many Japanese firms tried to avoid
compulsory redundancies through redistributing resources, early
retirements and freezing recruitment. Major companies also lay
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off temporary workers typically comprising of about ten percent
of the staff. Then came the first announcements of redundancies
in the core workforce. Nissan, the Japan’s second largest care
manufacturers, announced heavy losses and started a restructuring
involving 5000 fewer staff. Te most dramatic part of the
announcement was the closure of Zama plant employing about 2500
workers. These workers were laid off because the factory was
capable of making many cars using the most advanced technology,
including extensive employment of robots (Samanta, 33).
b. United States Case
The chemical and mechanical revolution in America agriculture
over the past 10 decades put several farm workers out of
employment, transforming America from an agricultural society to
industrial nation. In 1850, about 60 percent of employees worked
in agriculture. Today, the number has reduced whereby only 2.7
percent of the workers are engaged in farming while millions of
people are poor. Despite the workers displacement, technology has
made America the leading food producer in the globe.
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c. Israel Case
New generations of computer driven robots will for replace
humans from performing tasks on land in Israel and potentially
transform into an automatic outdoor factory. In Israel, farmers
are using advanced robots in farming. In order to reduce the
risks associated with using Palestinians as workers in the farms,
the institute for agricultural engineering came up with
mechanical farm laborers/robots. The Israel people are
experimenting with a robotic melon picker which uses sensors in
determining whether crops are right to pick which has put many
Palestinian workers out work, especially during harvesting (Nof,
1143).
Examples of replacing human with machine
a. Computers
Since the beginning of the introduction of computers, many
people have feared that they will displace employees, and
information technology is no exception. However, we do not have
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solid evidence that the introduction and use of computers have
enhanced massive unemployment- in fact; overall more jobs have
been created by computers that have been displaced by them. In
the 1980s, thousands of employees of factories were made
redundant by the use of robots in factories making everything
from cars to biscuits. In 1990s, many of clerical and white-
collar employees have seen their jobs disappear with the
introduction of company databases, desktop publishing,
computerized accounting systems, building societies, automation
in banks, and firms of all kinds, small and large. Today, most
people do not work in factories or farms. Instead, they are found
in sales, banks, education, healthcare, law firms and insurance
firms. They provide services such as catering, writing computer
software or advertising and delivering goods. These jobs
primarily involve working with, creating or distributing new
knowledge or information (Cortada, 245-246).
Knowledge and information work account for about 70% of the
labor force in the US. Computers have taken over many of the
tedious tasks that humans once performed. Consider that only a
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generation or so ago: taking cash out from your bank account
involved queuing at the bank’s counter, having the cashier give
you the money and manually note the transaction in a book;
putting a newspaper together involved picking up individual
letters made out of lead and placing them manually in position,
with correct spacing achieved by placing a strip of lead between
lines; all long distance calls had to go through an operator who
manually made the connection. The introduction of computers has
in many instances led to a change in the types of job available.
Many publishing firms feared that desktop publishing would result
in fewer jobs in the publishing and printing industries. In fact,
thousands of new publishing and printing companies have been
created in the last decade- a quick flip through the yellow pages
under ‘printing’ will verify this! In several cases, workers that
are displaced by the use of computers are sometimes re-trained to
perform computer related jobs that may be more satisfying than
their original jobs (Henderson, 255).
b. Internet
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There is an increased use of internet in higher learning
institutions whereby education is delivered and supported through
information and communication technologies. The common term used
is “E-Learning” which is the use of internet to access learning
resources, interacting with contents, instructors, and other
learners in order to obtain support during the learning process,
with the aim of acquiring knowledge, constructing personal
meaning, and growing from the learning experience. This type of
learning has led to the displacement of instructors because one
instructor can teach many students based at different locations
at the same time. This is achieved through video conferencing
that is facilitated by the internet (Ferrer, 87). Also, the
internet has led to the creation of E-government which beginning
to deliver improvements in professional support systems and
national productivity, assisting various government agencies, and
departments in solving service delivery problems, processing
information, creating new knowledge, and developing new services.
The need to increase the exploitation of e-government
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capabilities may lead do displacement of workers in various
government departments (Curtin, 68).
c. Phone
In the past, almost all organizations employed many people to
work as messengers whose work was to carry letters physically
from one place to another. Later, the invention of telephones and
mobile phones made possible more rapid transmission of messages
without people having to physically move from one organization to
another. The use of phones in organizations has led to the
displacement of people who worked as messengers because one
person/secretary can deliver the required information to the
required destinations.
d. Televisions
Televisions have altered the nature of leisure and
entertainment which used to employ many people in the past. For
instance, several people applied their skills as artisans who
could entertain people and earn a living. In the past, people
organized concerts whereby they could act and get paid.
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Televisions have changed the scenario because people no longer
want to live performances. Instead they watch such programs on
televisions and hence the artists who performed before audiences
to earn a living are displaced. Also, televisions have enhanced
the passing of information to wider geographical areas within a
very short time. In the past people were being sent to deliver
such information. These people have been displaced by televisions
(Landau, 78).
Conclusion
Yes, the introduction of new technology may reduce the
number of jobs in the directly and indirectly affected areas or
industry. On the other hand, it may increase the number because
increased productivity resulting for the advanced new technology
will increase demand, and more workers will be necessary to
satisfy it. Even if there is a loss of jobs in specific
industries, new jobs will be created in support areas for the new
technology, in whole new industries resulting from unpredictable
technology, and in the service and white collar areas.
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Mechanization and automation have concentrated human work.
Devices like television stations and office computers permit a
few skilled operators to replace greater number of humble
laborers. The machines work prodigiously but require human
direction and assistance. Some see this as a natural, desirable,
and inevitable relation between humans and machines, implicitly
drawing a line between human and machine skills. But the boundary
is not static. Machines cannot yet match human motor control,
judgment or emotional empathy. But they are advancing rapidly on
all fronts, and the human component of competitive business is
shrinking. A telephone, a cash register, or a milling machine
requires a skilled operator for each transaction. Voice mail, a
bank machine, and a computer integrated factory may run
autonomously for days. Rising productivity is a business
imperative as long as customers choose better goods at lowest
prices. Output per worker must increase, and so the amount of
essential labor decreases.
Technology may be cutting-edge, but it is also a double-
edged sword that can cause harm, as well as provider benefit.
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Extreme technological unemployment may come about as intelligent
machines replace more and more human workers in an increasing
number of sectors of the economy, which we already see as mass-
market stores install automatic check-out machines, bookselling
moves away from local bookstores to online services, and
journalistic careers vanish as newspaper subscriptions plummet
and people read blogs instead of magazines. Information
technology facilitates off-shoring of jobs. A standard concept in
economics of innovation is creative destruction, the principle
that innovations often destroy old industries and jobs, but the
result is the creation of more jobs in new firms. The usual
criticism of this postulate is that it does not take account of
the suffering of people who lose employment in old industries,
especially those unable to get jobs in the new industries. But if
we think of creative destruction in terms of a production
function in which old industries are the input and new industries
are the output, we cannot in fact specify exactly what the
function is, especially when innovations of different kinds may
have different consequences. Some scholars suggest that
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innovation has a declining utility function, such that in the
earlier stages of human history the new jobs gained from creative
destruction outnumbered the old jobs lost, but later on in
history, the jobs lost outnumbered the jobs gained. They
postulate we may have passed the inflection point, after which
innovation is more destructive than creative.
The current situation with information technology may
illustrate a different point, conceptualizing innovation as
staged process, in which creation and destruction occur at
different times, following a complex coupling function. For
example, the two could proceed in surges like two same frequency
waves which are out of phase, or even of different frequencies
and thus causing a third kind of wave-like a beat frequency that
occasionally causes either creation or destruction to predominate
without that fact marking a long-term trend. This metaphor
suggests that the current unusually severe economic distress
could be partially caused by an extreme but temporary dissonance
in the rates of progress in various science and technology areas,
which could be harmonized by convergence.
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Work Cited
Allstetter, William, and Tami Schuyler. The Cutting Edge: An
Encyclopedia of Advanced
Technology. New York: Oxford UP, 2000. Print.
Arestis, Philip. The Elgar Companion to Radical Political Economy.
Aldershot, Hants, England:
Elgar, 1994. Print.
Cortada, James W. The Digital Hand. New York: Oxford UP, 2006.
Print.
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Curtin, Gregory G. The World of E-government. New York, N.Y.:
Haworth, 2003. Print.
Ferrer, Nu. Content Management for E-learning. New York: Springer,
2011. Print.
Henderson, Harry. Encyclopedia of Computer Science and Technology. Rev.
ed. New York:
Facts On File, 2009. Print.
Landau, Saul. The Business of America: How Consumers Have Replaced Citizens
and How We
Can Reverse the Trend. New York: Routledge, 2004. Print.
Nof, Shimon Y. Handbook of Industrial Robotics. 2nd ed. New York: John
Wiley, 1999. Print.
Rosenberg, Richard S. The Social Impact of Computers. 2013. Print.
Samanta, Irene. Strategic Marketing in Fragile Economic Conditions. 2010.
Print.