Daniel Lacalle

Face It, Technology Does Not Destroy Jobs

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If you read some newspapers and politicians’ comments, it seems that technology companies are a threat and robots will take your job . The idea is interesting, and has populated hundreds of pages of science fiction books that feed on a dystopic view of the future where humans are only an annecdote.

It’s an interesting idea, there’s only one problem. It is a fallacy.  

The idea that technology will destroy jobs starts with exagerated estimates – as always – with the objective of presenting a world in which there must be an intervention – fiscal, of course – from governments, in order to save you from a future that has always been wrongly predicted … But this time it’s different.

The empirical evidence of more than 140 years is that technology creates more jobs than it destroys (read here ) and that there is nothing to fear  of artificial intelligence. Randstad studies  show that technology will create more than 1.25 million jobs in Spain alone over the next five years.

The empirical evidence of more than 140 years is that technology creates more employment than it destroys

Evidence shows us that if technology really destroyed jobs, there would be no work today for anyone. The technological revolution we have seen in the past 30 years has been unparalleled and exponential, and there are more jobs, better salaries. The best example is the German region of Baviera, one of the parts of the world with a higher degree of technification and robotization, and with a 2.6% unemployment. An all-time low. The same can be said about South Korea, and the world in general.

When I started to work in 1991, they told us that machines would take our jobs. Today, there is a lower unemployment and the workforce has grown massively. Today, they tell us the same thing. If 47% of jobs are going to disappear in 20 years, many more will be created .

Most of the jobs we know today did not exist ten years ago. Technology does not destroy employment, what it does is free capital from obsolete sectors to new sectors and, thereby, improve the quality of life of all and, in addition , create many more direct and indirect employment.

Technology only destroys jobs we do not want anyway

In fact, technology only destroys the jobs we do not want anyway. What society, all of us, must do is to create the conditions for us to be prepared for the new world. To be prepared does not mean to make us all computer engineers, but to understand that our capabilities are not just our decree or tasks, but a whole set of skills that have enormous value in a modern society. “Low skilled workers” are only viewed as unemployable because our analysis of valuable skills is based on obsolete views of jobs as tasks, instead of the inmense possibilities of many other high-value characteristics that those citizens possess apart from the specific labour they have conducted. A construction worker can be a terrific salesman or a great customer service consultant.

Technology does not destroy jobs, politicians do.

What does not work, nor has it ever worked, is to try to put barriers to technoligy, penalize the efficient, try to stop progress, with the objective of perpetuating obsolete sectors under the excuse of “employment”. It neither defends the existing jobs nor solves the problem.

If politicians want to defend the job, why not ban tractors and put the whole world to work in fields, like Pol Pot?. You may say this is an exaggeration, but this nonsense is the same fallacy as placing barriers to technology to perpetuate obsolete jobs.

Interestingly, those same people who “predicted” the end of oil, water scarcity, massive food shortages, the end of pensions, hyperinflation and slavery to machines, all wrong, are the ones who say “this time is different “, today.

Let us be clear. All that is sought by promoting scaremonging estimates is to find an excuse to increase your tax burden . Not for jobs. If politicians really cared about employment, they would be giving tax breaks to technology companies and start-ups to train workers on high-added value jobs and helping them adapt to change, not squandering funds in useless subsidies. Less basic income and more basic knowledge .

The problem is not artificial intelligence, but natural stupidity.

The tax assault on technology companies is not a coincidence. It seeks to perpetuate obsolete industrial conglomerates, which in Europe have turned into covert social security systems and, instead of seeing high-tech companies as guarantors and leaders of the change of the growth pattern, that create jobs and improve our quality of life Of all, it seeks to prevent change . The aim is to have citizens as hostage clients, addicted to Huxley’s Soma of State subsidies via welfare. It is more comfortable to subsidize idle capacity than promote progress.

Instead of making it possible for technology companies to grow and develop in Europe, politicians seem to prefer to subsidize low-added value sectors that generate sub-employment … and if a company buys a machine, a bureaucrat will decide how many jobs it is supplanting, only to pass the tax bill. Can you imagine if the hat manufacturers would have succeeded when they went on strike against Ford’s evil new automobile? Today, we would have all paid much more for cars and, above all, the hat industry would have succumbed anyway. Because putting barriers to progress is useless, and very expensive .

The technological debate cannot be addressed from dystopian estimates that have proven to be false time and time again since Malthus. But it is even worse when it is viewed from a fiscal repression point of view. You and I already know that there is a huge perverse incentive to present apocalyptic predictions because the trick is that you will pay the tax bill.

If politicians truly believed the apocalyptic scenario they paint, and really cared about jobs, they would do everything and more to attract investment and technology companies, not try to support their dinosaur telecommunications conglomerates via subsidies and entry barriers. And, of course, they would not attack those who lead change and generate innovation. They would be more like Ireland and less like Greece.

The probability that technology and the democratization of information generate more prosperity, employment and well-being is almost 100%.

If politicians were truly concerned about technology and digitization, they would not focus on whether taxes should be paid in profits centers or in customer locations. The benefits of technological multinationals comes from their intellectual capital (technology, software, algorithms) that makes services efficient and inexpensive. If interventionists were concerned about robotization and employment, politicians would be facilitating the creation of thousands of technology companies, not putting fiscal and regulatory barriers . They would be encouraging technological investment, not subsidizing idle capacity.

What politicians and those who make flawed 50 year predictions know is that the probability that technology and the democratization of information will generate more prosperity, employment and well-being for all is almost 100 percent.

What they also know is that it jeopardizes a rent-seeking revenue system that feeds many cronyist networks.

Technology does not destroy jobs. Politicians do. Never bet against human ingenuity.


Daniel Lacalle. PhD in Economics and author of “Life in the Financial Markets”, “The Energy World Is Flat” (Wiley) and forthcoming “Escape from the Central Bank Trap”.

Image courtesy Google.

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