Every generation experiences the same fear: technology is going to permanently displace workers. The spinning jenny was supposed to idle England’s textile workers. The steam engine would hollow out the trades. Electricity would render physical labor unnecessary. The computer and the Internet would finish the job of ending work. Now, artificial intelligence models have assumed the role of civilization-ending technology, and the doomsayers are back at their posts.
This time, however, some of the loudest alarms are coming from the inside. Dario Amodei, the CEO of Anthropic, claims that AI could eliminate half of all entry-level white-collar jobs within the next five years and that unemployment could rise to between 10 and 20 percent. Dan Schulman, the CEO of Verizon, predicts that AI, combined with developments in robotics, could lead to unemployment rates of 20 or even 30 percent in the next few years. BlackRock CEO Larry Fink argues that AI could cause students graduating from college in the next few years to face the highest unemployment rate in years, even without a recession. These are serious people with serious thoughts about a serious issue. Fortunately, they’re also seriously wrong. This is just the latest example in a long series of examples of one of the oldest and most refuted errors in the history of economic thought.
Economists refer to this as the “lump of labor fallacy.” Briefly, this is the idea that the total amount of work in an economy is fixed. New technological advancements don’t simply save workers time and effort; they displace labor and permanently destroy it. To be fair, there is surface-level plausibility here. Who among us hasn’t walked past a bank of uncrewed cash registers standing idle before trudging over to the end to go to the self-checkout lane? The rise of the self-checkout lane, which allows one cashier to simultaneously operate four, six, sometimes even a dozen cash registers, certainly seems to have permanently displaced workers.
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