(With Apologies to Ian Malcolm) The Economy Finds a Way

By November 30, 2015Blog

Over a holiday weekend dominated by turkey, Black Friday (Thursday?) savings, and sensational if not slightly shameful brawls over the latter, online retailer Amazon has achieved a minor victory in the constant struggle for media relevance.  On Sunday morning, with the help of former Top Gear host Jeremy Clarkson, the company released a promotional video for its much hyped Amazon Prime Air service.  The two-minute clip features a prototype delivery drone in action, the first such publicly released footage since the FAA gave approval for testing earlier this year.  The video has already garnered well over 1.5 million views and created a huge buzz within the tech community.

In truth, the video feels a bit like a PR gimmick and provides no set timeline on when we’ll be able to receive our emergency, drone-delivered, shoe resupply.  But it is also an undeniably impressive demonstration of cutting-edge technology.  At this point it seems inevitable that someone will perfect drone-delivery technology within the next 50 years.  When that happens, it is likely to revolutionize the transportation industry—and destroy thousands of jobs in the process.

Amazon’s “Prime Air” is just one recent example of how an increasing trend towards automation threatens the livelihoods of America’s 4.8 million transportation and warehousing employees. Robotic warehouses and self-driving cars are the predominant threats, among others.  Many of these changes are coming blindingly fast: Forbes estimates that self-driving vehicles will become fully integrated into the U.S. economy by 2030.  Given the long-term nature of economic horizons, such a timeline would render transportation workers from cabbies to long-haul truckers obsolete practically overnight.

Obviously, not every transportation or warehousing job will be replaced by technology.  Even if the impact is widespread, it is unlikely to have a drastic impact on the broader economy.  Given current employment levels, a 25% decline in transportation related employment would amount to a less than 1% decline in total employment.  This reality, however, is of little importance to those millions of workers who are (understandably) more concerned about providing for their families than ensuring little Mylie gets her cleats within an hour of ordering them.  In fact, the taxi industry has been battling ride-sharing services like Uber for years, even though those companies don’t represent technology replacing jobs so much as they do a change in who is doing the employing. 

Economists call this process of technological disruption (and the backlash that comes with it) Creative Destruction, and it is hardly a new phenomenon.  Over the course of its brief history, the United States has transformed from an agrarian society to an industrial powerhouse, and in the post-Depression era, to an increasingly service dependent economy.  Each of these transitions has saw the end of millions of jobs that were traditionally seen as secure.  As the automation revolution continues, it seems increasingly likely that taxi and truck drivers will go the way of fabric weavers, small-plot farmers, and milk delivery men.

When considering the destruction of these jobs, however, it is essential that we also consider the “Creative” aspect of the dynamic.  Each technological innovation brings with it individual winners and losers, but on the aggregate scale they have been a boon to civilization.  After accounting for the cyclical impact of recessions, the post-Depression era has seen employment increase, quality of life improve, and wages at least remain relatively stable.  While computers, robots, and the internet have drastically altered the economic landscape, the American economy (and its individual workers) have adapted to the changing circumstances.  Have there been growing pains?  Absolutely, but it is hardly the unemployment wasteland envisioned by the Luddites in the early 1800s.

So what new opportunities will present themselves to the legions of soon to be out-of-work transportation workers?  The drone revolution will clearly bring more employment opportunities to software designers, aeronautical engineers, etc.  These are highly skilled jobs, though, and it will not be easy (or likely) for a relatively low-skilled workforce to transition into them.  Honestly, it’s hard to imagine how these workers will adapt, but that is not reason to give up hope or fear the coming change.  Quite the contrary: if history is any indication (and with apologies to Ian Malcom), if there’s one thing we can count on, it’s that the economy will find a way.

Leave a Reply