The False Choice Between Automation and Jobs

A. Michael Spence
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But ultimately, the productivity conundrum can be resolved, if we embrace and unleash the benefits of automation and put in place a smart set of policies to ensure that everyone is prepared for it, and everyone can benefit.
By A. Michael Spence and James Manyika
We live in a world where productivity, a key pillar of long-term economic growth, has crumbled. In the United States, Europe, and other advanced economies, productivity growth has slowed so drastically in the past decade that economists debate whether we have entered a new era of stagnation—and this at a time when we need productivity growth more than ever to sustain growth, as working populations in countries from Germany to Japan age and shrink.

Now comes potential help, in the form of advanced robotics, machine learning, and artificial intelligence, which can already outperform humans in a range of activities, from lip-reading to analyzing X-rays. The performance benefits for companies are compelling and not just (or even mainly) in terms of reducing labor costs: automation can also bring whole new business models, and improvements that go beyond human capabilities, such as increasing throughput and quality and raising the speed of responses in a variety of industries. Automation will give the global economy that much-needed productivity boost, even as it enables us to tackle societal “moonshots” such as curing disease or contributing solutions to the climate change challenge.

The catch is that adopting these technologies will disrupt the world of work. No less significant than the jobs that will be displaced are the jobs that will change—and those that will be created. New research by the McKinsey Global institute suggests that roughly 15% of the global workforce could be displaced by 2030 in a midpoint scenario, but that the jobs likely created will make up for those lost. There is an important proviso: that economies sustain high economic growth and dynamism, coupled with strong trends that will drive demand for work. Even so, between 75 million to 375 million people globally may need to switch occupational categories by 2030, depending on how quickly automation is adopted.

Read the full article as published in Harvard Business Review

A. Michael Spence is a William R. Berkley Professor in Economics & Business.