“The analogous classic example, favored by LinkedIn’s Reid Hoffman, is story about the American food production industry. Here 40% of the population which was once emplyoed [sic] in the industry relocated to new industries without any problems, as the 40% has dropped to only 2% over the years. As the theory goes; losses of incomes in one place create new incomes in another place. […] This time it’s different. We’re not any longer dealing with railroads substituting horses…”
Actually, railroads increased the number of horses being used and substantially so. Prior to the railroad, 18th century (and prior to that) farmers primarily used oxen on rutted dirt roads; horses were used for transportation and (mainly) military purposes. As Victorian era cities began to pass the million person mark, horses (and their dung) became real problems as far as health goes. The Epizoootic of 1973 was a equine virus that killed off huge numbers of horses — in some cities, as many as 90% — throughout the Northeast and Canada, and created a real problem in terms of, not just removing the corpses of the dead horses, but in economic terms. Many think it was a major contributor to the economic crisis of the late 19th century. [See the Wikipedia entry on “The Long Depression” (20 years!) for details on that.]
But it was the invention and then proliferation of the automobile that profoundly changed our economy by eliminating the horse (and all those buggy whip manufacturers) and almost killed capitalism by being the primary cause behind the Great Depression (according to the US Census Bureau).
Those 40% of food producers were producing food for more than just humans; horses needed to be fed as well. The automobile negated a great deal of that agricultural produce. Suddenly, within the course of a single generation (1900–1920), huge percentages of American farmland were transitioned from feeding horses to feeding humans.
As a result, the cost of food plummeted.
To make matters worse, the 1920s saw start-up firms like American Harvester, John Deere and Caterpillar begin to produce automated farm equipment that put a lot of low-skill workers out of work. [Many were southern African-Americans that migrated north and some of them began the Harlem Renaissance and kick started the Jazz Age. But I digress.] Small farms needed to buy this equipment in order to stay in business. Yet, in order to buy this equipment, they needed loans from small banks. This drove them deep into debt. The automated production vastly increased production which added to the already horrid glut of food, driving the cost of food into the basement. Many of the farmers went bankrupt, and eventually, the small banks in much of rural America started to fail and started to take with them the larger banks in New York and London. Hence, the Great Depression.
It wasn’t until the middle of the 20th century that the automobile became the job creator that everyone expected it to be when Henry Ford started rolling his Model T off of the assembly line. But by then, we had already gone through several decades of strife and deprivation in the form of major economic depression and the associated global warfare. Two world wars sandwiching the Spanish Flu and we are looking at over 100 million dead.
So, to say that 40% of the population “relocated to new industries without any problems” is clearly misstating the case. There were plenty of problems; enough where we almost ceased to exist as a species.
Like the evolution of new species in a global ecosystem, the creation of new jobs in the global economy takes time. [The automobile needed a half century.] And without an adequate amount of time for organisms to adapt to changing environments (before the environment changes again), what happens is complex-systemic failure in the form of a major extinction event. That’s the biological component; in the economic version, we have software made of ones and zeros killing off huge sectors of our economy (as well as our culture) that have been around for decades, centuries or even millennia and replacing them, if at all, with something equally ephemeral. Our civilization’s foundation, which has supported us for 10,000 years is being ground into gravel and then dust within the course of just a few decades.
Both the rapidly-approaching climate change event and this rapidly-approaching ‘Singularity’ event are planet killers and both have, as their root cause, the exponentially-accelerating rate of technological growth. This growth rate — AKA, “Moore’s Law” — is a tsunami that began as a tiny and *very* slowly growing ripple with the development of the hand-axe some two million years ago and thus, is approximately ten times older than our species. Worse, it appears to be manifesting itself in some sort of conclusion within the next few decades, and that conclusion is beginning to make itself obvious to all of us.
And one thing we all know for sure: this is not something either Donald Trump or Hillary Clinton are prepared to deal with. But, to be fair to both these clowns, I really don’t think anyone is prepared to deal with it.