More Job Creation from Disruptive Innovations in Technologies

History shows that disruptive innovations in technologies bring more jobs than what they destroy… In terms of Costs-benefits analysis, disruptive innovations in technologies are smarter and more beneficial for our wellbeing… They are the epicenter of all progress the Human Civilization has made from the building of pyramids to the master of energy from electricity… Even incremental innovations are often the improvement of disruptive ones…

To understand how disruptive innovations in technologies bring more jobs compared to what they destroy, let analyse what has happened with progress made in mass transit and transport. The Economist gives a better description of such progress as illustrated in “The Smell of the Continent: The British Discover Europe”. By Richard Mullen and James Munson. Macmillan; 368 pages.

As The Economist states, “at the beginning of the century the journey from London to Paris took three or four gruelling days and nights. By mid-century mechanisation had reduced this to less than 11 hours, making a day out to the French capital feasible”.

Let try a modeling based on this case to make understand how disruptive innovations in technologies create more jobs compared to what they distroy… Once again, we agree that disruptive technologies destroy jobs. But the story should go far in analyzing the other aspect of job creation they bring…

Here is an exemple of how to understand the impact of disruptive innovations of technology in the economy… I will use just a layman language without any complex econometric equation… Let suppose you have two choices:

  • The first one is about operating a less productive and less innovative ship that uses 1000 workers manoeuvring physically in risky conditions to move it… The final outcome is that it costs high for final users or clients spending a couple of days to travel while losing huge time… The flows of businesses using this option are neither efficient nor productive… Because of such inefficiencies, the economy cannot create 10,000 jobs that would be available if the traffic was more efficient in term of costs and timelines…
  • The second option is about operating a ship or an aircraft that is very efficient with only 5 workers… It takes you just a couple of dozens of minutes to travel… This makes it cheaper and comfortable for people and businesses to use daily many times not one ship or aircraft but many of them… As results, many companies in tourism, retails, manufacturing, etc. can create 1,000,000 jobs because of such efficiencies in transportation…

What is your choice?

Let transpose the same basic modeling in building infrastructure systems with the two options:

  • the first one uses inefficient technologies that requires 100,000 workers in poor and risky conditions with huge delays; you end up in delivering a system, which costs you 5 times its scheduled budget… If it is a public infrastructure, it means that the government will have to increase the fiscal pressure to deliver such kind of infrastructure systems with huge negative implications on the creation of jobs… If it is a private one, it means that the final users will have to pay the additional “addition” (the bill)… You end up with externalities in terms of missing opportunities of job creation of, let say, 20,000 positions because of delays and cost overruns… In final, you have created just 80,000 jobs…
  • the second option is that you use 10,000 workers with very disruptive technologies to deliver an alternative or the same system of infrastructure with only 50% of the budget and 30% of timelines scheduled for the delivery… Because of such efficiencies in terms of costs and timelines, the final outcome for the economy is the creation of 500,000 jobs for the final business users… The job creation of this option is 510,000 jobs; most of these jobs come from using the infrastructure asset; not from building it…

Once again, what is your choice?

This is not only a theoretical model exposing an economic choice… If you transpose this model to agriculture automation and mechanization you get the same results…

Automation and mechanization of agriculture involve the reduction of manpower in producing, processing and trading foods. However because of efficiencies in agriculture and the availability of foods from such innovations in technologies, businesses having healthy staffs and stable general conditions can create more jobs out of agriculture…

Bringing more efficiencies and productivity is not a loser game… However stopping disruptive innovations in technologies will never preserve an economy from declining… It will just postpone the collapsing… Disruptive innovations in technologies are at the heart of the creative destruction… Reactionary reflexes against progress are part of collapsing destruction…

Let be opened minds to progress… Of course, not naive! There are setbacks from disruptions… However put those setbacks in perspective with benefits… If benefits outweigh the setbacks, it means that the outcome is effective; if it costs even less for such effective outcome, it means that it is efficient and productive…

If we think that the jobs of tomorrow will be like the jobs of yesterday, then we miss something fundamental… The jobs before industrial revolution are not like those after that revolution… The jobs before the booming of computer and IT are not the same compared to those after such booming…

The coming industrial revolution of 3D printings, robotics and artificial intelligence will destroy some obsolete jobs… I have no doubt that efficiencies that such disruptions will bring will allow to create many times more jobs compared to the obsolete and inefficient ones they will destroy…

In the end, any technology that we create is a tool! Any tool at our disposal has risks, costs and advantages… The final outcome in using a tool depends on what we want… The atomic energy can be used either for destruction as a bomb or for building as electricity… The biggest challenge will remain the head and the hand that use a tool; not the tool itself…

We are the ones who will decide whether or not disruptive technologies will be benefiting our collective and individual wellbeing… The reason why we should be working to develop new models that make such innovations better tools for improving our standards of life… Job creation will be the outcome of such efforts…

The matter fact is that 3D printers, robotics and artificial intelligence applications to manufacturing industries will allow unprecedented capacity of production… To make the economy running, there should be consumers or clients with adequate purchasing power to absorb such supply of goods and services… Job creation is essential in monetizing the consumption within a market…

Robots and automation may help to produce goods and services… They are useless to consume them… It takes a solvable demand to make a market working… Making sure that people have adequate income to make a market working is as essential as bringing efficiencies and productivity in the supply of goods and services…

As I said previously, the coming industrial revolution will be beneficial to the economies that will have healthy demography to make the economy working efficiently… Job creation will remain essential for channelizing income needed for the demand and consumption of the market… We should never forget that the economy is first about human beings dealing with limited resources; it is not about numbers and technologies…

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