Chapter 1: The Evolution of Human Adaptation

Human beings have historically thrived in straightforward environments, such as the African savannah and Eurasian forests. For thousands of years, we faced predictable challenges and utilized our cognitive abilities to outsmart one another. It wasn't until the end of the last ice age, approximately 13,000 years ago, that we began to witness a rapid evolution in technology and social structures. This accelerated pace of change is something our brains are not equipped to handle effectively.

As a result, we struggle when faced with complex, unfamiliar challenges. Our attempts to forecast the future often rely on current trends, leading us to assume that existing patterns will simply continue indefinitely.

For instance, throughout the early 1970s, many US politicians and economists were convinced that Japan would dominate the global economy by the year 2000. Concerns about depleting coal reserves transitioned into fears of dwindling oil supplies—remember the discourse around "Hibbert’s Peak"? And who could forget the predictions made in the 1950s about everyone flying in nuclear-powered vehicles by now?

The reality is that experts are often just as misguided in their predictions as sci-fi writers. Marx, for example, misjudged the societal shifts brought about by the Industrial Revolution, inadvertently advocating for communism as a solution to capitalism's perceived failures. This grave error led to widespread suffering in the Soviet Union, while the Western world enjoyed unprecedented material advancements.

Those who peruse Alvin Toffler’s "Future Shock" will find that professional futurists frequently fail to identify significant trends. Similarly, Bill Gates' "The Road Ahead" overlooks crucial technological developments that shape our current lives.

Chapter 2: Misconceptions About Automation

When it comes to automation, most economists and commentators have a skewed perspective. The prevailing narrative suggests that automation eliminates jobs by replacing human labor, resulting in increased unemployment and poverty, all while corporate profits soar.

Interestingly, this argument mirrors concerns raised with every technological advancement since the invention of the wheel, which allowed one individual to transport as much as three could carry. The advent of the printing press was believed to have destroyed the livelihoods of thousands of scribes. The steam engine is often blamed for displacing countless manual labor jobs, and the telephone supposedly rendered many young messengers unemployed.

The issue lies in the human brain's limitation in perceiving only present circumstances, struggling to foresee the complex causal relationships that produce unexpected results. Consequently, we waste vast sums of taxpayer money propping up outdated jobs. For example, we fret over the livelihoods of the 5,000 fishermen impacted by overfishing but fail to consider the tens of thousands of new jobs that could emerge if fish populations were allowed to recover.

The narrative surrounding automation is yet another instance of our difficulty in grasping intricate causal chains. The common story simplifies this to: introduce a robot, eliminate three jobs. Our brains crave simplicity, making it easy to accept this narrative, even if it's misleading. Once we form beliefs, we often cling to them stubbornly, much like a sloth hanging on a branch for days.

However, the truth is often more complex than our simplified narratives suggest.

Several comprehensive studies have demonstrated that instead of reducing their workforce through automation, many companies actually increase their employee numbers.

Indeed, the evidence suggests that as companies automate, they tend to hire more workers overall.

This seemingly paradoxical situation arises from various factors. Research by Philippe Aghion and colleagues indicates that automation enhances productivity, allowing companies to produce more per dollar spent compared to manual labor. This efficiency leads to expanded market opportunities, necessitating additional staff in marketing, sales, IT, and customer support roles. Thus, while lower-paid manual jobs may diminish, higher-paying, more intellectually stimulating positions emerge.

Daisuke Adachi's research at Yale University found that from 1978 to 2017, the introduction of one robotic unit for every 1,000 workers resulted in a 2.2% average increase in total employment. Similarly, a study by Joonas Tuhkuri at MIT revealed that advanced technology adoption across various sectors correlates with increased hiring, rather than job losses. Research by Michael Webb and Daniel Chandler further supports this, showing that automation is linked to company survival, with successful firms expanding their workforces as they automate.

Countries like Japan and South Korea, which have embraced automation, boast some of the lowest unemployment rates globally.

To put it simply: would you prefer an economy with 10,000 low-paying jobs dedicated to menial tasks, or one that creates 25,000 well-compensated positions in technology and innovation?

Today, we often react strongly when jobs in lower-wage sectors are threatened, failing to envision the myriad better opportunities that could arise. This has always been the case. Before we elect politicians who promise to "save" jobs, we should reconsider. Just because a narrative is simple (robots take jobs) doesn't mean it's accurate. In fact, due to the complexity of our world, simplistic tales are typically incorrect.

As the evidence suggests, automation does not eliminate jobs; it appears to foster job growth. Admittedly, the nature of these jobs may differ from those lost to robotic intervention. Historically, we have transitioned from low-value, labor-intensive jobs to more fulfilling, cognitive roles. As of 2022, the US labor market supports nearly 150 million more jobs than it did a century prior, with most of these roles being more rewarding and better compensated.

Attempting to freeze the clock to prevent job loss is akin to trying to halt time itself. Nations that resist automation risk falling behind as others adapt and thrive. Consequently, the nation attempting to "save" jobs may face severe unemployment, while those adopting automation scramble to fill available positions. This outcome is likely not what voters envision when they advocate for job preservation.

Thus, the next time you encounter claims that automation will lead to widespread unemployment, take a moment to reflect: if that were the case, why are the most automated economies simultaneously those with the lowest unemployment rates?

Simple narratives may charm children, but they can be dangerously misleading when applied to economic policy.