I agree with Becker that the candidates that he discusses for retarding U.S. economic growth in coming years, such as a technological slowdown or reduced private investment, are implausible; also that there are useful reforms, notably tax reform, that can stimulate economic growth. But like Larry Summers, whose recent paper “The 2013 Martin Feldstein Lecture: Economic Possibilities for Our Children,” NBER Reporter, 2013, no. 4, www.nber.org/reporter, has influenced my thinking, there’s a risk, not of a technological slowdown but of a technological speed-up, that could—implausible, futuristic, and alarmist as this may seem—retard U.S. economic growth in the coming decade and beyond.

Suppose that very cheap and very capable machines, which require very little labor to design, produce, or maintain (mainly just a few computer geeks to assist the computers to design new computers and other new machines), provide an attractive substitute for labor in some industry. An example mentioned by Summers is the driverless motor vehicle, which has been developed by Google, and works, and will be in mass production in just a few years, and which is just an ordinary vehicle plus a small though very capable computer. The driverless vehicle could displace most truck drivers, taxi drivers, bus drivers, drivers of ambulances and other emergency vehicles, chauffeurs, and drivers of military vehicles. There are some 3.5 million truck drivers in the United States and 900,000 bus and taxi drivers and chauffeurs: in total, a nontrivial fraction of the total U.S. work force. Where are all these people to go when their jobs are replaced by a computer lodged in a driverless vehicle? Many other jobs will be disappearing because of automation at the same time. Similar technology is likely to be displacing in approximately the same time frame airplane pilots, warehouse workers, workers in factories that produce vehicles, oil-field workers, and many other types of worker as well. Historically, it is true, new technologies created jobs for a lot of workers, but this seems unlikely to happen in the case of computer technology. Driverless cars are a good example. They just require the building and installing of computers that have already been designed. The manpower needs are trivial.

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Tags: economic growth, Larry Summers