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The great gnashing of teeth over job losses to our new robot overlords has reached fever pitch on the blogosphere, but according to one prominent economist, it's nothing new. The same phenomenon of rising, technology-driven, productivity-squashing wage gains was a feature of the industrial revolution, and ended with an encouraging, all-at-once massive snapback for wages that preserved consumer demand.
George Mason economics professor Tyler Cowen has reached major heights of online prominence as author of the highly-popular Marginal Revolution blog. Professor Cowen compares the current divergence between corporate profit and disposable income growth rates, 20.1 per cent and 1.4 per cent respectively, with the early 1800s:
"From 1780 to 1840, output per worker rose 46 per cent and the real wage index rose by only about 12 per cent... The significant real wage gains come after 1840 and — in my view — even more after 1870…Eventually all of the creative ferment of the industrial revolution pays off in a big 'whoosh,' but it takes many decades, depending on where you draw the starting line, of course. A look at the early 19th century is sobering, or should be, for anyone doing fiscal budgeting today. But it is also optimistic in terms of the larger picture facing humanity over the longer run."
The comparison doesn't offer much short term optimism in terms of wage growth, but might assuage fears that Skynet, the intelligent and genocidal computer network from the Terminator movies, will shortly become reality. For the longer term, the late 19th-century example does suggest that the benefits of technology will spread to the broader population as a higher standard of living – eventually.
Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Scott on Twitter at @SBarlow_ROB.
Scott Barlow