Wisdom Of The Week

David Autor: So, I think it's easy to see the many ways in which machines substitute for the things we used to do. And then what's harder to see, typically, is: how is that complementing us? But of course you sit back and say, could you and I actually be having this conversation, could you and I have a podcast? Could I actually do significant[?] research as an economist without all this sort of hardware increasing my output per hour? The answer is: Not very well. So, on the one hand is the: Are you directly complemented, versus substituted? Second factor that affects how that automation affects your earnings in a given activity is sort of, the elasticity of final demand--so, in other words, if we get really productive at something but there's a fixed amount of it that people want, then eventually they just buy less and less of it. So you see, for example in agriculture, the vast increases in productivity in agricultural stemming from the green revolution and so on, have eventually reduced employment dramatically in agriculture. And the reason is that, all evidence to the contrary, there seems to be a finite amount that we can eat.  

Russ: It's a great example. So, food is incredibly cheap, which is a glorious thing; but it doesn't lead, therefore, to: Oh, there will be more farmers. There are fewer.

- David Autor on the Future of Work and Polanyi's Paradox (Econtalk)