How technological development helps economies and

society
www.sanjayjohn.com /2016/08/how-technological-development-helps.html

We have come a long way from inventing stone tools to axes to electric hacksaws, but there are still people who
believe that technological developments lead to loss of jobs, and are somehow bad for society.

Stone age tools: a high-tech engineer in 3000 B.C.

When we make a tool to simplify our job, whether it is a sharp stone

to cut wood faster or an ax to remove trees faster, as our ancestors
did, or an electric hacksaw which we use today to make chopping of
trees even faster than an ax, we make our jobs simpler. The same
holds for all inventions-software, robotics, computers, etc. We invent
tools to make our jobs simpler, to produce more for the same hours
worked. Both capital owners and workers benefit by these
improvements in the productive powers of labor, by the employment
of new tools, technologies, etc.

Let me give you an example to clarify this: assume you have several
wood cutting factories which were employing workers uses axes.
Then the owners of these factories buy electric hacksaws. Assume
electric hacksaws are 10 times more efficient and you need only 20
minutes to cut a tree, instead of 200 minutes using an ax.

Once an electric hacksaw is employed, the same work can be done in

1/10 of the time. You can employ the worker to do 10 times the work,
because now he can chop 10x the number of trees for the same
hours worked. Since the output of each factory can go up by 10x by
this operation of replacing axes with hacksaws, it increases the
competition for labor-and the net result is that the worker can demand
more wages per hour, because he can find jobs with other wood cutting facilities. Maybe the factory owners and the
workers will settle for something in the middle- in the extra 9x chopped trees by this operation, maybe 6x will be kept
by the factory owners, and the 3x chopped trees (or their wages in dollars) will be kept by the workers, whose real
value of labor is increased by this operation.

All parties-capital owners and the workers, benefit by the introduction of electric hacksaws instead of axes for
chopping wood. The same holds for all improvements in technology and tools which simplify our jobs-they benefit
the workers as much as they benefit the capital owners.

Note that the workers needs to acquire a new skill-the operation of an electric hack saw in addition to using the ax.
As we progress as humans, we operate newer and newer, more complex machines.

Jobs losses from invention of tools, machines, robots, AI, etc.

What happens to all the jobs which are eliminated by computerizing the paper ledgers, by employing all these
machines in the fabrication of things, like the horse buggy makers who lost jobs to automobile makers or the drinks
vending machines which robbed the jobs of people who sold the drinks manually? They are lost, but those workers
find other jobs! Our predecessors were doing entirely different jobs than us-there was no NASA or Boeing or
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Mitsubishi in 1500 AD- clearly jobs shift, and that's the nature of things. But it is nothing to worry about. If a machine
or robot takes away a job, the best job for the person who lost their job is making more machines of this kind. This is
how Japan does it-that country loves automation, machines, and instead of manual labor, the Japanese want to
invent machines and robots for everything, which is the right approach to development. Women are even marrying
robots now in Japan, and it is a perfectly legal union! The best job for humanity is to make tools and machines
(robots included) which do your work faster, and this is exactly what technological development has been
for thousands of years. However, to employ someone to make machine X, you need capital-materials for making
the machine X, fixed capital employed in erecting the factory and the machines and tools employed to make the new
machine X, and the wages which employees must be paid before machine X comes out of the factory. Economics is
about increasing this capital.

Modern day tools: a factory worker in 2000 A.D.

Whenever someone talks about loss of jobs because of new software, robots, tools and machines etc. you should
tell them that the best jobs are to develop more software, robots, tools and machines. Repetitive and mundane tasks
can be done by machines; and humans can dedicate themselves to producing more and more machines for more
and more tasks, which is the hard part. When you see a bullet train or a plane you cannot not be marveled at the
genius of humanity. If McDonald's can serve burgers using robots, it would be awesome-the people who work in
McDonald's right now can find jobs building or fixing or maintaining these robots, instead of flipping hamburgers all
day.

Semiconductors, software, robots internet, telephone, etc. are just an extension (over centuries) of stone age tools,
chisels, axes, matchsticks, paper, watches, washing machines, etc...technological advancement is continuous, and
we are constantly improving our productive powers by inventing new tools. We produce more for the same work
(same man hours worked) with these tools, which is what human progress is all about.

Primitive tribes have everyone doing something-mostly foraging for food. The more developed the society, the less
the need to work. Progress is not about keeping everyone employed-it is about efficiently producing things. That's
where tools, machines, robots, AI (Artificial Intelligence), etc. help-they help produce consumable goods more
efficiently. Lamenting about the loss of jobs because of automation, robots, etc. is the same as lamenting about the
progress which intelligent humans make in producing goods more efficiently or cheaply.

The more developed and rich a country, the more tools and machines it has. This does not lower wages; it actually
increases wages. It is the abundance of capital, these tools and machines, which makes people in developed
countries produce far more (per hour) than an undeveloped or poor country, where everything is done manually and
by hand. If you travel around the world and go from a developed to a poor country-you can see that everyone is
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working their 8 to 10 hours a day everywhere, but the real production of goods is much higher in a developed
country because of tools, machines, etc. Witness giant cranes next to a Japanese highway being constructed; vs
people literally with shovels next to a highway in Bolivia. The net work done is 10x or 100x more in Japan than in
Bolivia for the same number of total man hours spent.

The warnings for loss of jobs because of technological progress are nothing more than luddites' arguments against
modernization and technology.

Adam Smith may have underestimated the role of tools and technology in improving production of society

Smith in his Wealth of Nations emphasized the role of division of labor in increasing net production of society,
illustrated by his pins/nails example, in the very first chapter of his first book. He may have underestimated the role
of better tools and what we call technology today. After all, we know that humans have been making tools since the
stone age (sharp tools made of stone, hence the name stone age) and division of labor alone without the invention
of tools would probably not lead to the massive improvements in production powers of society. Even in his pins
example, there are many tools which the workers use to produce so many more nails per day, and it is highly
doubtful that they would be able to produce so many pins without all these tools and machines which they had. With
good tools, good machines (machines are sophisticated tools) you simplify many tasks; and I am of the opinion
that it is the tool makers, the inventors of tools, machines, technologies, etc. who have been driving
humanity forward.

A bow and an arrow are tools invented by an extremely intelligent ancestor of ours. We are always fascinated by
new tools and machines and highly respect the people who make them, and there is no reason for me to believe
that this was not the case in 5000 BC. Organizing labor so that each person does one or two things and specializes
in them (the skill of a capitalist or a businessperson),which is the foundation of division of labor, is a skill much easier
to acquire than inventing new tools and machines.

The large number of successful corporations today with tens of thousands of workers who dedicate themselves to
making tools and machines (Caterpillar, Hitachi, Boeing, Intel, Daimler Benz, Lenovo, Google (software tools), etc.)
is a good example of the skill of tool making being a very important part of society. What we call high tech today is
an extension of the same skills which produced the stone age tools, the bow and arrow, the hoe, etc. etc. And this
will go on; the tools we use today will look very primitive in a few hundred years. Even the guns and the powerful
cannons of a few hundred years ago look primitive and low-tech in comparison to the sophisticated war machines
like tanks, supersonic jets and submarines of today. I do believe that humanity's advancement is continuous, and
anything which is older than a few hundred years looks really primitive to us, at all times, not just today, but in the
past and future (so if you are alive in 1300AD you look at tools from 1100AD as really primitive; and if you are going
to be alive in 3200 AD you will think that tools from 3100 and before were really primitive). I cover this "the present is
special fallacy" in another article here.

The massive improvement in technology is correlated well with human advancement-and I believe is also the most
important cause of human development and progress. Good tools, good machines simplify our lives very much; and
while putting them together is the job of capitalists, we all, including the capital owners themselves, value a skilled
mechanic or a technology oriented person quite highly.

We don't have to go back in time to see how our ancestors used tools and machinery. In many parts of the world
there are still aboriginal tribes, and if you look at how they live, you get a glimpse of how our ancestors lived.
Aboriginal tribes and poor countries have less automation and tools than rich countries; and this shows you that a
society with a large number of machines is a developed, well-to-do society.

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