JOB DESTROYERS/WEALTH CREATORS:

Ultimately the question boils down to this: are today's modern technological innovations like those of the past, which made obsolete the job of buggy maker, but created the job of automobile manufacturer? Or is there something about today that is markedly different?

Malcolm Gladwell's 2006 book The Tipping Point highlighted what he called "that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire." Can we really be confident that we are not approaching a tipping point, a phase transition--that we are not mistaking the trend of technology both destroying and creating jobs for a law that it will always continue this way?

This is not a new concern. Dating back at least as far as the Luddites of early 19th-century Britain, new technologies cause fear about the inevitable changes they bring.

It may seem easy to dismiss today's concerns as unfounded in reality. But economists Jeffrey Sachs of Columbia University and Laurence Kotlikoff of Boston University argue, "What if machines are getting so smart, thanks to their microprocessor brains, that they no longer need unskilled labor to operate?" After all, they write:

Smart machines now collect our highway tolls, check us out at stores, take our blood pressure, massage our backs, give us directions, answer our phones, print our documents, transmit our messages, rock our babies, read our books, turn on our lights, shine our shoes, guard our homes, fly our planes, write our wills, teach our children, kill our enemies, and the list goes on.

There is considerable evidence that this concern may be justified. Eric Brynjolfsson and Andrew McAfee of MIT recently wrote:

For several decades after World War II the economic statistics we care most about all rose together here in America as if they were tightly coupled. GDP grew, and so did productivity -- our ability to get more output from each worker. At the same time, we created millions of jobs, and many of these were the kinds of jobs that allowed the average American worker, who didn't (and still doesn't) have a college degree, to enjoy a high and rising standard of living. But ... productivity growth and employment growth started to become decoupled from each other.

As the decoupling data show, the U.S. economy has been performing quite poorly for the bottom 90 percent of Americans for the past 40 years. Technology is driving productivity improvements, which grow the economy. But the rising tide is not lifting all boats, and most people are not seeing any benefit from this growth. While the U.S. economy is still creating jobs, it is not creating enough of them. The labor force participation rate, which measures the active portion of the labor force, has been dropping since the late 1990s.

While manufacturing output is at an all-time high, manufacturing employment is today lower than it was in the later 1940s.

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