No one knows, but if history is any guide, it is very unlikely.
I would also be surprised if the twice the work was "suddenly" required, but would you be surprised if people buy more of something if it costs less? In the 1800s ordinary Americans typically owned only a few outfits. Coats were often passed down several generations. Today, ordinary Americans usually own dozens of outfits. Did Americans in the 1800s simply not like owning lots of clothing? Of course not. They would have liked to own more clothing, but demand was constrained by cost. As the price of clothing has gone down, demand for clothing has increased.
With software, won't it be the same? If engineers are twice as productive as before, competitive pressure will push the price of software down. Custom software for businesses (for example) is very expensive now. If it were less expensive, maybe more businesses will purchase custom software. If my Fastmail subscription becomes cheaper, maybe I will have more money to spend on other software subscriptions. In this way, across the whole economy, it is very ordinary for productivity gains to not reduce employment or wages.
Of course demand is not infinitely elastic (i.e. there is a limit on how many outfits a person will buy, no matter how cheap), but the effects of technological disruption on the economy are complex. Even if demand for one kind of labor is reduced, demand for other kinds of labor can increase. Even if we need less weavers, maybe we need more fashion designers, more cotton farmers, more truckers, more cardboard box factory workers, more logistics workers, and so on. Even if we need less programmers, maybe we need more data center administrators?
No one knows what the future economy will look like, but so far the long term trends in economic history don't link technological innovations with decreased wages or unemployment.
I am not an economist but isn’t there increasing evidence that for many goods/services, supply/demand/cost are just not that closely related anymore? I feel like we’ve seen this repeatedly with greedflation and the post Covid “supply shocks” blamed long after they stop being relevant. Prices go up but don’t come down because meaningful competition is simply not present anymore for large sectors. When it is present.. algorithmic price fixing can take the place of other kind of cabals.
Outside of goods, there must be more schools than ever before, and more academics qualified to teach at them, but is it bringing down the cost of education?
> I am not an economist but isn’t there increasing evidence that for many goods/services, supply/demand/cost are just not that closely related anymore? I feel like we’ve seen this repeatedly with greedflation and the post Covid “supply shocks” blamed long after they stop being relevant. Prices go up but don’t come down because meaningful competition is simply not present anymore for large sectors. When it is present.. algorithmic price fixing can take the place of other kind of cabals.
Can you link to the evidence you’re talking about? Did companies only start being greedy in 2020? I would argue the “greedflation” after Covid 19 can mostly be explained by the fact that there was a supply shock combined with a spike in demand as people people shifted consumption to goods and away from services during the pandemic. Some economists, like Isabella Weber, argue that the pandemic served as a coordinating mechanism for sellers to raise prices, but even Weber would never argue that supply and demand are “not that closely related anymore.”
> Outside of goods, there must be more schools than ever before, and more academics qualified to teach at them, but is it bringing down the cost of education?
Well, yes supply has increased but so has demand. In 1960, 7% of adults 25+ had a college degree. Now that’s 37%.
Further the demand is less price sensitive than usual because the government freely lends money to spend on education (us government currently has $1.6 trillion in student debt) and because we mostly encourage kids to get degrees at any cost.
Finally, despite the growth in total number of universities and students, spots at elite institutions are limited and thus scarce and highly valued.
> In 1960, 7% of adults 25+ had a college degree. Now that’s 37%. .. despite the growth in total number of universities and students, spots at elite institutions are limited and thus scarce and highly valued.
Good example for discussion because I think that it's well known that many people who have attained higher education at great expense nevertheless struggle with unemployment and underemployment, and groan about how competitive things are in academia with thousands of applications for every placement. If we're oversupplied with qualified yet underemployed academics who could be teachers, and yet teachers are unavailable to meet the demand of students who want education.. how is that not a disconnect between supply and demand?
Whenever a huge disconnect like this between supply/demand is pointed out, economists will retreat to discussion of regulation and policies, inflation, macroeconomics conditions. Sure, fine, great.. but that's just another way of saying supply/demand/cost are not closely related.
I would also be surprised if the twice the work was "suddenly" required, but would you be surprised if people buy more of something if it costs less? In the 1800s ordinary Americans typically owned only a few outfits. Coats were often passed down several generations. Today, ordinary Americans usually own dozens of outfits. Did Americans in the 1800s simply not like owning lots of clothing? Of course not. They would have liked to own more clothing, but demand was constrained by cost. As the price of clothing has gone down, demand for clothing has increased.
With software, won't it be the same? If engineers are twice as productive as before, competitive pressure will push the price of software down. Custom software for businesses (for example) is very expensive now. If it were less expensive, maybe more businesses will purchase custom software. If my Fastmail subscription becomes cheaper, maybe I will have more money to spend on other software subscriptions. In this way, across the whole economy, it is very ordinary for productivity gains to not reduce employment or wages.
Of course demand is not infinitely elastic (i.e. there is a limit on how many outfits a person will buy, no matter how cheap), but the effects of technological disruption on the economy are complex. Even if demand for one kind of labor is reduced, demand for other kinds of labor can increase. Even if we need less weavers, maybe we need more fashion designers, more cotton farmers, more truckers, more cardboard box factory workers, more logistics workers, and so on. Even if we need less programmers, maybe we need more data center administrators?
No one knows what the future economy will look like, but so far the long term trends in economic history don't link technological innovations with decreased wages or unemployment.