E C O N O M I C S
34
Edited by
Cristina LindbladJOB KILLER
Concerns that inventions of new machines
powered by water, wind, horse, or steam, or
that use human power more efficiently, might
replace workers and cause massive unemploy-
ment have an extremely long history, going back
to ancient times. Aristotle imagined a future in
which “the shuttle would weave and the plectrum
touch the lyre without a hand to guide them.” In
such a world, “chief workmen would not want ser-
vants, nor masters slaves,” he concluded.
Still, it wasn’t until the 19th century, an era that
brought innovations such as the water-powered tex-
tile loom, the mechanical thresher, and the Corliss
steam engine, that concerns about technology-
based unemployment took center stage. The nar-
rative was particularly contagious during economic
depressions when many were unemployed.
The phrase “technological unemployment” first
appeared in 1917, but it started its epidemic upswing
in 1928. The count for “technological unemploy-
ment” skyrockets in the 1930s in Google Ngrams,Concerns that machines would replace workers
went viral during the Great Depression, sparking
fears of chronic unemploymentStories matter. That, in a nugget, is the central premise
of Robert Shiller’s book Narrative Economics: How
Stories Go Viral & Drive Major Economic Events.
The Nobel laureate economist cites Bitcoin, the Laffer
curve, and the gold standard as examples of nar-
ratives that became infectious, spread by word of
mouth, popular media, and more recently the inter-
net. These epidemics can influence the behavior of
consumers and companies, causing them to postpone
purchases and investments or making them overconfi-
dent about their financial future, which may result in
excessive risk-taking. Shiller argues that if economists
were better at understanding how these contagion epi-
sodes unfold, they might be better at predicting reces-
sions and asset bubbles.
Some narratives, like viruses, simply die out. But
others mutate or become dormant only to flare up
again years or even decades later. Shiller devotes
two chapters of his book to one particularly dura-
ble narrative—a superbug, if you will. What follows
is an excerpt.