Bloomberg Businessweek - USA (2019-10-07)

E C O N O M I C S

34

Edited by

Cristina Lindblad

JOB KILLER

Concerns that inventionsof new machines

poweredbywater,wind,horse,or steam,or

thatusehumanpowermoreefficiently,might

replaceworkersandcausemassiveunemploy-

menthaveanextremelylonghistory,goingback

toancienttimes.Aristotleimagineda futurein

which“theshuttlewouldweaveandtheplectrum

touchthelyrewithouta handtoguidethem.”In

sucha world,“chiefworkmenwouldnotwantser-

vants,normastersslaves,”heconcluded.

Still,it wasn’tuntilthe19thcentury,anerathat

broughtinnovationssuchasthewater-poweredtex-

tileloom,themechanicalthresher,andtheCorliss

steamengine,thatconcernsabouttechnology-

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 unemployment

Storiesmatter.That,ina nugget,is thecentralpremise

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.