"Specifically, I would be interested to know if any economist has an economic argument against the following ideas:
Future breakthroughs in technology (e.g. robotics, nanotech) could eliminate millions of jobs very quickly, creating a serious problem of unemployment.
I am not suggesting that this is likely in the near term. I am saying that it is possible. Many people believe that there is some fundamental principle of economics (even of physics) that rules this out. Drawing a lesson from the information revolution, many readers have written to inform me that the birth of the computer led to new industries and new jobs (thank you). Needless to say, I do not disagree. I am suggesting, however, that there is nothing that rules out the possibility of vastly more powerful technologies creating a net loss of available jobs and concentrating wealth to an unprecedented degree."
Here's the response I submitted:
1. Yes, there IS a fundamental principle of economics that rules out a serious persistent problem of unemployment:
The first principle of economics is that we live in a world of scarcity, and the second principle of economics is that individuals have unlimited wants and desires.
Therefore, the second principle of economics: unlimited wants and desires, rules out any long-term problems of unemployment.
(I shouldn't pass up an opportunity here to invoke Thomas Sowell and point out that the first principle of politics is to ignore the first principle of economics.)
2. What if we were having this discussion in the 1800s, when the U.S. was an agricultural-based economy, and you were suggesting that “future breakthroughs in farm technology (e.g. tractors, electricity, combines, the cotton gin, automatic milking machinery, computers, GPS, hybrid seeds, irrigation systems, herbicides, pesticides, etc.) could eliminate millions of jobs very quickly, creating a serious problem of unemployment.”
With hindsight, we know that didn’t happen, and all of the American workers who would have continued to work on farms without those technological, labor-saving inventions found gainful employment elsewhere in different or new sectors of the U.S. economy like manufacturing, health care, education, business, retail, computers, transportation, etc.
For example, 90% of Americans in 1790 were working in agriculture, and now that percentage is down below 2% (see chart above), even though we have greater employment and output overall now than in 1790. The technological breakthroughs and advances reduced the share of workers in farming, but certainly didn’t create long-term problems of unemployment. Thanks to “unlimited wants and desires,” Americans found gainful employment in industries besides farming.
Update: If there were examples in the past where farm technology eliminated millions of jobs very quickly, it certainly wasn't a long-term, persistent problem of unemployment.