Stephen Hawking, the University of Cambridge physicist and bestselling science writer, says that technology is driving an “ever-increasing inequality.” He is a brilliant polymath, but he doesn’t understand economics.
If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.
His error here is in too quickly accepting the assumption of technological unemployment, which asks us to imagine a world where a large percentage of the populace is unemployable because they have zero marginal productivity thanks to machines. In other words, in no conceivable circumstance will an employer pay them anything for their labor. They cannot get jobs and pay their bills. Those without savings will starve and die.
New technology changes productivity, but it does not upend the logic of exchange and production.
Given this apocalyptic assumption of crippling and permanent unemployment, it is unsurprising that Hawking comes to a bleak conclusion — one that seems to demand government as a solution. But the idea of technological unemployment suspends the laws of economics: specifically, scarcity and comparative advantage.
Scarcity occurs when our desires exceed our means of achieving them. We cannot perfectly multitask: to do one thing implies not doing something else. This is an inescapable quality of the world. No matter our level of technological development, scarcity will still e…