There’s a word for those stubborn idiots who just don’t understand the benefits of new technology: “Luddite.” Economists—ever ready to adopt a bit of jargon—even speak of the “Luddite fallacy,” the doubtful belief that technological progress creates mass unemployment. The original Luddites were weavers and textile workers who smashed mechanical looms in England two centuries ago.
“Back then, some believed that technology would create unemployment. They were wrong,” comments Walter Isaacson, biographer of Albert Einstein, Benjamin Franklin, and Steve Jobs. “The industrial revolution made England richer and increased the total number of people in work, including in the fabric and clothing industries.”1
Indeed it did. But to dismiss the Luddites as backward fools would be unfair. The Luddites didn’t smash machine looms because they wrongly feared that machines would make England poorer. They smashed the looms because they rightly feared that machines would make them poorer. They were skilled workers who knew that the machine looms would devalue their skills. They understood perfectly well the implications of the technology they faced, and they were right to dread it.2
The Luddite predicament is not uncommon. New technologies almost always create new winners and losers. Even a better mousetrap is bad news for the manufacturers of traditional mousetraps. (It is hardly good news for the mice, either.) And the process by which the playing field changes shape is not always straightforward. The Luddites weren’t worried about being replaced by machines; they were worried about being replaced by the cheaper, less skilled workers whom the machines would empower.3
So whenever a new technology emerges, we should ask: Who will win and who will lose out as a result? The answers are often surprising, as we’re about to see.