Will automation take away all our jobs?

Here's a startling fact:

in the 45 years since the introduction
of the automated teller machine,

those vending machines that dispense cash,

the number of human bank tellers
employed in the United States

has roughly doubled,

from about a quarter of a million
to a half a million.

A quarter a million in 1972,
about a half a million today,

with 100,000 added since the year 2000.

These facts, revealed in a recent book

by Boston University
economist James Bessen,

raise an intriguing question:

what are all those tellers doing,

and why hasn't automation
eliminated their employment by now?

If you think about it,

many of the great inventions
of the last 200 years

were designed to replace human labor.

Tractors were developed

to substitute mechanical power
for human physical toil.

Assembly lines were engineered

to replace inconsistent human handiwork

with machine perfection.

Computers were programmed to swap out

error-prone, inconsistent
human calculation

with digital perfection.

These inventions have worked.

We no longer dig ditches by hand,

pound tools out of wrought iron,

or do bookkeeping using actual books.

And yet, the fraction of U.S. adults
employed in the labor market

is higher now in 2016

than it was 125 years ago, in 1890,

and it's risen in just about every decade

in the intervening 125 years.

This poses a paradox.

Our machines increasingly
do our work for us.

Why doesn't this make our labor redundant

and our skills obsolete?

Why are there still so many jobs?

(Laughter)

I'm going to try to answer
that question tonight,

and along the way, I'm going to tell you
what this means for the future of work

and the challenges that automation
does and does not pose

for our society.

Why are there so many jobs?

There are actually two fundamental
economic principles at stake.

One has to do with human genius

and creativity.

The other has to do with human
insatiability, or greed if you like.

I'm going to call the first of these
the O-Ring principle,

and it determines the type
of work that we do.

The second principle is
the Never Get Enough principle,

and it determines how many jobs
there actually are.

Let's start with the O-Ring.

ATMS, automated teller machines,

had two countervailing effects
on bank teller employment.

As you would expect,
they replaced a lot of teller tasks.

The number of tellers per branch
fell by about a third.

But banks quickly discovered
that it was cheaper to open

new branches,

and the number of bank branches
increased by about 40 percent

in the same time period.

The net result was more branches
and more tellers.

But those tellers were doing
somewhat different work.

As their routine,
cash-handling tasks receded,

they became less like checkout clerks

and more like salespeople,

forging relationships with customers,

solving problems, and introducing them
to new products like credit cards,

loans, and investments:

more tellers doing a more
cognitively demanding job.

There's a general principle here.

Most of the work that we do

requires a multiplicity of skills,

brains and brawn,

technical expertise and intuitive mastery,

perspiration and inspiration
in the words of Thomas Edison.

In general, automating
some subset of those tasks

doesn't make the other ones unnecessary.

In fact, it makes them more important.

It increases their economic value.

Let me give you a stark example.

In 1986, the Space Shuttle Challenger

exploded and crashed back down to Earth

less than two minutes after takeoff.

The cause of that crash, it turned out,

was an inexpensive rubber O-Ring
in the booster rocket

that had frozen on the launch pad
the night before

and failed catastrophically
moments after takeoff.

In this multi-billion dollar enterprise,

that simple rubber O-Ring

made the difference
between mission success

and the calamitous death
of seven astronauts.

An ingenious metaphor