Digital Minefield

Why The Machines Are Winning

Digital is Killing Jobs

The last post told how digital products were an economic dead-end. Physical products generate a cascade of transactions. Digital products don’t; they have no potential for additional resale. When they go digital, their value is one sale and done.

If that were the only effect of digitalization, the economy might find alternatives to keep afloat. It’s not. Replacing physical products with digital also means the loss of supporting businesses and products. Every lost business and product results in the loss of many jobs.

Take music. When downloading e-songs replaced the purchase of CDs, it broke a long history of ever-improving physical music players, from Edison cylinders to shellac 78s to vinyl 33 and 1/3s (and 45 singles and EPs) to cassette tapes to CDs.

Each of these formats had players, which required not only repair and maintenance but also replacement. Today, such devices and recordings are mere curiosities and eccentricities.

Digital versions have not replaced all physical products. What has happened is the newer the device the more it is perceived as disposable. Therefore, newer digital devices are less likely to be repaired. As a result, repair, once done by human technicians, has become replacement (using products made by robots).

And still it gets worse. Lost services are also lost business with lost office space and lost support jobs. Office space is rent and jobs are purchases. Lost physical products are also lost parts for repair, maintenance, and replacement. That equals lost jobs in manufacturing, warehousing, shipping, and so on.

Loss of jobs is lost income: money not spent on clothes, cars, consumer goods, eating out, entertainment, and lower rents or mortgages—and loss of tax revenue (made up by the rest of us).

So far I’ve talked about how digital products destroy resale and jobs. Both these are after the fact. The digital revolution is also destroying jobs before the fact—as fast as it can. Next week.


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