A few months ago, J. D. Vance, sitting vice president of the United States, gave an interview to Ross Douthat of the New York Times. During that interview, Vance and Douthat had an interesting exchange:
Douthat: How much do you worry about the potential downsides of AI? Not even on the apocalyptic scale, but on the scale of the way human beings respond to a sense of their own obsolescence? These kinds of things. Vance: So, one, on the obsolescence point, I think the history of tech and innovation is that while it does cause job disruptions, it more often facilitates human productivity as opposed to replacing human workers. And the example I always give is the bank teller in the 1970s. There were very stark predictions of thousands, hundreds of thousands of bank tellers going out of a job. Poverty and commiseration. What actually happens is we have more bank tellers today than we did when the ATM was created, but they’re doing slightly different work. More productive. They have pretty good wages relative to other folks in the economy. I tend to think that is how this innovation happens.
There are two interesting things about what Vance said, both relating to the example that he chose about bank tellers and ATMs.
The first thing is what it tells us about who J. D. Vance is. The bank teller story—how ATMs were predicted to increase bank teller unemployment, but in fact did not—isn’t a story you’ll hear from politicians; in fact, for a long time, Barack Obama would claim, incorrectly, that ATMs had decreased the number of bank tellers, in order to suggest that the elevated unemployment rate during his presidency was due to productivity gains from technology. I’ve never heard a politician cite the bank teller story before: but I have seen the bank teller story cited in a lot of blogs. I’ve seen it cited, for example, by Scott Alexander and Matt Yglesias and Freddie deBoer; and I’ve heard it, upstream of the humble bloggers, from such fine economists as Daron Acemoglu and David Autor. The story of how ATMs didn’t automate bank tellers is, indeed, something of a minor parable of the economics profession. You can see it encapsulated in this wonderful graph from the economist James Bessen:
From James Bessen, Learning by Doing (2015)
So Vance’s choice of example tells us the same thing that his appearance on the Joe Rogan Experience did, which is that J. D. Vance—however much he might like to hide it—really, really loves reading blogs.
But the other thing about the bank teller story that Vance cites is that it’s wrong. We do not, contrary to what Vance claims, have “more bank tellers today than we did when the ATM was created”: we in fact have far fewer. The story he tells Douthat might have been true in 2000 or 2005, but it hasn’t been true for years. Bank teller employment has fallen off a cliff. Here is a graph of bank teller employment since 2000:
So what happened to bank tellers? Autor, Bessen, Vance, and the like are right to point out that ATMs did not reduce bank teller employment. But they miss the second half of the story, which is that another technology did. And that technology was the iPhone. The huge decline in bank teller employment that we’ve seen over the last 15-odd years is mainly a story about iPhones and what they made possible.
But why? Why did the ATM, literally called the automated teller machine, not automate the teller, while an entirely orthogonal technology—the iPhone—actually did?
The answer, I think, is complementarity.
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