The cash machine turned 50 this week — old enough, I think, to teach us a few lessons about the dawning of a new machine age. It seems a good advertisement for practical innovation that makes life a little easier. But with its very name a promise to replace a human being, the “automated teller machine” seems a harbinger of mass technological unemployment.

The story of the robot takeover has become familiar: robots came first for the bank tellers, and I did not speak out, for I was not a bank teller. Then overnight the robots were driving trucks, performing legal research and interpreting mammographic X-rays. The only jobs remaining were those writing books with titles such as Race Against The Machine and Rise of the Robots.

The difficulty with these visions of technological joblessness is that there are plenty of jobs around at the moment. In the UK, the employment rate is nearly 75 per cent; it hasn’t been higher since records began in 1971. The job situation is not quite so rosy in the US, where participation in the labour market is down since the Clinton and Bush years. Still, the unemployment rate is at a 16-year low. A job apocalypse this is not.

The ATM may help to explain this apparent puzzle. James Bessen of Boston University points out that the ATM did not, in fact, replace bank tellers — there are more bank teller jobs in the US now than when the ATM was introduced.

This should not entirely be a surprise: the original story of the cash machine is that its inventor John Shepherd-Barron had the door of his local bank slammed in his face on a Saturday lunchtime, and was frustrated that there was no way to get his money until Monday morning. Mr Shepherd-Barron didn’t invent a replacement for human tellers so much as a way to get cash at any time of the day or night. Banks opened more branches and employed humans to cross-sell loans, mortgages and credit cards instead. The automated teller worked alongside more human tellers than ever.

The ATM is no outlier here. Mr Bessen found that in the 19th century, 98 per cent of the labour required to weave cloth was automated — yet employment in the weaving industry increased as our demand for clothes more than offset the labour-saving automation. The same process seems to be at work today in the legal sector: artificial intelligence is increasingly being deployed to do tasks once done by legal clerks, but employment of those clerks is up, not down. Mr Bessen has found only one clear example of automation entirely eliminating a human job: elevator operators. There are other jobs that haven’t been taken by robots, but nevertheless have disappeared — Hansom cab driving, or operating a telegraph. Banks are not being replaced by cash dispensers so much as bypassed entirely by contactless payments and online accounts.

Overall, though, machines have been tools that have enhanced human productivity. They automate some routine tasks. This expands output and it also boosts demand for humans to perform complementary, non-routine tasks. This leads to better pay, more interesting work and as many jobs as ever overall.

Or at least — it should. Our chief economic problem right now isn’t that the robots are taking our jobs, it’s that the robots are slacking off. We suffer from slow productivity growth; the symptoms are not lay-offs but slow-growing economies and stagnant wages. In advanced economies, total factor productivity growth — a measure of how efficiently labour and capital are being used to produce goods and services — was around 2 per cent a year in the 1960s, when the ATM was introduced. Since then, it has averaged closer to 1 per cent a year; since the financial crisis it has been closer to zero. Labour productivity, too, has been low.

Plenty of jobs, but lousy productivity: imagine an economy that was the exact opposite of one where the robots took over, and it would look very much like ours. Why? Tempting as it may be to blame the banks, a recent working paper by John Fernald, Robert Hall and others argues that productivity growth stalled before the financial crisis, not afterwards: the promised benefits of the IT revolution petered out by around 2006. Perhaps the technology just isn’t good enough; perhaps we haven’t figured out how to use it. In any case, results have been disappointing.

There is always room for the view that the productivity boom is imminent. A new policy paper from business economists Michael Mandel and Bret Swanson argues that we are starting to find digitally driven efficiencies in physical industries such as energy, construction, transport, and retail. If this happens, Silicon Valley-style innovation will ripple through the physical economy. If.

It is in the nature of exponential growth that the near future can easily outweigh the recent past. But we are still waiting. For now, the machine has stalled and the error message reads: “Sorry: this robot takeover could not be completed at present.”

Written for and first published in the Financial Times on 30 June 2017.

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