Tech Innovation Doesn't Mean Jobs, Greenspan Warns

Technological innovation, by its very nature, is about reducing jobs, not creating them, former Federal Reserve Board Chairman Alan Greenspan warned an audience of federal information technology executives and contractors, Tuesday morning.

That's not to say new technology can't contribute to economic growth, which will, in turn, raise employment, Greenspan said at MeriTalk's Innovation Nation Forum. But, there's no guarantee that will occur.

"Innovation, going back to its earliest days . . . is always an issue of how do you leverage people's work into more output," Greenspan said. "Jobs are created in the process. As technology decreases [products'] unit cost, profits go up and companies expand and they hire people. But it's not the technology, it's not the innovation that does that and there's no way of getting around that syllogism."

Federal IT executives have argued improvements in the way government manages technology, such as consolidating federal data centers and moving IT processes to more nimble cloud computing, can save the government billions of dollars annually without costing jobs.

Workers who once managed cloud-bound data in house will be shifted to IT work that's more focused on agencies' missions, they have said.

Because many of the workers currently managing federal data centers are contractors, it's difficult to assess precisely how many jobs the data center consolidation and cloud computing initiatives will cost.

The federal government is fundamentally less capable of innovation than the private sector, Greenspan said, because the consequences of government failure are much higher and the government is less spurred by competition. Considering those constraints, Greenspan called government advances in technology during his 18 years as Fed Chairman "unbelievably awesome."

Greenspan said he was generally up on current technology when he became Fed chairman in 1987, but became somewhat divorced from it during his lengthy term.