Harvest.jpg

Fewer, Please

We have been discussing America’s declining birth rate (a crisis, say some: not so, say I), so I thought that I would post this somewhat relevant excerpt from a recent Economist piece that I happened to be reading on the (possible) decline of innovation in recent years:

Perhaps the most radical answer to the problem of the 1970s slowdown [in innovation] is that it was due to globalisation. In a somewhat whimsical 1987 paper, Paul Romer, then at the University of Rochester, sketched the possibility that, with more workers available in developing countries, cutting labour costs in rich ones became less important. Investment in productivity was thus sidelined. The idea was heretical among macroeconomists, as it dispensed with much of the careful theoretical machinery then being used to analyse growth. But as Mr Romer noted, economic historians comparing 19th-century Britain with America commonly credit relative labour scarcity in America with driving forward the capital-intense and highly productive “American system” of manufacturing.

 Food for thought.

 The relatively low levels of mechanization in some parts of the US agricultural sector allegedly dependent on cheap migrant labor may well reinforce Romer’s point (whimsical or not), as may the advances that the Japanese are making in the field of robotics.

  1. Lavaux

    No one can make a machine that can do everything a person can do. If such a machine could be made, buying one to do unskilled labor would be far more expensive than hiring a guy. If you think about it this way, the human being is the most amazing machine known to economics – cheap but capable of so much.

    What’s more, you’d have to depreciate the machine, and depending on your tax regime, that may be less attractive than labor cost. Of course you could probably lease the machine and leverage the residual, which may make the machine more attractive than labor cost depending on your tax regime.

    The point is that innovation doesn’t occur in a vacuum and probably has to overcome factors like tax, accounting, inputs, trade and market barriers before becoming worth adopting to enterprises. So would you hire some machines to pick your cherries at $10,000 per day, or would you go get a truckload of migrant laborers to pick your cherries and pay them $1,000 cash per day? I know what I would do.

  2. EstoniaKat

    Then there’s this:

    http://youtu.be/IfUaKXasdD4

    I love the future.

  3. Pilli

    I don’t have much to say regarding low levels of mechanization in agriculture. However, I can say that the mechanization of tomato harvesting in conjunction with the development of tomatoes that can stand the process has severely degraded the taste of the final product.  The new tomatoes are tasteless.

    I get my tomatoes from the roadside stand when I can.  They are vine-ripened and hand-picked.

    I would love to see the invention of robots that mimicked the human hand-picking action of produce. 

  4. FloppyDisk90

    Capital innovation is not a good in and of itself.  If it’s cheaper (“cheaper” here defined as the profit maximizing quantity) to hire relatively more labor vs robots then the economically efficient thing to do is hire labor.

  5. captainpower

    A recent podcast on Ricochet disputed the premise that innovation is slowing.

    Money & Politics with Jim Pethokoukis Episode 8: Erik Brynjolfsson December 21, 2012 at 11:50am

    http://ricochet.com/podcasts/money-politics/Erik-Brynjolfsson

  6. Andrew Stuttaford
    C
    captainpower: A recent podcast on Ricochet disputed the premise that innovation is slowing.

    Money & Politics with Jim Pethokoukis Episode 8: Erik Brynjolfsson December 21, 2012 at 11:50am

    http://ricochet.com/podcasts/money-politics/Erik-Brynjolfsson · 31 minutes ago

    Edited 29 minutes ago

    Yes, the Economist ends on a cautiously more optimistic note too. The Romer piece referred back to the 1970s. So far as the mechanization of certain sections of agriculture is concerned, however, innovation has been in short supply. Conversely, the Japanese are forging on with robotics–because they have to.

  7. Andrew Stuttaford
    C
    FloppyDisk90: Capital innovation is not a good in and of itself.  If it’s cheaper (“cheaper” here defined as the profit maximizing quantity) to hire relatively more labor vs robots then the economically efficient thing to do is hire labor. · 36 minutes ago

    Well, the failure to innovate  is, in a sense, a cost too. Possibly a huge one.

    What’s more,  if the US “has” to rely on immigrant workers to harvest certain of its crops (because of the failure to invest in innovation in this area) the indirect cost of that dependence means that the total cost of this exercise amounts to rather more than the very modest wages that the agricultural sector is able to get away with paying thanks to an American labor market badly distorted by current US immigration & immigration enforrcement policies.

  8. Barbara Kidder

    Your column (and delightful illustration) has provoked some thought, so let me pose the following:

    History provides us with examples of individuals who have  made amazing inventions and discoveries.

    These people were driven in their pursuits by  many different motives;  some such motives that come to mind are, fame, favor, competition, pride, personal hardship, altruism, patriotism and, yes fortune, to name a few.

    Not all of these successes  were born out of a desire to profit from such inventions (nor from a patent thereof), for instance, the invention of the printing press by Johannes Gutenberg, who never made a successful commercial venture from his genius.

    When reading biographies, we observe that many of these  innovators were driven by a force within that motivated them, through repeated failures and setbacks, to keep on ‘keeping on’.  We think of men such as, Thomas Edison, Ely Whitney, Guglielmo Marconi and Jonas Salk.

    Can you really make a case for a strong connection between ‘innovation, invention and discover’ and the birth rate?

  9. Barbara Kidder
    Andrew Stuttaford

    FloppyDisk90: Capital innovation is not a good in and of itself.  If it’s cheaper (“cheaper” here defined as the profit maximizing quantity) to hire relatively more labor vs robots then the economically efficient thing to do is hire labor. · 36 minutes ago

    Well, the failure to innovate  is, in a sense, a cost too. Possibly a huge one.

    What’s more,  if the US “has” to rely on immigrant workers to harvest certain of its crops (because of the failure to invest in innovation in this area) the indirect cost of that dependence means that the total cost of this exercise amounts to rather more than the very modest wages that the agricultural sector is able to get away with paying thanks to an American labor market badly distorted by current US immigration & immigration enforrcement policies. · 7 minutes ago

    America’s ever-increasing adoption of government ‘welfare’ must bare some responsibility for the country’s “reliance on immigrant workers to harvest…its crops”.

    Welfare payments to able-bodied Americans act like a disincentive for these workers to seek seasonal or menial employment.

  10. david foster

    Barbara Kidder…important to note that “innovation” involves much more than invention per se. Xerox, at its Xerox PARC facility, did many creative things in the computer field, but the corporation as a whole did a poor job of bringing them to market.

    If agricultural labor had been much less expensive in the US in the mid-1800s, would (say) the McCormick Harvester have ever been widely been adopted, or would it have sunk without a trace? If it had been logistically feasible to produce automobiles in volume in the Mexican border area in the early 1900s, would anyone have bothered with actually funding the assembly line and other productivity innovations in the industry?

  11. Mothership_Greg

    I think we should institute some manner of one-child policy ASAP.  Think of the innovation this would spur!

  12. Rachel Lu

    Scarcity of any kind might, of course, inspire innovation. Scarcity of labor  (brought on by low birth rates) may inspire one kind, scarcity of resources (brought on by high birth rates) may inspire another kind. However, a couple of things to note. We’re already moving towards more of an “information economy”, in which a larger percentage of people can devote themselves to creative or interactive or analytic endeavors. The sort of stuff that people do well and machines don’t.

    But of course the downsides of low birth rates go way beyond just labor shortages. It speaks to the kind of society we have, and low birth rates only make the already-existing problems worse. When a population is declining, people turn their attention to comfort and security instead of innovation and creativity and the opening of new opportunities. That’s not the kind of society I want to have.

  13. FloppyDisk90
    Andrew Stuttaford

    FloppyDisk90:

    Well, the failure to innovate  is, in a sense, a cost too. Possibly a huge one.

    …. if the US “has” to rely on immigrant workers to harvest certain of its crops (because of the failure to invest in innovation in this area) the indirect cost of that dependence means that the total cost of this exercise amounts to rather more than the very modest wages that the agricultural sector is able to get away with paying thanks to an American labor market badly distorted by current US immigration & immigration enforrcement policies. · 2 hours ago

    Government policy does indeed distort the labor market but not in the manner you infer in your comment.  Tight immigration policy and enforcement of same is a barrier to entry into the labor market and is the relevant economic distortion.  That the US is failing to adhere to its own laws in this area is *removing* (or lessening) a distortion.

    There are lots of good conservative reasons (rule of law, etc…) to argue for enforcement of immigration laws but the economic arguments I’ve heard articulated thus far don’t hold water.  As for innovation, the market will sort that out.

  14. Bob W

    I live I central Calif., dispute the government it is the richest agriculture area in the country (and the world). I see no failure to innovate where possible. There is considerable investment in technology like GPS and use of satellite data. Large investments in drip erigation have been made to offset the reduction of water allowances. Much hand labor is still needed. Nothing has proven able to match the hand, eye and decision process in picking many crops, just look at your produce section of your supermarket and try come up with a machine to pick that basket of strawberries, those oranges or that neatly trimed head of lettuce. Right now lots of labor is going into pruning trees and grape vines, mechanize that! By the way in the next week or so the World Ag. Expo. will be held here and as the name implies agulcultural persons from all over the world will be here to see the latest in equipment and innovations.