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Conservatives Are too Quick to Dismiss the Rise of the Robots
Much like the suits at Cyberdyne Systems, James Sherk and Lindsey Burke of Heritage do not fear the rise of the robots. From their new paper “Automation and Technology Increase Living Standards”:
Automation reduces both labor costs and prices. Lower prices leave customers with more money to spend elsewhere, increasing the demand for labor elsewhere in the economy. Automation changes where and how people work, but it has not historically reduced the overall need for human employees. Little empirical evidence suggests this time is different. … Businesses do not appear to be automating human tasks at a faster rate than before. If they were, this would increase measured labor productivity growth. This has not happened.
And their chart to partially support the above point:
I dunno. For one thing, I am not sure whether I believe that chart’s ability to reflect accurately what’s happening in the digital economy. More importantly, I think it’s easy to fall into the trap of believing that just because automation so far has not eliminated the need for lots of human workers means it won’t in the future. It’s a comforting thought. Sherk and Burke offer the textbook, Econ 101 answer: “Automation reduces the need for humans in particular tasks, but employees have historically moved to new or different sectors of the economy as a result. Little evidence suggests this time is different.” Yet even if they are correct, this process can be a wrenching one. As my colleague Michael Strain has explained:
Today, real wages and per capita income are both enormously higher in the West than they were when the Luddites were destroying labor-saving machines during the Industrial Revolution, and to date the machines have not eliminated the need for human workers. Why would a technological revolution today have a different outcome than the Industrial Revolution? No need to worry, argue many economists.This dismissal is too flip.
Even if the standard economist’s answer is correct when comparing the 21st century to the 19th, it omits the fact that living through this period of transformation was wrenching. Many economic historians believe that the British working class had to endure decades of hard labor with little improvement in their quality of life before they were able to enjoy the benefits of the new economy. Real wages fell dramatically for some occupations. Many who held those occupations couldn’t be retrained to compete in the new economy. Lives were shattered. Some families suffered across generations. People flocked from the countryside to dirty, disease-infested cities. For decades, there was deep social unrest. British society was shaken to its core.
Just think about the progress made in autonomous vehicles and the fact that the most common job in most states is that of truck driver. A rising technological tide may not lift all boats, at least over the short and medium term. And even if most Americans eventually prosper, many Americans may not. That matters. Indeed, if you believe the Great Stagnation scenario put forward by Tyler Cowen, a large majority will not flourish in the new economy. Sherk and Burke do offer a few solid policy ideas such as occupational licensing and education reform. But if markets do not provide an acceptable living standard, then society through government may need to respond more directly, such as through large income subsidies that make work pay more. It is a policy direction that many on the right are squeamish about, despite the success of our existing wage-subsidy program, the Earned Income Tax Credit. And that may create a bit of a blind spot when thinking about the challenges — as well as the opportunities — from advancing technology.
Published in Economics
a) One could argue that rather than being the cause for the destruction of lower-skilled jobs, automation is merely a response to a population becoming so wealthy that it refuses to perform lower-skilled work unless paid more in wages than the value created by that work.
In other words, perhaps rather than automation destroying labour, automation instead rises in economies where labour is no longer the driving force behind wealth-creation. Automation can be seen as a symptom, rather than a cause.
b) One should remember that the Luddites were not protesting unemployment. They were protesting a mismatch between the cost of living and the amount they were being paid for their work. One can easily argue that the mismatch was caused by high consumer prices due to the Napoleonic wars, rather than being caused by labour-saving devices.
They couldn’t afford food because it was artificially expensive, not because they weren’t paid enough. Similarly, would robots still be a problem if government policies allowed them to reduce the cost of living to a level where it could be virtually negligible?
c) Imagine ancient Rome. Would the history of Rome been different if instead of slaves, which are expensive to feed and maintain, they had been reliant on robots? All the grain that was used for “slave feed” could have gone to the citizens instead. In that scenario, the problem isn’t the robots but rather keeping non-Romans from cashing in on the free grain.
For how long have people been predicting that technology would put us all out of work?
Computers aren’t a bit smarter than a hammer. That’s a bit of a limitation.
So I think predictions with such a long history of failure should be taken with a big grain of salt…
Robots are like Democratic voters. They’re both tools. Aside from the latter case, tools are generally good and make workers more productive. The better the tools, the more productive the worker. E.g. compare a backhoe to a shovel.
There are people who can’t read or write well, but are clever with their hands and provide a lot of value with their hands. They are normal everyday people: fathers and mothers, bag checkers and more. These are the people I am most concerned about. Will robots take all of these people’s jobs in the next 200 years? Maybe by then we can alleviate such mental disconnects like the inability to read well? Maybe there are other jobs they can do that don’t involve reading and thinking abstractly about stuff?
Of course in the end (10,000 years from now?) robots will probably take the thinkers jobs too, leaving us in the precarious predicament of being beings who must solve problems, overcome the world, and create peace and harmony, and yet we will be relegated to some sort of “utopia” in which nobody works or does any of this?
We cannot stand in the progress of innovation because it will cost jobs. That is not how this works. Not for long. Yes it will be hard for some, but let me guarantee you the “poverty” experienced during a coming great change would be a poverty anyone before the 1900’s would have killed to experience.
Define “flourish”.
Would it not be sufficient for the bottom two rungs of Maslow’s hierarchy to be fulfilled for the vast majority of humans?
Robots may reduce the need for human labour, but they could also reduce the need for human taxation.
The single biggest item of the US budget is Social Security. Commonly thought of as “payments to elderly non-workers”, one could also think of it as “payments to the people who provide elderly non-workers with goods and services.”
After all, retirees don’t just stuff their SS cheques in a mattress. They spend that money on things like food and housing.
Therefore, if robotics reduces the cost of things like food and housing, there’s less need for taxation.
If I could have a small patch of arable land with no property tax burden, and a robot to do all my labour for me, it would hardly make a lick of difference to me that I was “unemployed”.
The saving grace for us, I think, is that our mechanism of productivity increase, the microprocessor, has very generalized applications. Unlike the manufacturing-specific advances during the industrial revolution, the microprocessor improves everything in some respect, some things more than others, but everyone becomes more productive.
Yeah, we’ll get the occasional bsod, but software is so unfathomably complex that I still think it’s impressive that my PC boots when I press the power button. But things have gotten quite better over the last decade or so.
As long as an algorithm can’t do your job, and you can use them to do your job better, you’re going to be OK in the Information Age. But if an algorithm can do your job, it’s time to start honing a different set of skills which puts you higher on the food chain.
But I think Misthiocracy’s point is a good one. If we’re talking about robots bringing utopian productivity levels, where all basic needs are met with zero marginal cost or effort, we’d be living in something more like a Star Trek economy where theres no money, because no basic good has any value.
Machines have been displacing human labor for a long, long time. An ordinary waterwheel, such as became common during the Middle Ages, could be “stronger than a hundred men,” to borrow from the title of a book on the history of waterpower. Continuous-flow grain mills were introduced in the late 1700s and were used in the US to serve export markets as far away as India. A hand-or-foot-powered Spinning Jenny could displace 8 or more human spinsters, and steam or water-powered equipment was even more productive, by far.
Teleprinters replaced Morse telegraphers with fewer and less-skilled typists. Mainframe computers decimated many large clerical organizations, beginning in the 1950s and achieving deep penetration by the 1980s. Numerically-controlled machine tools were “robots” that displaced human machinists, and garnered much the same kind of gee-whiz press coverage now attending 3-D printing.
In entertainment, thousands of local orchestras were displaced by record players, radio, and sound movies.
I’m really not convinced that today’s automation represents a radical breakpoint, economically-speaking, rather than being a continuation of this trends.
One thing to keep in mind: workers in many sectors of the economy have been hit *simultaneously* with 3 factors which act to reduce demand for their labor and hence reduce their supportable wage levels:
1) Offshoring of goods and some services, enabled by trade policy and transportation improvements as well as by information technology.
2) Immigration to the US which approaches being virtually uncontrolled.
3) At least the continuation, and possibly the acceleration, of automation based productivity improvements (see my previous comments)
Also a factor impacting many workers: rampant credentialism, which can prevent individuals from “working their way up” in a manner previously more common.
Good points, donald foster.
I still do my own lawn work and other tasks around the house even though my time is worth more than what it would cost to pay someone else to do it. In utopia, people will be able to solve any problem they wish, even if a computer could do it better, faster, and cheaper. There is still a great sense of accomplishment attained when one does something themselves, even if others are much better at doing those things.
Is this Pethokoukis speaking or Obama?
Computers replaced steno pools and secretaries. Who uses a telephone operator anymore? Go to a phone booth and call one .. if you can find a phone booth. Tax credits and subsidies distort markets and prices, reduce investments and capital formation.
Let free people trade freely–there’s your fix.
The title, “Conservatives Are too Quick to Dismiss the Rise of the Robots” doesn’t make sense to me. Let me disassemble .. we are not concerned with the use of robots? We aren’t thinking about how robots are replacing humans? Please someone help me out here.
If a factory needs/wants/desires to automate a repetitive function with equipment, so be it. If a human was doing it before, now that human can do something else. If it dignifies a human to do a job that a simple piece of equipment can do, then there is something wrong with that person. As humans, we like/need/desire meaningful work. Not make-work, i.e. work created to make us feel better (think, most of those YCC and CCC jobs from the 20’s and 30’s).
When we become more efficient, we save money. When we save money, we are capitalizing. With capital comes investment. With investment comes hiring, new products that need processes to build them, new assembly lines, parts, logistics and support. Economic activity happens.