More Robots, Fewer Jobs: capital vs. labor in production
bloomberg.com
bloomberg.com
Over the years I've watched various professions devalued to search engines and spreadsheets, from paralegals to accountants. I don't think it's a bad thing. It's progress and it's freeing up time. The bad part is that we live in a society with an antiquated work-ethic, where your value is measured in capital and the number of hours you put in each week at your job. Automation isn't the problem, living is a culture incapable of valuing leisure time is what needs to change.
Smith's argument at the end of the same passage and throughout the WoN is that government intervention and regulation is necessary to avoid the societal decay that the invisible hand of capitalism can produce. Specifically he suggests government-sponsored education as the best solution to the problem.
Leave North America, it's a whole new world(TM)
I recently read "A Year of Living Danishly"[1] - an amazing account of two early-30s brits who move to Denmark and learn how life works there. After an adjustment period, they are floored, and I mean absolutely floored how good the work/life balance is. They are shocked their old life they loved can seem so horrible in comparison.
I asked my Danish friend about it, and he said "Yeah, I like living in a country that focuses on being happy rather than focusing on getting money."
[1] https://www.amazon.com/dp/1785780239/?tag=roadchoseme-20
The real issue is why doesn't later stages capitalism just create wealth for all? Why does my boss's ideas of work, which he learned from his boss, eventually trickle down to my idea of work and when I push back I open myself up to punishment? Why does his greed normalize work life?
I imagine a maximum income/net wealth cap on individuals would stop that but short of a revolution I don't see that happening anytime soon.
Industrial capitalism is over 200 years old and shows no signs of stopping. Its biggest competitor, communism, failed spectacularly. So yes, the oil money will run out and then the laws of scarcity will put these economies in the same place everyone else is in. This scarcity will trickle down to labor as the cycle repeats itself.
Or, more likely, oil prices will crash once ICE gets replaced by electric vehicles and we power them with solar, nuclear, natural gas, and wind. That will most likely happen well before 50 years. A lot of good that oil will do Norway if no one wants it.
Norway also has a state pension fund that is the largest in Europe at slightly over USD700B, bigger than California's pension fund.
Even if things turned bad Norway would still have USD250k~300k per citizen in state funds (if things turned out rosy it would be nearly USD650k per capita). Compare this to the USG of nearly USD9k per capita. In PPP terms Norway has little to worry about.
At today's prices. Do you really think oil demand will continue for the next 50-100 years at this level with all this investment in renewables? We're currently at a price slump close to pricing from two decades ago.
Its a little presumptuous to think oil will continue to have this value.
The Norway sovereign fund isn't the valuation of their oil businesses, it consists of 1T investments in non-oil businesses, including renewables, that have been funded by oil that's already sold at yesterday's prices. If oil become worthless tonight, they'd still have the 1T fund and it's ongoing proceeds.
Wikipedia says it's a mixture of equities (60%), government bonds (25%), corporate bonds (10%) and real estate (5%). If (when) oil profits vanish, these investments will still be there. In fact, since they are legally unable to withdraw more than 4% of the fund's value each year (and typically make more than that), it should continue to grow indefinitely.
The fund has a really interesting set of ethical guidelines--they won't invest in tobacco companies, companies causing severe environmental damage, or those involved in nuclear weapons or cluster munitions, for example.
I absolutely despise this argument, because it usually forgets that you can have all the time in the world, and it won't matter if you can't pay your rent or buy food.
- Pensions
- Alaska Permanent Fund
- Child tax credits
- Stimulus cheques
- Social Security
- Welfare
Maybe the phrase "basic income" is too closely associated with socialism... in that case, call it an automation tax credit or something. Once people start receiving the cheques, they'll realize that it's a pretty good deal— kind of like the ACA.
The United States House of Representatives passed a Basic Income bill written by Richard Nixon in 1969. https://www.youtube.com/watch?v=6vHYFzYvCak
Why should one be forced to pay rent or buy food? Just try to live independently in the US, it's not possible. If you want to buy land and grow your own food, the first thing to notice is that property taxes are actually a rent paid to the state. In many areas you're forced to hook up to the city water/sewer system, which is another form of rent.
People keep bringing up "basic income" which I think is crap. How about we try to reduce the cost of existence instead, so people can get off the economic treadmill? Then we can work up to our level of comfort rather than have people at the bottom struggle to survive. Everyone would be happier except those who strive to exploit the labor of others.
I do not advocate welfare with this, just elimination of as much financial pressure as possible. Eliminating rents is the first step IMHO. This includes phasing out mortgages, which are rents on money that only serve to inflate home prices thereby increasing demand for loans. On this point I am not totally convinced, but I think gradually reducing the percent of sale price than can be borrowed would be a start. I don't know if lowering that to zero is actually optimal, but I suspect 50 percent would be better than where we are today.
Well, you're not. You don't have to exist. I kinda like existing, though.
Yes, yes, utopian society and all that. It's the way things exist now, and while it can be fun to imagine a world without it, it's not entirely practical when trying to figure out a problem for those displaced from automation.
"I do not advocate welfare with this, just elimination of as much financial pressure as possible. Eliminating rents is the first step IMHO. This includes phasing out mortgages, which are rents on money that only serve to inflate home prices thereby increasing demand for loans. On this point I am not totally convinced, but I think gradually reducing the percent of sale price than can be borrowed would be a start. I don't know if lowering that to zero is actually optimal, but I suspect 50 percent would be better than where we are today."
So nobody but the uber wealthy can buy houses? And how do you eliminate the rent when I live in an apartment?
Adjust that so nobody but the wealthy can afford to build a NEW house. We already have it that the poor generally buy used cars (or buy with bad deals, negative equity etc...). If there were no loans then there would probably be an eventual housing shortage, but we currently have people over extending themselves just to get in the game.
As housing prices fall, your rent will too. But I'm in favor of doing as much as possible to eliminate rentals as well.
As an example, look at the housing bubble forming in the bay area. If people had to put down 50 percent of the purchase price, they would not be able to afford todays prices and the prices would come down.
Housing shortages tend to RAISE prices, not lower them. And no, I'm not going to adjust my statement, as it reflects current reality. You adjust your response.
"As housing prices fall, your rent will too."
There's not much to indicate this would be true.
"But I'm in favor of doing as much as possible to eliminate rentals as well."
So while I'm busy not being able to buy a house, where do I live?
"As an example, look at the housing bubble forming in the bay area. If people had to put down 50 percent of the purchase price, they would not be able to afford todays prices and the prices would come down."
That's assuming there aren't people buying those houses.
Why should we value leisure time over work, and by proxy, acquisition of capital?
These are the activities that gave us the great comforts of modern living, from electric light, to heating, to plumbing, electronic entertainment, vaccines from diseases, you name it.
We're not 'done' with hard work, or technological evolution. We never will be, and that's a good thing.
If you want to push for more leisure time than is currently available fine - but most people won't, because they instintively feel bad for not keeping up with others. And perhaps they should. Or at least they should admire and deeply respect those who put in the work to make our world go round. You can't shame away diligence.
1. Robots are capital, and therefore investment, while labor is a pure expense. Capital will generate income that can be reinvested back into more capital etc, generating more wealth for the owner, and they can sell those robots later to turn that investment liquid.
But labor is purely an expense, and the money that a manufacturer pays to employees is wealth that they've transferred elsewhere, it doesn't compound, and it can't be owned and controlled like capital can.
2. In terms of taxation, governments in Europe and US tend to: 1. Tax labor relatively heavily (income taxes), 2. Tax capital gains relatively lightly, and 3. Do not tax capital ownership as such. So it's rational for capital owners to try to replace labor with capital if it can perform the same tasks - with tragic effects for labor.
Following Piketty, it seems to make sense to introduce a small but nonzero tax on the ownership of capital (not just on capital gains at the time of a sale) to offset these changes.
This is probably where people start talking about universal basic income, but that runs into a different problem: if you bias income too much to labor, investment can't keep up with the increasing demand and you get accelerating inflation. So there's a tricky control systems problem here (and I prefer the job guarantee for its control theoretic formulation) that gets swept under the rug in favor of dogma about free markets or what have you.
I think you are underestimating the capacity for greed as well as the effect of globalization. Even if whole nations of workers are eviscerated, it is possible to sit in comfort and growing your wealth and power with little regard to the balance or even efficiency of the overall system.
You are also up against an extremely well-organised and well-armed government, but that may not even be the most salient point:
A lot of people for very good reasons do not want to see the government overthrown. They know the result will only be worse. Our societies are far too organised and interconnected over large distances, with all their widely distributed and interconnected creation of everything from basic food to almost all goods except for the most primitive ones.
Only if you can fully replace a government with a new one could you have a "revolution". So, elections and parties still are the best option. I think they actually work too, it's just that there is very little successful effort in organizing something better. Yes of course there have been plenty of attempts, but they all fail even more than the current system: None of those attempts manages to get enough people "on board", and they scream and insult everybody they don't like - so they are no improvement at all (not even mentioning the wild and unrealistic ideas they usually have).
For example, I think an alternative new movement would have to start calmly instead of yelling loudly. The latter only attracts the crazies, while the thinking people are pushed away. So, no mass demonstrations against this or that, "being against" is not a good start for the alternative. Instead work on what and how things should/could work instead of working on how to best insult and score points against the "political opponent". Or, if you start talking about revolutions I will assume your main goal is destruction.
By the way, I would posit that many people who are "greedy" are that way because of the environment, not because "that's what they are". Soooo many people, with advancing age, grow disillusioned. In particular, I know quite a few medical doctors who got into the profession with idealism - but now they actually sell "BS" to people who want it. From homeopathy to network marketing stuff like (branded) vitamins or "energy mats". Of course they don't believe in any of it, it's just that they have given up and now go with the flow.
That said, I was talking about revolution specifically as a failure state of unbounded greed. It has been bad enough for that in the past, and revolutions have been successful at deposing governments, even if they don't always produce the best follow-on state. The postwar era has generally seen western governments be successful at economic stability, but that's becoming less true over time. That said, there are some vestiges of economic control still in effect (that is, "stabilizers" like unemployment and Social Security) that stopped the global financial crisis from getting unbearably bad. But keep in mind, the last time we saw overthrows of major western governments was the Great Depression, so the more economic policy looks like the conceits pre-Keynes "Classicals," the less your moderating arguments work out.
Unless you expand the view and see that an employee that gets paid has money to participate in the economy and buy your goods.
Economics is a sham science.
https://en.wikipedia.org/wiki/Prisoner%27s_dilemma
And yes, I agree, we're going to need a countervailing market mechanism to stop it from proceeding to its logical conclusion: a persistent, severe recession. Whatever the mechanism, it's going to need to be dynamic and adaptable, or it's "dead on arrival" as a solution.
If his work is of no inherent value, wouldn't I be better off just keeping the money rather than hope that he'll spend it all on my goods?
Humans have better things to do than pretend to be machines.
If you pay $1M in salaries, that won't help you next year at all; if you buy robots for $1M, you'd expect at least half of them to still do useful work for you after quite a few years.
Unskilled labor in high demand is a pure expense. If your laborers require training that you provide then you could see that as an investment. If your laborers are unlikely to be able to find work in their field elsewhere then you could see your retention of them as an investment. The effect is compounded when both are true. Of course this does rely on a sense of loyalty in the workers, and it's up to the employer to create an environment that fosters that.
- Printing was the "good case". Before the Linotype, typesetting was a very slow process, with people picking type slugs from a case one letter at a time. The Linotype had a keyboard and ran as fast as the operator could type. This made shorter-run print jobs and thicker newspapers practical. Printing, and employment in the printing trades increased substantially.
- Glass bottle making was the "production way up, wages down" case. Bottle making by hand glassblowing required a skilled team of about six people working in close coordination, manipulating molten glass and molds. It took years to get good at this. Bottles were expensive. Once an automatic bottle making machine was developed, it took a semi-skilled machine tender to feed the machine and take the bottles away. The skilled trade was destroyed. Bottle cost went down, production went up, and wages went down.
- Stone planing was the "almost everybody gets fired" case. Brick houses used to have stone lintels over doors and windows. These were chiseled flat by people with big hammers, big chisels, and big muscles. Then a machine for planing stone flat was developed. This was much faster and cheaper. But the size of the stone lintel market was determined by the rate of house construction, and cheaper lintels didn't affect that much. So almost all workers lost their jobs.
Those are still the ways automation plays out.
[1] https://www.amazon.com/Chapters-Machinery-Labor-George-Barne...
The rate of "innovation" has grown so fast, that we may very well be at a place where your retraining itself may not be relevant by the time you are finished being retrained.
Robots are meant to serve one purpose- cost reduction. It was the case that Robots replaced monotonous tasks, but it just seems like that inchoate stage in robotics is over. Software seems to be aimed directly at doing much more than that- It's not a coincidence that Artificial Intelligence and Machine Learning are both trendy right now and revolve around "thought" in their respective monikers. Once these data scientist achieve their goals... what's next? Won't they be replaced by metarobots too? A traditional supply and demand framework doesn't apply here where retraining to meet the demand is the solution to one's labor woes- it just defers the problem until the next "retraining."
I don't have a solution, but we should remain vigilantly aware what the end goal in Robotics is: Providing capitalists with more ways to accumulate capital, at the expense of our labor.
And the irrelevance at the large scale.
General life advice is not to mix micro-economic problems and solutions with macro-economic problems and solutions.
Obviously on a micro-individual layer, if the bottom 90% are getting fired, getting yourself into the top 10% cognitive elite is quite useful. Its also completely useless as macro-economic societal level advice, there's no point telling the bottom 90% getting fired that they should all work harder to be one of the 1 in 10 still employed.
This is aside from the problem of most of the people IRL giving advice to retrain just coincidentally happen to have a financial interest in signing up as many retrainers as possible, or in calming the masses into not rolling the guillotine out yet because of those fantastic retraining benefits. On a large scale as the job cognitive requirements increase over time, eventually you'll reach a limit where most of the community doesn't have the cognitive power to determine who's a retraining scammer and who's legit at which point the confidence-job scam collapses. Arguably we're pretty close to that with higher education right now, we are at the point now of investing trillions of loans and a tenth of young peoples productive lives into an end result of poverty stricken baristas, waiters, and NEETs, which can only go on so long before the plug is pulled on the system. What do I as a taxpayer get out of spending my tax dollars so my waitress was able to obtain her unusable education degree? It certainly doesn't make her a better waitress.
Eh... Taxes are a tricky subject. I think it's unproductive to make arguments based on what is owed to you in return for your contribution to taxes. Sure, our taxes pay for infrastructure, and we have an expectation for that infrastructure to work properly. But, when you extend it to matters such as "paying for someone else's education" and expecting something in return, it just doesn't sound "right."
No one owes you anything, even if an indiscernible amount of that was funding that person's education. Taxes are a social construct allowing our elected officials to allocate resources to what's needed.
So, the problem isn't so much that your taxes aren't being utilized to give you something in return (the frivolous education of your barista), but the underlying problem is the excessive funding to education that exacerbates all the waste to happen.
The problem comes when robots begin to perform these higher order tasks. What happens to individuals when they have no "higher" place to move into? What happens to society when automated replacement becomes commonplace?
Keep in mind that the specifics of this is very hard to predict. A large number of the jobs we have today would have seemed absurd 20-40 years ago, but to us they feel like they were inevitable.
Web design, coding, app design, site reliability engineers , debugging, user interface testing, so many new jobs
That hasn't happened though. We have no indication that such a question is more relevant now than it was 200 years ago. And it's worth pointing out that we're currently in a period of fairly low productivity growth.
And now the publishing industry is dying because of the web. Its not remotely a 1 to 1 transition and automation certainly is to blame for that. Sounds like your example was just a couple hundred years too early. Back in the old days you literally had a factory running to print papers everyday, two usually, with an evening edition. Editing layouts took several experienced people which now can be done by a bored intern with a copy of Adobe CS. Teams of copy editors had to read and re-read copy to make sure it makes sense, now spell and grammar check do that.
Your Detroit example isn't good either. New factories require less human assistance. Ford's new plants in Tijuana will require less human work per car for example.
The numbers simply don't add up and every new form of automation doesn't lead to an explosion of jobs. Worse, in the few cases it does, it creates local unemployment. Its unrealistic to expect a 20 year travel agent veteran to become a full stack developer for Expedia. And if she did, how many job openings are there for that? In the past we needed one travel agent for every 1,000 people. A handful of devs can put up a travel service that serves millions.
Also the article linked makes some good points,but ignores a lot of job growth has been in retail or part-time jobs[1]. While technically employed, these people are far from the jobs of old and cannot be the primary breadwinners in their household. Not to mention, that we've never had automation on this level before so historical data might be meaningless. Sure we can talk about horses turning into cars, but people still needed to drive and own those cars. We may be only a few years away from a self-driving car service that makes both those things obsolete and the jobs it produces will be nowhere near what we have today.
[1] In other words, the automation downturn is already here but some haven't recognized it yet. People with college degrees working at Footlocker or greeting at Walmart know its happening.
I was lucky to get into programming (as a hobby at first), but as we all know, it's not for everyone. Especially, if you only get into it because you think it's lucrative.
My Dad fell ass backwards into a blue-collar factory job when he was 18, and supported a wife (who worked part time sometimes) and 2 kids. This was literally par for the course in the 60's-80's. That's upper middle class these days, at minimum.
http://www.danielsusskind.com/research
The depressing conclusion: " In a static model, increasingly capable machines drive down relative wages and the labour share of income and force labour to specialise in a shrinking set of tasks. In a dynamic version of the model, labour is driven out the economy at an endogenously determined rate, forced to specialise in a shrinking set of types of tasks, and wages steadily decline to zero."
http://www.vox.com/new-money/2016/10/24/13327014/productivit...
This has been the pattern for over 200 years of labour-saving automation:
http://www.economicshelp.org/blog/6717/economics/the-luddite...
Would the economy be better off if we replaced excavation equipment with spoons? Surely this would create tons of excavation jobs, but would the effect ripple outwards past that specific job type? Would it be a positive ripple or a negative ripple? It's a ridiculous hypothetical, but accurately illustrates the point.
It's like asking what the goal of "nature" should be. Nature consists of individuals who have their own goals, but nature has no goals of its own.
There may be a prevailing ideology, I'll admit. In the west, and now most of the world, it seems to be material wealth, as measured in exchange tokens. In the future, in some places, maybe other forms of well-being will come to dominate, perhaps measured in stranger tokens.
Either way, I think you're the one making the claims that need substantiation. Years of studying econ hasn't provided me clear evidence that upholds the idea that "economies have goals" other than "economies tend to grow in material wealth" – and even that has subtleties too many to thoroughly discuss on an internet forum.
Neither "capitalism", "communism" nor "socialism" exist except as ill described definitions and abstractions that are misused and abused by academics, politicians and the general public alike.
The actual systems we have are a patchwork of contradictory laws, policies and actions by a ton of different parties.
When you wrote "economic systems" I read that as a statement about actual economies instead of what you actually wrote.
Pragmatically, these kinds of questions have to be weighed by net-harm vs net-good. By stifling innovation or subsidizing bad ways of doing things you are choosing a (relatively) small amount of good (preserving some obsolete job so that people don't lose those specific jobs) over the much larger net-good that increase economic output provides for the entire system.
If you have an open mind; I would suggest reading the chapter "The Curse of Machinery" from Henry Hazlitt's 1946 work "Economics in One Lesson". It can be read here for free: https://fee.org/articles/the-curse-of-machinery/
Would never suggest this will change your world, but it might help you understand the opposing POV.
In terms of net-good vs net-bad, I would consider it to be enormously net-bad to simply cast these people aside, and not help them at all.
Also, interested if you took a look at that chapter I posted. Interested in your take.
I am saying that we MUST, absolutely MUST find some way to assist those who are displaced because of automation. Those people still need to support families, pay rent, buy food. If we decide that "increased productivity" (read: increased profits for owners) is more important, then we need some way for these people to be able to remain in their homes. If we don't, then we might as well shoot them all as soon as their job becomes obsolete. It would be less cruel.
'profits for owners'... yawn...
'shoot them the second their job is obsolete'... your inner communist is showing ;)
If people chose to work more hours, the hourly wage would decrease somewhat, but total wages paid out would still increase, since it would contribute to higher levels of production.
In other words, people work less because they choose to work less, not because there is less demand for their labour. There is objectively more aggregate demand, as measured by constant dollars spent on it, for labour per capita.
Further more , what we do know from history is that technology does cause transition periods with heavy unemployment and other forms of suffering. But: in the past ,things happened much slower. The term "the industrial revolution", for example, was created after the fact ,because people of that time just seen a slow change, both in time and geography. And yet, all that suffering, both directly(unemployment, poverty) and indirectly(world wars).
But it seems that today ,things are happening fast. So even if the only problem is handling the transition periods ,it could be a really big problem.
The per capita aggregate demand for labour has massively increased since 200 years ago. If you divide the amount of wages paid out in the aggregate by the number of people, you see it has increased something on the order of 20X. People work less because they have less need to work, as a result of much higher levels of wages/wealth. If they so chose, there would be plenty of work they could do, and that there is much higher levels of demand (as measured by constant dollars paid out) for it than there was in the past.
>Further more , what we do know from history is that technology does cause transition periods with heavy unemployment and other forms of suffering.
Technology has not historically caused transition periods with heavy unemployment.
Our liabilities, in terms of industries ripe for automation, include the chemicals sector (DuPont is headquartered here and is our largest for-profit employer) and the pharmaceuticals sector (AstraZeneca is our third largest for-profit employer). We also used to have several large auto manufacturing plants, but they all shut down during the study period, and those displaced workers struggled to find new jobs. Nevertheless, the unemployment rate has more or less reflected the larger U.S. rate, which has slowly dropped since the Great Recession.
Obviously, a lot of people in the software industry are worried about what will happen if their jobs become automatable.
I just heard a talk at the Open Data Science Conference that addressed this worry, and the speaker's basic point was that the people who are most at risk are those who are resistant to change, or who can't cope well with change. Robots and automated processes are still very much in the "highly capable of performing task X" stage. So, while you can construct a specialized robot that's very good at doing one particular thing, we humans remain the supreme generalists. That may one day change, but for now, automation, by and large, replaces tasks, not people.
Granted, if you're a person who only knows how to do a handful of tasks, then you're at risk. But if you are able to change and adapt to new tasks that aren't (or aren't yet) automatable, then you'll be able to continue to stay ahead of the automation wave. At least, for a good long while.
And the more I think about it, there are probably a good number of workers affected by or at risk of being replaced by automation, and they are not necessarily resistant to change -- but they might not have the resources to pursue the retraining and education that would help them pick up the skills necessary to adapt.
However, giving extra education to all 10 of those people won't help all of them; the whole point why those 10 jobs were eliminated was to achieve the same result with less people.
The Bloomberg article seems to focus more on the impact in localized areas, but at the national level, there are reallocations of jobs to new industries.
I know that eventually we'll have to contend with automation replacing all jobs that people could reasonably do - but for now, this seems like we're still in the "buggy whip" job displacement territory.
[1] https://www.nytimes.com/2017/05/05/upshot/were-getting-awful...
I'm just not interested in paying them a living wage.
Most of those temp jobs do not pay a living wage. They exist because of the largess of either government subsidies for the working poor, the largess of relatives of the working poor, or because said working poor are burning the furniture to keep warm. (And the government will have to bail them out when they reach retirement age.)
A job that doesn't, or can't pay a living wage is a net drain on the economy. It expects somebody else to subsidize the person working it.
Unless the government could instead be paying that person to do something useful for all of society, instead of something that benefits only me. This election has shown that millions of people want meaningful work.
Like teaching and caring for children, filling potholes, building bridges, laying down light transit rail, digging trenches to bring fiber to slow-connection areas...
Every single time we talk about infrastructure, we are constrained by how broke the government is. Meanwhile, real unemployment is at 9%, and public funds are paying underemployed people to be greeters at Wal-Mart, and mowing lawns at the Google campus.
I also assure you that my subsidized servants will not be bringing down the price of bread at the grocery, for anyone - poor or otherwise.
Not sure what you are trying to say.
There's a classic Micheal Moore movie (or, someone else?) where he discussed the closure of the Janesville Wisconsin General Motors assembly plant which historically employed between 10% and 1% of the city. In December 2008 when it closed the number of unemployed increased by 1200 people. In December of 2009 the number of unemployed auto workers legally officially dropped to zero. Obviously all 1200 people didn't get jobs... Thats where SSDI comes into play, because unemployment is a state funded program but SSDI is federally funded. SSDI has been roughly doubling in size every 5 years since the 80s, very roughly. Currently there's about 14 million under 65 getting federal disability benefits. Its increased from about 2 percent to about 4 percent of the population this century, and shows no indication of leveling off or decreasing, LOL. So the current unemployement rate of 4.7% is realistically about 8.7%
It's a vicious cycle.
I'm not saying it's easy to get there. But it can be done by popular will.
The Fed has f'd over the workers with ZIRP.
by contrast, there's not so much robotic clustering in California.
also, this optimistic note: Some of the sectors with the biggest job losses were ones that didn't automate intensively, like textiles and paper products. That goes to show that keeping out robots won't necessarily protect your job.
"Folks, would you like the rock, or the hard place?"
Software is more profitable. Why get into a worse business when you dominate a better one?
1. Employment very near record highs.
2. More automation than ever before.
Automation has been increasing monotonically since the Industrial Revolution. Employment levels go up and down, but have been very low, particularly in the US, for the last hundred years.
Maybe something very new is happening. But it usually isn't.
I envision a fast food store, or even Walmart for that matter, as a large mostly meatless vending machine.
With the rise of the $15 minimum wage movement, a number of chains are experimenting with replacing some or most of their employees with automated kiosks and other devices. As they become less novel, and as wages continue to rise, expect there to be fewer fast food jobs available.
It is a minor inevitability; I've seen burger assembly robots that will make, from raw ingredients (including the ground meat) burgers in a handful of minutes. The only human intervention needed is refilling ingredient hoppers and cleaning. Once people get used to not seeing so many other humans behind the counter, and the capital outlay to buy / rent / install the machines goes down (at least, relative to wages) they are likely to be much more widespread.
Exactly this. A machine could make a far superior product in a fraction of the time for less money (at quantity). I worked at McDonalds through college, and I remember people (including myself) letting the pre-cooked hamburgers sit in the warming bins for hours passed the time they were supposed to. Gross! At a minimum, I can't see why everything in the prep-area wouldn't already be automated. I imagine there'd be far less waste as well with everything being stored in a pre-cooked temperature controlled manner until the customer orders it.
I wonder how long it would be before McDonalds followed suit if someone with the capital built a competing shop that automated to the max and made a superior product for a competitive price.
It's just a matter of time.
I'd be interested in seeing (paywall, unfortunately) how they took that into account because the last paper I read with this thesis (Michael J. Hicks and Srikant Devaraj, Myth and Reality, CBER, Ball State U) explicitly did not take those factors into account, and in fact deliberately conflated the effect of offshoring, outsourcing and automation to make their point that automation, not outsourcing was to blame.
It's worth noting the exceptionally strong political imperative to blame the effects of trade on automation given the profits involved, the strong desire of business to continue to engage in labor arbitrage & maintain cross continental supply chains. This makes automation a critical scapegoat.
More likely is that the rate of automation-related job destruction (which is about 400 years old, not 10 years old) and automation-related job creation (ditto) hasn't changed over the years, it's just that low skill technology related job creation has been moved abroad to arbitrage the wage differential and is assumed out of this study's model (correct me if I'm wrong).
For example, those million odd people working at Foxconn making iPhones are likely not counted in this study as jobs that "could have been created in America, but weren't" even though that's exactly what they were.
There are several key underlying points:
1. Work flows to where it can be done cheapest. It always has.
2. Value is relative. Something is worth what someone else will pay to have it done. That includes the worker's labor. Large numbers of workers are currently being told "What you do isn't worth what you want to be paid to do it.", as jobs relocate or get automated out of existence.
3. Supply and demand rules. When demand is high and supply is low, prices are high. As supply increases, prices drop.
4. Everyone wants the best deal they can get.
Work flowing elsewhere has been going on for a very long time. Before automation and robotics came along, and work had to be performed manually by human workers, employers had incentives to locate where the work was done in places with lower labor costs. Locating in non-union areas was a first step. Moving offshore was next. (Ask what used to the the International Ladies Garment Worker Union about it.)
China bootstrapped itself from Third World agrarian nation to First World industrial power by leveraging low labor costs. The moved peasants off the farm to the cities to become an industrial workforce. Unlike the experience of Russia which did the same thing under the Bolsheviks after the Russian Revolution, coercion wasn't needed. Those factory jobs had better hours, better working conditions, and paid better than being a peasant on the farm. People migrated en mass to get those jobs. Chinese workers got paid a fraction of what Western workers would get for the same jobs, but it cost far less to live in China. Those factory jobs were a step up for those who had them.
But China is suffering from its own success. The supply of peasants on the farm is drying up, manufacturers must compete for labor, pay is rising in consequence, and China is no longer the low cost producer. A major Chinese manufacturer announced a full court press into robotics a while back in consequence.
The inflection point we see now is that higher level jobs than assembly line worker can be and are being automated, and "knowledge work" is flowing to places where it can be done cheaper, with outsourcing an increasingly common practice.
And "everyone wants the best deal they can get" is a driver. Unless you are one of the one tenth of one percent who doesn't care what something costs, you are probably on a budget. You have fixed costs you must pay, like rent and food, and variable costs come out of what's left of your income. The Internet provides all sorts of tools for locating the best deals, and price will be a factor. It may not be the only factor on which you make a purchase decision, but all else being equal, lower price wins.
So outfits who make things or provide services have a strong interest in reducing costs to be able to provide lower prices, and lowering labor costs is a goal. The fact that we can get many things cheaper than we used to is a consequence of the factors mentioned above. A question I normally ask folks who want jobs returned to the US is "How much more are you willing to pay for what you buy to see that happen? You will pay more." I don't normally get meaningful answers.
Complaints about immigration that reduce to "Those <whatevers> will work cheaper than I do and take my job!" raise similar issues. The people who want to buy whatever you make or do are on a budget just like you are. If the immigrant you worry about can do the job as well as you can and will charge less to do it, explain why they should pay you more? What's in it for them?
I don't have pat answers to the problem of job loss. I just think we aren't asking the right questions. ______ Dennis