Job destruction by robots could outweigh creation

No, there's another possibility: automation has increased productivity, so that the same n workers are now producing a lot more product, which can be sold for a lot more money, enough more to pay for the additional cost of automation, plus the increased wages/salaries of the workers (since they are now more highly skilled than they were before; they're robot maintainers and programmers instead of assembly line workers), and still leave increased profits.

In other words, the real benefit of automation is to raise everyone's standard of living by raising the average productivity of human workers.

Actually your thought experiment is incomplete, so your answer is not the only possible solution.

Let's say I have a shoe factory, and I install a robot that can, say, cut the shoe leather faster, more cheaply, and more reliably (less waste). Perhaps it can cut shapes a human couldn't, or couldn't cost effectively, so I can even sell new shoe designs. The guy who used to cut the leather and put in the shoelace eyelets can now just do eyelets. This might cut my costs such that I can drop my shoe price AND make a larger profit. The lower price means I sell more shoes and make more profits. So I not only keep the old leather-cutter, but in fact might bring on more people so that I could get even more profits.

This is a contrived example, in the style of The Wealth of Nations, but it could just as well be a more complex one. Computers replaced slide rules and draftsman, yet more people are involved these days in building planes (and more interesting ones) than were in the pre-computing days.

Yes this is not the only possible outcome -- some people will be automated away, can't find other employment and they will be screwed. Governments should provide some support for them, and some governments will (probably not the US, but that's another story). But it's not axiomatic that "robots == job loss" -- we're not talking some sort of asimov robot that would be a 1:1 replacement for a human!

This is obviously a very simplistic scenario, but I think it's no more simplistic than your scenario:

Sally works at an electronics factory for minimum wage. The factory fires her and replaces her with a robot. The factory then is able to sell some electronic components to Joe for a lower price while also increasing the factory's margin. Joe sells handmade artisanal pocket calculators. Now that some of his components are cheaper, Joe can afford to hire Sally to work as a phone salesperson, making slightly more than minimum wage. Sally makes more money, the factory makes more money, and Joe can expand his business and probably make more money.

That's pretty much The Lump of Labour Fallacy:

http://en.wikipedia.org/wiki/Lump_of_labour_fallacy

Your comment applies not just to robots but to any labour saving device or productivity increase. From the wikipedia page:

Historically, the gigantic increase in labour productivity induced by technological progress since the industrial revolution has resulted in the dominance of the scale effect, bringing about both a massive increase in real wages and a decrease in labour time. There is no reason to expect that this same process cannot be continued in the future.

Arguments like these assume that the company is already operating at maximum capacity, and can produce no more profit. It is entirely possible that robotics can produce more profits than possible by humans alone, and a fraction of the newly generated extra profit can keep the workforce still employed in some other new task, like maintaining the robots. For example, it was unlikely that anyone could curate the web manually, but Google automated the entire process. Perhaps few people at Yahoo directories lost job, but there was overall gain in employment due to an algorithm (Pagerank).

Exactly. It would not make any sense for companies to automate anything if it did not end up reducing how much they're paying for employment.

"Gee, yeah and I'm starting to think that prayer might not be enough to protect the health of those children in that factory I own in Bangladesh. I guess my fault is I'm just too honest and trusting."

The most prescient comparison to be made is the increase in self checkout lanes; the human element is left to frantically supervise while the customer has all the social interaction equivalent to using a DVD player. The future should be bringing people closer together.

The crux of the arguments presented is that there is some undefined point past which the market will not be able to absorb the displaced labor.

If or when that comes to pass, it's no longer about whether or not automation benefits society - but how to adapt to a changing employment landscape.

> Robotic car manufacturing hurt some auto workers, but all of society gets cheaper cars

This is false. Over the past forty years, the rise in price for the median car sold in the US has far exceeded inflation. The idea that "society gets cheaper cars" is false, cars have gotten more expensive, even taking inflation into account. The US Bureau of Labor Statistics keeps careful track of such things.

Obviously automating something will benefit someone. You have your facts mixed up however, thus your conclusion that it benefits "society as a whole" can be disregarded.

Super cheap robotic labor is a calamity!

Why? Because you will be able to get such a robot for practically nothing and it will fill all your material needs without you having to pay any one any more money.

That's right. Head for the hills. The world is coming to an end.

An unprecedented wave of prosperity is coming to destroy us.

The only way this could be a problem is if robotic labor becomes super cheap, while at the same time becoming super expensive. The picture usually painted is the overlords will have it and those underfoot won't be able to buy it. Unlike any other technology revolution, ever.

The reality is that even the poorest sap unable to operate a robot will be handed a $500 self-assembling house that grows all its own food, collects all its own energy, and cleans itself. Imagine the untold suffering that awaits us.

Past performance is no guarantee of future results.

Even for someone who personally suspects that the market will always find sufficient use for the displaced labor, it seems a little silly to ignore the possibility that it won't simply on account of it not having happened yet.

The Swiss have only collected enough signatures to get that initiative up to be voted on this year.

http://www.businessweek.com/articles/2014-01-16/inequality-f...

It is yet to pass. Less than 50% of Swiss referenda pass.

> the others have found things to do mostly because people like doing stuff rather then because they's starve otherwise.

I've seen variations of this statement many times on HN, that is, "there's no such thing as disutility of labor". I'm a bit skeptical. I believe a lot of software people enjoy their jobs, and some keep working even though they don't hve to, but I doubt that's the case for the bulk of the world's urban population.

Also, people have many other material demands (sometimes called "needs") besides food and shelter. Viz. the common complaint by SV developers that "a 6 digit salary isn't much".

Huh? I can rattle off a dozen towns that were once solid industrial cities, now creaky shadows of their former selves.

The ante to get into the quality job market has been raised substantially. Very few moderate skill jobs exist that are allowing folks to live a lifestyle equivalent to an average Amercian circa 1965.

I'm starting to see decent contract workers in IT roles coming in around $25/hr -- so they are making something like $15-18. I made 2.5x that with zero experience in 2000. This is happening because the big employers around here are embracing new tech and are automating lots of IT work away.

> The proportion of people working seems a bit unaffected by technological change.

The proportion of the produce of society returned to labor vs. capital, OTOH, is strongly affected by technological change -- advancing technology tends to shift returns to capital (though sometimes there is a trailing second order effect where this produces policy responses that at least partially offset this primary effect.)

> A couple of centuries back most people were in farming and now that is done by like 2% of the population the others have found things to do mostly because people like doing stuff rather then because they's starve otherwise.

The fact that they would starve otherwise is a pretty big factor, and its a big factor that -- especially absent policy responses like child labor laws, minimum wages laws, etc., but even to a lesser extent with them -- keeps returns to labor down.

> Who needs a job when you have robots doing all the work for you?!

Anyone who doesn't own productive capital and lives in a society where you either need income from productive capital or income from labor to get the necessities of life.

> Think of all the other things you could be doing.

Starving in the street?

This is what Bertrand Russell advocated about 100 years ago. But he thought of a sane society where the productivity was split between everyone so we got more leisure instead of unemployment.

You seem to be arguing as if "surplus of labour" means that as a whole the world has enough good stuff, and having more people work won't add value.

What it actually means is that there are people who want more good stuff, and are even willing to do work to get it - but that's not an option for them because there are no jobs available. It's the sad state of people not being organized to work to provide their own needs - and it's caused by wealth being so concentrated in the smallest group at the top that economic activity is frozen for everyone else.

A basic income would take wealth away from the few who have more than enough, and thaw out economic activity for everyone else. Poor people would be able to spend, AND work because others are spending.

All of this has nothing to do with robots. Except.. One of the fears of robotics is that they'll work so well that even more wealth will be concentrated to a few. Basic income is the antidote to that concern.

In the long term it gets even better.. Eventually when robots are doing most of the work, a basic income will mean that work is optional for everyone, and people will do work they find meaningful instead of necessary, or will just spend time with their families.

> right now, we really don't have a surplus of labor. If we did, then the average standard of living would be really high

That doesn't follow. It's quite possible to simultaneously have

1. Capacity to produce plenty of available food, land, shelter, etc

2. Plenty of people willing to work for the food, land, and shelter

3. Lack of fed and sheltered people due to #2's labor having lower value than #1

There is no reason why the market determined value of labor (VOL) must exceed the market determined cost of living (COL). It happens. This is what people mean when they say that famine is a distribution problem, not a production problem. What they really mean is that it's an economic problem. Markets are entirely compatible with the notion of an underclass that cannot put food on the table, even amid abundance. Refer to the (e)book "Poverty and Famines" by Amartya Sen for examples and analysis. Exporting food while part of the populace starves isn't a stunt reserved for communist countries.

Thought experiment: there's a village with 100 peasants and surrounding land capable of producing 100 units of food if tended to by 75 laborers. The landowner hires 75 laborers, providing them each with 1 unit of food in return (supply of labor exceeds demand, so he has all the bargaining power). He sells the remaining 23 units at market in the neighboring town.

What do the 25 peasants that weren't needed do? Go to the neighboring town? What if nobody there is hiring either?

> That fact that we cannot provide a high enough average standard of living even when the incentive to work is very high, proves that drastically lowering the incentive to work would not provide a sufficient standard of living.

A high standard of living requires more than products of labor. Crucially, it requires control over resources. The market provides sufficient indirect control if VOL>COL. We can empirically and theoretically observe that that's not always the case.

It's hard to believe that we have no surplus of labor when politicians are clamoring to create new jobs.

What's wrong with wages as an incentive to work? Why should the government provide an additional incentive to work by depriving people of their basic needs?