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Home Publications Blogs Beat the Press Robots and Economic Luddites: They Aren't Taking Our Jobs Quickly Enough

Robots and Economic Luddites: They Aren't Taking Our Jobs Quickly Enough

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Tuesday, 24 December 2013 08:42

Lydia DePillis warns us in the Post of 8 ways that robots will take our jobs. It is amazing how the media have managed to hype the fear of robots taking our jobs at the same time that they have built up fears over huge budget deficits bankrupting the country. You don't see the connection? Maybe you should be an economics reporter for a leading national news outlet.

Okay, let's get to basics. The robots taking our jobs story is a story of labor surplus, too many workers, too few jobs. Everything that needs to be done is being done by the robots. There is nothing for the rest of us to do but watch.

There can of course be issues of distribution. If the one percent are able to write laws that allow them to claim everything the robots produce then they can make most of us very poor. But this is still a story of society of plenty. We can have all the food, shelter, health care, clean energy, etc. that we need; the robots can do it for us.

Okay, now let's flip over to the budget crisis that has the folks at the Washington Post losing sleep. This is a story of scarcity. We are spending so much money on our parents' and grandparents' Social Security and Medicare that there is no money left to educate our kids.

Some confused souls may say that the problem may not be an economic one, but rather a fiscal problem. The government can't raise the tax revenue to pay for both the Social Security and Medicare for the elderly and the education of our kids. This is confused because if we are living in the world where the robots are doing all the work then the government really doesn't need to raise tax revenue, it can just print the money it needs to back its payments.

Okay, now everyone is completely appalled. The government is just going to print trillions of dollars? That will send inflation through the roof, right? Not in the world where robots are doing all the work it won't. If we print money it will create more demands for goods and services, which the robots will be happy to supply. As every intro econ graduate knows, inflation is a story of too much money chasing too few goods and services. But in the robots do everything story, the goods and services are quickly generated to meet the demand. Where's the inflation, robots demanding higher wages?

In short, you can craft a story where we have huge advances in robot technology so that the need for human labor is drastically reduced. You can also craft a story where an aging population leads to too few workers being left to support too many retirees. However, you can't believe both at the same time unless you write on economic issues for the Washington Post.

Just in case anyone cares about what the data says on these issues, the robots don't seem to be winning out too quickly. Productivity growth has slowed sharply over the last three years and it is well below the pace of 1947-73 golden age. (Robots are just another form of good old-fashioned productivity growth.)

labor productivity

On the other hand, the scarcity mongers don't have much of a case either. Even if productivity growth stays at just a 1.5 percent annual rate its impact on raising wages and living standards will swamp any conceivable tax increases associated with caring for a larger population of retirees.

Comments (21)Add Comment
However, you can't believe both at the same time
written by djb, December 24, 2013 8:43
yes and this is one of the main points of economics today

we are producing more goods and services with less labor than ever before in history

and whether this productivity goes up slowly or rapidly it is still going up

so this idea that we wont have enough to take care of the elderly is simply a way to justify savaging goverment programs that help the poor and middle class

Robots: The Ultimate Republicans
written by paulpfish, December 24, 2013 8:44
Robots seem like the perfect solution to our problems. It like doubling the population but that half doesn't need social services.

The only issue is that Republicans will probably want to give them the vote (maybe 3/5th of a person???) since Robots are likely to vote Republican: 1) They are "makers not takers" 2) They will never need Social Security or Medicare. 3) They will never need Unemployment Benefits. 4) They don't complain when they are thrown on the scrap heap and replaced by a new younger model.

In fact, has anyone ever checked to see if the current Republicans are secretly robots? They all claim to be Christians but maybe that is just a cover...
Scarcity Mongers versus Surplus Mongers = Zero Sum Sock Puppet Mongers
written by Last Mover, December 24, 2013 10:57

Sock puppet mongers for the 1% have to preach to the zero sum choir to keep their ratings up. For example they never talk about the positive sum outcome of stimulus spending from huge productivity gains that result when idle resources are brought to life in a great recession.

Instead they only talk about the debt incurred to finance the stimulus spending ... as if the economy were already at full employment ... as if the spending results in crowding out other productive resources ... as if stimulus spending is a fools errand that gains nothing because, you know ... it's always a zero sum game in the end isn't it America ... somebody eventually has to pay the Pied Piper and all that don't they ...

Well guess what. There is no scarcity in a deep recession. The opportunity cost of employing an idle resource towards maximum output potential of the economy is exactly zero when the borrowing cost of doing so is zero as well.

Zero sum sock puppet mongers cannot handle this. It blows their tiny minds that trade-offs may not exist because it implies that said economic resources aren't truely "scarce", that they have no value. How can that possibly be?, they ask rhetorically of the audience choir nodding their heads in agreement.

Enter the scarcity/surplus mongering of not enough or too much of whatever ... not enough working to support everyone else, in obvious conflict of too many robots which displace the very labor of which there is not enough - with output that can support those not working.

Let's see, so if a robot takes your job and produces more, you can't get another job because ... there's not enough demand to absorb the additional output produced by the robot. Sound familiar?

Then again, absent robots, if there's not enough working to support those not working ... then there's too much demand chasing insuffient output ... so the excess demand should raise the wages of the working which increases the labor force and corrects the shortage of workers ... but somehow that does not happen. Again, sound familiar?

How is it that the obvious effect of the sock puppet's own economic scenario mongering continues to go right over their heads, right past their tiny minds of zero-sum fantasies, harshly interrupted by positive sum and negative sum territory every time?

Could it be ... could it just be ... they completely forgot about the sanctity of the very self correcting market clearing price signals they preach in another ongoing fantasy, that of "free markets"? You know, those prices that work to correct shortages and surpluses by moving markets to equilibrium?

Oh wait. Of course. A tiny mind can hold only so much. Beyond that, well you know, the zero sum tradeoff must be made between competing scaremonger stories, lest two scenarios get seen together by the audience choir and outed as the conflicting lies they actually are.
...
written by skeptonomist, December 24, 2013 12:10
A major problem is the workweek, which Dean mentions from time to time. If there's less work for humans, it has to be distributed more widely. We do need more time to play with all the gadgets, watch all the channels, surf all the internet sites and text and tweet each other, and when people don't get it they may do it on company time, which may actually reduce productivity anyway. The basic workweek has not changed for over 70 years.
...
written by JSeydl, December 24, 2013 12:30
I've been thinking about this post all morning. All I can say is that it seems as though the two extremes aren't gonna happen: robots aren't going to make physical labor obsolete, and the state isn't going to be bankrupted by retirement programs. As Dean notes, the money will be there to pay for our seniors even if productivity continues along it's current pace, provided that the gains from productivity growth are broadly shared. The "provided that" is the big if, and it's what we should all be focused on.
System failure due to insufficient cultural evolution
written by Justin S, December 24, 2013 1:14
We are living through the first era of human history where the problem is not resource scarcity, but a lack of purchasing power to buy everything that our society is capable of producing. We are the most efficient, productive human beings the planet has ever seen, and production is hardly a problem. Even the inefficiencies we do have, such as a parasitic finance and healthcare sector, is relatively easy to deal with, as Dean writes on a regular basis.

It is just hard for human society to adjust its thinking. We are still trapped in the old Puritan world of extreme resource scarcity and morality play economics. The idea that the only thing we are short of is the digital data known as money, is hard for many people to understand. Always remember, Keynes thought we would be working 15 hour weeks by this point! If only....
But then doesn't Krugman's position self-contradictory as well?
written by Yoram Gat, December 24, 2013 1:42
Krugman has things exactly the backward to the way the Post has them. According to Krugman we are going to have chronic shortage of demand ("secular stagnation"), but at the same time he is "optimistic" about "androids" increasing productivity. If true, this will just make the demand shortage even more acute, so the increased productivity is not a cause for optimism, but for pessimism.? Not so?
...
written by James, December 24, 2013 1:45
That's a lot of criticism of a story that doesn't even take sides in the debate as to whether robots will take our jobs. I read the story as just a list of cool robots coming. Furthermore, does DePillis warn about deficits or our ability to pay for entitlements? I wouldn't lump her or anyone writing for (excellent) WonkBlog in with the rest of WaPo.
The Rood of Grace
written by Sandwichman, December 24, 2013 2:47
No discussion of "robots" is complete without consideration of the complex history of anthropomorphic automata. One episode:

From Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Rood_of_Grace

The Rood of Grace was a crucifix kept at Boxley Abbey in Kent in southeast England. It was a mechanized likeness of Jesus, described by one Protestant iconoclast as an ingenious contraption of wires and rods that made the eyes move like a living thing, and considered spiritually inspirational and a destination for pilgrimages by many of the faithful, including a young Henry VIII. After the dissolution of the monasteries, the newly Protestant government used the Rood as an occasion to denounce the Roman Catholics.

According to tradition, the Rood was brought to Boxley Abbey on a stray horse. Considering that a miracle, the monks of the abbey took the crucifix. William Lambarde, in his 1570 book, Perambulation of Kent, describes how the Rood was created by an English carpenter taken prisoner by the French in order to ransom himself. According to various reports, the Rood was able to move, shed tears, foam at the mouth, turn and nod its head, and make various facial expressions.

After the dissolution of the monasteries, the Rood was paraded around various market towns, including Maidstone, Kent. On 12 February 1538 John Hilsey, Bishop of Rochester, denounced the Rood of Grace as a fraud, exhibited its machinery and broke it to pieces. The Rood was eventually burned in London along with numerous other statues of Roman Catholic saints.

According to Reilly, sermons and reports by the Protestant iconoclasts who attacked the Rood presumed that the Catholic authorities were misrepresenting the Rood; however, "Catholic audiences had seen mechanical theatrical mirabilia or miracles in the medieval cycle plays for generations." (Reilly notes an animated serpent winding around the tree in the garden, mechanical jaws of hell, and cords used to make a dove descend at Pentecost.). The Protestant iconoclasts who presented the Rood as a fraud perpetuated by deceitful monks on gullible followers stood to gain politically from spreading that version of the story, yet Groeneveld argues the Rood was, in its time, "acknowledged, even advertised, to be a mechanical marvel".
Printing money without inflation
written by Ian Winograd, December 24, 2013 2:59
Great post and comments. Dean says we can print money without creating inflation, and that is something that few people will agree with, but Dean is correct. Roger Malcolm Mitchell has been writing about this in his blog for some time now. There is no correlation between government deficits and inflation. Wage inflation drives price inflation.
Justin S. comment is an important one. The problem is fairness. It is not fair to have half of the country work and the other half be subsidized by the currency owner. I think the solution relies in a Universal Basic Income, which applies to everyone equally. That will pass the fairness test.
Not really a contradiction
written by Melissa, December 25, 2013 7:00
If you make the assumption (as you barely touch on) that the productivity gains from robots will all go to the owners, then there's no contradiction. The key is in your phrase "an aging population leads to too few workers" - that is, not too few potential workers, but too few actual workers earning paychecks because the robots took all the jobs, so too few middle class workers are left to pay into SS and Medicare, as the middle class dissolves into the non-working poor, who use Medicaid instead of paying into it. It's probably an overblown scenario, but it's not really contradictory.
You Can Believe Both At The Same Time
written by PJR, December 25, 2013 8:53
Simply assume that the owners of all those robots won't pay taxes. Imagine that these owners use some of their profits to remind people that they should be thankful if they have any sort of job and that they must demand an end to government social programs that they can't afford on their meager paychecks.
You & You're Elite Buddies Don't Get It
written by Chad Boyer, December 25, 2013 11:33
I got your link from Ritholtz's blog. You guys are two peas in a pod. You write about matters that matter to the people in your circle: the well off; the silver spooners; the highly educated; the politically connected; the social connected. The winners. You write this story because you have no idea what it's like to work in a field that can be robotized, outsourced or illegal immigrant'ed. You have the temerity to call Luddite those who feel the crush of marginalization, and their children's similar fate. You poo poo their concerns, like they're babes awakening from some childish nightmare. For you and casino gamers like Ritholtz, the parasite class, 'just folks' are a hoot, funny little insecure people with oddly irrational thoughts, little sheeple who occasionally 'baahhh' too loud for your urbanely sophisticated tastes. Well, let me tell you something: you had better 'do something' about us, because in time the big ol' hoot that is our lost jobs, our lost futures, our lost lives, is gonna come back to haunt you, the 'intelligensia'. Because, like Gertrude Stein being surprised that anyone voted for Nixon when she'd never met a Nixon voter, we, the laughable, are everywhere. And we are getting really, really REALLY angry.
A better replacement for robots: desperate people
written by Matt, December 25, 2013 12:32
The "robot revolution" has been postponed, as employers found that it was more efficient just to dismantle the safety net and rely on desperate workers. To wit:

* Robots are a substantial capital investment. Desperate workers are basically free, and in some places even government-subsidized.

* If you push a robot beyond its mechanical limits and it breaks, that causes downtime and repair costs. If you push a desperate person beyond their physical limits and they break, you just replace them and claim their injuries were "not work-related".

* You actually have to pay for robots. As Walmart and others have demonstrated with wage theft, this isn't equally true for desperate people.

* Robots can't vote, so subjecting them to endless anti-union propaganda is useless. Also, nobody wants to see a bunch of robots cheering at an attendance-mandatory Romney campaign rally.
...
written by Calgacus, December 25, 2013 3:21
skeptonomist:A major problem is the workweek, which Dean mentions from time to time. If there's less work for humans, it has to be distributed more widely. Work for money - jobs are a human decision, not something robo-magically imposed by a non-human economy. "if there's less work for humans, it has to be distributed more widely" makes as little sense as "if there's less decisions for humans .."

Chad Boyer: You miss the point of Dean's essay. He is showing the logical contradictions in elite propaganda. He is not poo pooing the concerns of those marginalized by the enormous economic crimes of elite parasites, and is very much on the side of the marginalized.
...
written by AlanInAZ, December 25, 2013 3:54
like Gertrude Stein being surprised that anyone voted for Nixon when she'd never met a Nixon voter


@Chad Boyer

I believe it is a misquote of the film critic Pauline Kael (Gertrude Stein died in 1946). She actually said she only met one person who voted for Nixon.
The incipent problem
written by Maxwello, December 26, 2013 10:07
The fact that robots will be able to boost productivity to a alevel where there is greater aggregate wealth is not in question. The question that I believe will be critical to the survival of the country is how would a new system of distribution come into being once the rules of scarcity are no longer in control. Exchange based on differential utility is fundamental to our current economy. If there is nothing that a producer values more highly than that which they have produced, or there is no way that someone can acquire something of value to trade (because of the collapse of pricing systems based on relative valuation), then it becomes very difficult for anybody who does not start out with large numbers of their own robots to participate in the economy in any way, since their most basic value, the ability to provide labour, will not induce others to transfer any amount of wealth to them.

In an economy without scarcity, the pipedreams of the far left/socialist/communist that have been so vilified for the last century may be harmless. Most people on the far right believe that they are evil, because they never bothered to examine why they were unworkable in a time when scarcity was a naturally occurring condition.

We're not there, yet. Partially that's a factor of our still developing the necessary technology, but it's also partially due to the efforts of those whose relative power is tied to their relative wealth under the current system. Americans need to start worrying about "enough" rather than feeling constantly insecure if they're not increasing their personal share of the collective wealth. The conservative forces have dug in there heels and raised an army of unquestioning devotees who believe that logical discussion is blasphemous, and thereforee, cannot be reasoned with.

My hopes are not high that we will come through the transition without bloodshed, and we know which side is better armed for a physical battle.
Why everyone who talks automation has it wrong
written by Jeremy Janson, December 26, 2013 10:50
I worked a job once where there was a backhoe on site, but I was doing part of the excavation by hand with a shovel. Why? Because the part of the ditch I was excavating by hand was too close to the house, and a backhoe would have destroyed the house. There will always be little nooks and crannies like that where for one reason or another the investment cost of sufficiently automating that job is just too high to be justified when other better investments are available, and as automation increases aggregate wealth and demand for raw materials, parts, et cetera, the "exceptions" will grow more numerous. The truth is that I have had an easier time getting theses supposedly "obsolete" grey collar and blue collar jobs as a low-skill laborer than getting jobs with my Industrial Engineering degree.

On the other hand, I also worked another job where I was automating well-educated people who are supposedly immune to this out of the job, namely engineers, logisticians, managers and account representatives. The process to do such is known as "Systems Modelling", and it involves both controlling what each person can modify in the system (Configuration Management), and automatically running analyses and simulations of the results (Systems Analysis). The Systems Analysis does months of engineering work automatically at the click of a button. The Configuration Management prevents people who should not have the ability to modify something from doing so, forcing them to do their job and exactly their job and preventing duplicitous work. SA depends on CM because without the clear variable declarations inherent in CM a computer cannot run a program on the design. The truth is that this kind of automation is actually less costly than automating physical processes for the same reason that Microsoft is more profitable than US Steel - you don't actually have to build anything, a few programmers on computers is good enough to automate the system. This means that instead of spending anywhere from 250K to 5 million for a machine, you can hire 3 programmers over a period of 6 months for a cost of (generally around) 75K to automate highly educated people out of the job. These highly educated people are also paid more, which means that just as the cost is lower, the benefit of automating them out of the job is also higher.
...
written by gman, December 26, 2013 2:38
Automation, Globalization and Immigration are all levers work by capital to keep wages suppressed...workers of the US..GOODNIGHT!
The medium term is the problem
written by Larry, December 26, 2013 6:17
Yes, the robots will eventually do the work. But the transition is going to be rough. We organize our society around work. It's the basis of dignity and self-respect for just about everybody. What happens when we don't need truck drivers or cabbie any more? This is coming within years, not decades.

Conventional economics isn't helpful when large numbers of people can't earn enough to support their families. Higher minimum wages can't fix that, as the robot-defined wage floor sinks.

Better monetary policy can still get us back to full employment for now as long as we don't screw up other policies too much. But it can't (and shouldn't) fix the bigger problem. What will?
Dawn of Crewless Ships
written by Wayne Martin, December 27, 2013 12:14
There are many industies that have been moving towards full automation. This mornings Financial Times carried an article about how it is very likely that there will be crewless ships sailing the high seas in not too distant a time frame:

http://www.ft.com/cms/s/0/e77b53e8-6c00-11e3-85b1-00144feabdc0.html#axzz2ocodWWka

Ship loading and unloading is already close to automated in some locations. There is every reason to see this technology up and running within the next ten years.

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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