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Home Publications Blogs Beat the Press Robots Don't Cost Jobs, Bad Economic Policy Does

Robots Don't Cost Jobs, Bad Economic Policy Does

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Sunday, 19 August 2012 06:55

The NYT had an interesting piece on how a new generation of robots is able to do far more sophisticated tasks in factories and warehouses than earlier generations of robots. The piece repeatedly warns that this new technology could cost large numbers of jobs.

While one outcome of the introduction of this new technology could be the loss of jobs in the economy, that would be due to inept economic policy. What the article is describing is productivity growth. This is exactly what we should want. It allows us to be richer if we work the same number of hours or to be as rich and work fewer hours. We had very rapid productivity growth in the three decades following World War II. It did not lead to unemployment, but rather to rapidly rising living standards for the bulk of the population.

In the last three decades the government has pursued policies that have the effect of redistributing income upward so that the gains from growth are not broadly shared. These policies include a high dollar policy that makes U.S. manufacturing goods less competitive domestically and internationally, a policy of selective protectionism that largely protects the most highly educated professionals (e.g. doctors and lawyers) from foreign competition, and a policy of shifting tens of billions of dollars each year to Wall Street banks through "too big to fail" insurance provided at zero cost by the government.

If this new generation of robots ends up making large segments of the population worse off, it will be the result of deliberate policies. It is not the fault of the robots. 

Comments (8)Add Comment
Since Robots Don't Buy Stuff They Cause Insufficient Demand: Scare Story #1,579
written by Last Mover, August 19, 2012 10:09
Conflating the role of productivity, competition and distribution of resources into a series of shallow uninformed unconnected stories draped in a background of pending doom has become a staple of MSM necessary to attract readers.

For example the reporters writing this drivel can't even make the connection that austerians would be advocating about robots and productivity under "free markets": More productive robots drive down unit cost, competition distributes the gains to everyone and the added consumption keeps everyone employed. (Therefore advanced technology never causes unemployment.)

Of course it hasn't worked this way for 30 years because the rich captured the productivity gains by gutting competition for monopoly and monopsony capitalism. Since this is not reported either the reporters can switch from one scare story to the next without the slightest hint of gross incompetence.
...
written by Sandwichman, August 19, 2012 12:34
Excellent!
...
written by liberal, August 19, 2012 1:38
In the last three decades the government has pursued policies that have the effect of redistributing income upward so that the gains from growth are not broadly shared.


You miss the biggest one again, Dean: land ownership in the absence of high land value taxes.
...
written by Brett, August 19, 2012 2:26
a policy of selective protectionism that largely protects the most highly educated professionals (e.g. doctors and lawyers) from foreign competition,


It's not just foreign competition. It's competition from any domestic change in treatment that might reduce the income of doctors.

Imagine that technology gets good enough that tasks that were once done by a highly expensive single doctor can now be done by a bunch of more moderately paid people working with machine assistance, with overall productivity in treatment being much higher (although "productivity" in the Services Sector is harder to measure). That type of thing has happened many times since the Industrial Revolution, going back to when a bunch of skilled weavers were replaced by many more lower-skilled factory workers who could produce much more woven cloth on assembly lines and with machines.

Yet that's the type of thing that you know the AMA is going to be pushing hard against. So instead, we end up with a smaller number of doctors and hospital owners enjoying the gains of productivity.
What About Zombies?
written by Frankly Curious, August 19, 2012 4:06
What about zombies? If they killed indiscriminately, wouldn't this free up both capital and jobs? I recall reading that the Plague was good for the economy. Frankly, a zombie attack sounds like more fun.
Robots & Autonomy
written by TVeblen, August 19, 2012 9:49
I agree with Dean that labor-displacing technological change is at the heart of increasing living standards, assuming high labor demand elsewhere in the economy (supported by other macroeconomic policies that Dean notes). The big problem is that the average rate of growth in the demand for even highly skilled workers is not keeping pace with the supply. Real average wage growth for engineers, architects, and even accountants has been slowing. But the question that the NYTs article did not address was the change in the quality of work life for those engineers and other technical folks working with robots. Basically what happens is that you become an "attendant to the machine" rather than using the robot/tool in some creative capacity (not always, but my non-design engineering friends tell me that production and testing tasks are increasingly fragmented such that few understand how the entire system work) . Employers are using all sorts of sophisticated software to montior PC usage by employees. Even my cardiologist has been reduced to a keypuncher as she sits furiously typing in info to the med records system while going over my bloodwork and charts (not a very enjoyable experience). Now I love technology and use econometric software to do all sorts of fancy estimation routines that we couldn't dream of 30 years ago (it would have taken boxes of IBM punchcards and hours of mainframe time to do dynamic panel GMM models in 1977). But the downside is that speed-up and intensification of the labor process is all too often the byproduuct of technological change in the workplace. Rare is the case where employees have any say in how technology is used or implemented to change the workflow or process. Can we even have such a conversation in today's world where the "boss is king" and breaking tenure and teacher unions is the new Democratic education policy.
Who Builds The Robots?
written by FoonTheElder, August 20, 2012 1:03
So where did big corporate America outsource all the jobs building the robots?

Or is it that we're so busy spending our research dollars on billion dollar bombs and spying equipment that we don't bother with productive research any longer.
Productivity and Production
written by John M, August 21, 2012 4:55
The issue about productivity is that it has a denominator. Productivity is production divided by worker, or production divided by work-hour. Increased productivity causes increased production, decreased employment, or combination of the two.

When all the gains (and then some) go to the top 20% (with the lion's share going to the top 1%), increased productivity means primarily decreased employment rather than increased production. Granted, it also means decreased consumption of limited resources.

Increase in productivity may also increase the "natural" rate of unemployment -- the rate we get before too much inflation sets in. Again, that would be due to beneficiaries of growth being in the top 20%.

In fact, talking about growth in this context of extreme inequality is equivalent to the following meaningless average: on average, you, I and Bill Gates are decabillionaires. On average, we had a certain amount of per-capital positive GDP growth, even though the bottom 80% got negative growth.

Who builds the robots? A small fraction of the people whose jobs are displaced by the robots. Alternatively, a small fraction of robots build the later robots.

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About Beat the Press

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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