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.