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Home Publications Blogs Beat the Press Washington Post Runs Front Page Piece Challenging Demographic Horror Story and Doesn't Even Know It

Washington Post Runs Front Page Piece Challenging Demographic Horror Story and Doesn't Even Know It

Thursday, 07 March 2013 09:09

The Washington Post had a front page piece today warning that the spread of robots in the workplace may displace large numbers of workers. Incredibly, the piece never once mentions the implication of the displacement story for the demographic nightmare stories that endlessly fill its news and opinion pages.

Remember, the demographic nightmare story is that because of lower birth rates and longer life expectancies we are going to see a fall in the ratio of workers to retirees, from 3 to 1 today, to just 2 to 1 in 20 years. So, this is a story where we are suffering from a severe labor shortage. All of us aging baby boomers will be laying in our own waste because there is no one to change our bedpans.

Okay, now we have the story of sophisticated robots that will be able to replace human laborers in a wide variety of activities. The Post tells us that we should be worried about unemployment. Not really, because anyone who has read an intro econ textbook in the last 70 years knows that creating demand in an economy is very simple. Governments can run deficits. And if we need lots of demand, then we can run large deficits.

These deficits will give us the money we need to buy the output generated by sophisticated robots. And, when it is necessary, we will have the sophisticated robots changing our bedpans.

Of course there is a political problem. Folks like Peter Peterson and Washington Post don't want us to run deficits. They would rather see workers be unemployed. But hey, this is not the fault of the robots.

Advanced robots are simply another form of the productivity growth that we should all know and love. It increases the potential wealth of society. It is certainly possible that the rich and powerful will use their control over the political process to deny the bulk of the population the benefits of productivity growth, as they have largely done for the last 30 years, but the blame should be focused on the rich and powerful, not the robots. You might as well lash out at the wheel.

Comments (4)Add Comment
Super Duper Doo-Doo Scoopers for Seniors Saved by Government Spending
written by Last Mover, March 07, 2013 10:26
Breaking news: Poopers Saved by Scoopers

Initially no workers were available to operate advanced hi-tech doo-doo scoopers for seniors, thereby rendering them obsolete immediately upon delivery to bedpans overrun with senior poop.

However this changed once government deficit spending increased high enough to pay doo-doo scooper specialists to run the machines, for which the primary qualification was experience as a ballet dancer to keep from stepping in it.

Ballet industry employers protested on grounds that more spending cannot cure structural unemployment and stinks of bad economics.
Theories of robots
written by Lrellok, March 07, 2013 2:00
I have a theory i have been kicking around for some time. First, lets start where all credible theories start, with facts. I have done a series of Pearsons Correlations between Labor force/population, Wages/GDP, and Equipment/GDP, to see if i could find sound evidence of the idea that increased technology lower demand for labor and wages. The idea was that if technology was displacing labor, we should see an inverse correlation between labor and equipment as a share of GDP, since all those people got replaced with robots, and while robots may cost less then people, they cost more then nothing.
THe answer, in short, is No, Nada, Zero, Zilch. THe Correlation between total hours worked and Equip/gdp is strongly POSITIVE (.86 or higher) in all series since 1950. THe Correlation between Compensation and Equipment both as GDP is equally strong. THe only negative correlation is Wages/GDP to Equip/gdp (-.6188). HOWEVER, if you break it down based on LF/Pop shift, you get the following ; From 1947-1969 LF/pop was relatively flat and Wages had no correlation to Equipment (-.17), from 1970-1989 LF rose sharply and wages had a negative correlation to equipment (-.663), From 1990 to today LF is again flat and wages now have a positive correlation to equipment (.685).
During this middle period (70-90) Wages fall from 52.5% of gdp to 46.9% of gdp, while Equipment and technical spending rises from 6.6% to 7.5% of GDP. This is in contrast to a LF/pop change from 60% to 66% (-.903 to wages), and total hours changing from 150.5 million to 217 million (-.854 to wages). SO if machines where replacing humans at the time wages have an inverse correlation to equipment, why would total hours and LF/pop be screaming through the ceiling? Wouldn't companies need fewer workers, not more? And why have wages continued to decline since 1990, while their correlation with equipment is now positive? It must ABSOLUTELY be noted that between 1991 and 2000, Equipment went from 6.9% of gdp to 9.6%, while wages INCREASED from 46.76% to 48.47%. During the same time period, LF/Pop was effectively flat.
It is one of the most basic rules of economics that if supply increases, prices fall. Yet this most fundamental of all rules has seldom been applied to labor. The strong correlation between LF and wages indicated that the increasing number of people in the labor force suppressed wages. Even a casual look at Equipment/GDP vs Wages/Gdp reveals that there is little reason to think that increases or decreases in equipment are responsible for wages falling.

In this context, what pete and his freinds are doing is obvious. Lower labor costs increase profits, and higher LF/Pop ratios lower labor costs. By screaming about LF/Pop dropping and demanding it be kept high through cuts that prevent people from retiring, they continue to suppress wages.
written by Stuart Levine, March 07, 2013 5:46
One issue that you might have mentioned is the fact that Social Security and Medicare are financed by a tax on labor. If, as has been the case since 1979 or so, most of the productivity gains accrue to capital, Social Security and Medicare will be starved for funds because labor income, as a share of national income, will continue to decline.

Seen in this light, the "Social Security/Medicare crisis" WaPo is constantly touting is really a crisis in wealth and income disparity.
written by Jonnan, March 11, 2013 12:46
I do wonder - what happens *economically* when we hit a point where robots actually can and or do do . . . everything we *need* done. A Star Trek future where food is plentiful and everyone has a tablet computer is great, but how exactly does that economy work? Can we all actually make movies/write programs/write books, and spend the money watching movies, playing games and reading?

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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.