Project 04 – Movie Podcast

Reading 11: Automation

It does not seem to me explicitly clear whether automation is causing employment rates to go down. Sandy Ikeda of The Freeman (from mises.ca) points out how everybody thinks that automation causes people to lose jobs because they can only see the immediate affects of it. Looking at the big picture, however, in her example of the coat manufacturing company the introduction of automation frees up funds in the company and creates new opportunities in the marketplace. Hence, there are ultimately no jobs lost in this picture.

Then again, part of her argument falls back on how the majority of the lost jobs are made up for by the introduction of the automation market opportunity. This might not be the case though. In the tech world, some incredibly profitable companies are quite small. Andrew White of The Guardian, points out a great example for this.  In his own words, “As an illustration of how the most innovative digital companies can generate huge wealth on the back of the toil of relatively small numbers of people, look at how Google’s market value, of $377bn, is supported by just 53,600 global employees. Contrast this with General Motors’ market value of $60bn, with 216,000 employees.” These numbers make it hard to believe that so many of the jobs lost to automation will be replaced by new job opportunities.

In order to really understand this big picture and see if the Luddites were right, however, far more than mere speculation is needed. No one will know, just from reading the articles, whether we have a real problem on our hands or not. In order to know this, an in-depth study would have to be undertaken bringing together field researchers, historians, and economists. In short, its a complicated answer and the best we can do here is speculate. But because we are speculating, I will give my opinion. I do not believe that , the Luddites were right, at least not yet. I think that the human element is always going to be necessary in some situations. Automation, could only be as real of a threat as people make it out to be if we launched a mass production of robots on the scale of what you would see in sci-fi movies. Today, automation can only exist for very specific tasks in specific environments. Humans have to be around to supervise or perform every other task. As is pointed out by Sandy Ikeda, “the best estimate is that the work week in the United States fell from about 70 hours in 1850 to about 40 hours today.” This says to me that things are getting better for us.

If it does come to be that automation is raising an employment issue though, I do not believe that a universal basic income would be the solution. It reminds me too much of a socialist society which has been proven in the past to not work out in the long run. How could a government generate enough revenue to be able to distribute it back to its people at that rate? A much more viable solution would be set restrictions on what we can use automation for. This would protect jobs from being stolen without putting economic strain on our already greatly indebted government.

I think that automation is helping our society. I’ll let Sandy Ikeda’s words echo here one last time, “First, while it’s true that machinery frequently substitutes for labor in the short term, automation tends to complement labor in the long term; and, second, the primary purpose of markets is not to create jobs per se, it is to create successful ventures by satisfying human wants and needs.” The people in the other camp all too often use extreme examples which just quite simply are no where near existence yet. Like Noah Smith’s example of the five dollar robot. He fears that the human element will be pushed out the picture by automation one day. In his own words, “Once human cognition is replaced, what else have we got? For the ultimate extreme example, imagine a robot that costs $5 to manufacture and can do everything you do, only better. You would be as obsolete as a horse.”

That being said, the introduction of automation is interesting. Imagine you just invented or discovered a new technology. If you go public with it though, you know that millions of jobs will be lost to its novelty and usefulness. Should you introduce it to the public and try to make a living off of it? If you do, people could lose their jobs, so obviously you shouldn’t, right? I don’t think so. Hopefully, your technology will ultimately lead to enhancing the quality of human life, like Sandy points out. Even if it didn’t though, its likely that somebody else would invent or discover this new technological trick and put the people out of a job anyway. At least if you did it yourself you would have a little more control of the situation. Perhaps you could even use the money you make to found a non-profit to help people (assuming it does really well).

Perhaps I am incredibly naive, but technology seems to be only enhancing our lives for now. This conversation can be put on the shelf for another day.