Will robots put most people out of work?

You cannot possibly know that the only “niche” open will be “banditry” for buggy whip makers when buggy whip making is made obsolete by technology. Buggy whip makers found work at Ford Motor Company and in other places.

Some technology advances (robotics) scare many otherwise smart thinking people into thinking unemployment will rise, as in the referenced article.

For example, before technology T1 was adapted, say, n1 full time persons were required to produce product P1, and after T1 was adapted, n2 full time persons.

This does not happen in a vaccuum. n1 is greater than n2. The cost of n2 is less than n1.

But now n3 = n2 – n1 persons are now available to competitors, including new competitors, plus it is safe to assume that in most situations and generalizing here for the concept, there is now more competition for jobs that produce P1, which drives down the cost of P1.

With the consumer price of P1 lower than before, either (1) demand will usually go up for the product, or (2) consumers will buy other consumer goods.

So either (1) we must adjust n3 in the real world (job losses) upward, meaning there are fewer jobs lost due to technology T1, or (2) there is more “purchasing power” available for other products P2, P3, P4, etc., or (3) there is more leisure time for the producers, or (4) most probably, all of the above. Also, technology T1 may also require new jobs in both its production and/or consumption.

The changes that came with computing advances should kill this idea about robots leaving great masses of people unemployed. In the 1930s the biggest companies had multiple floors of accounting specialists and clerks using calculators all day to do the accounting for the company. In the late 1940s or early 1950s the CEO of IBM was still saying only three or four organizations in the world would ever need a computer. Microsoft CEO Bill Gates once said that people would never find much use for the Internet.

And yet we did not have great masses of former accountants and clerks on the street when computers automated so much of the accounting process. It rather enabled all kinds of new specializations in all kinds of industries, created an entire new information industry for both business and consumers, and made life easier in general. For the unskilled and uneducated included. The poorest barrios in one of the still poorest countries of Latin America have smart phones in at least one home every block.

The same will hold with robotics. We cannot have any idea how it will sort out. If 3-D technology is not crimped with stupid government interference, there will be a lot more people able to do some home-based manufacturing services, just for an example. IF.

But government interfering with the readjustment does not help, and that includes government-directed retraining. Let the market pull the resources to where the new demand will go, and let private investors take the risk instead of wasting economic resources for government middlemen and idlers. Those resources belong at private risk, no cost to you.

 

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