That’s the part I can’t understand. OK, the 1% finally have robots that can do everything. They no longer need their human servants, except for a favored few, so they can finally get rid of the masses. No more workers to man the factories, no more migrant laborers to pick the crops, no more consumers to buy the cheap plastic junk, no more rubes to buy the tickets to the shows.
So the 1% heave a sigh of relief, retreat behind walled fortress communities taking all resources on the planet with them, and shut the gates behind them leaving the masses to starve to death on a blasted hellscape, or alternatively decide to send out killbots to wipe everyone out.
I mean, because we all worship at the feet of Adam Smith’s Invisible Hand, we’d all just accept our fates and die in the gutter. It’s not like there are any economic activities beside market capitalism that ever happen!
It’s a silly fantasy, because maybe we’d have taxes? On the trillionaires? And small taxes on trillionaires could fund the lifestyles of the useless masses? Or maybe the government? Could buy a few robots? And make the robots work to feed the hungry, cure the sick, and house the homeless? Or, like, Bill Gates the IX feels sorry for a starving kid he sees on TV one time, and tosses the kid a magic robot?
The thing is, even in 2015 America, it turns out that not all economically significant activity is some sort of market transaction. I swept the floor of my house last night, but my wife didn’t pay me to do it. I paid thousands of dollars this year, not to a corporation in exchange for goods and services, but as taxes. I drove on a road to work today, and I didn’t pay any corporation. To get from my house to my car, I walked, and didn’t have to pay a fee to any corporation. I searched for “Beenado” on Google, but didn’t pay Google anything. I looked up “Liberland” on Wikipedia, and didn’t pay anything. I spent 20 minutes writing a long post on the Straight Dope, but didn’t get paid for it.
Even if it were true that in the future most people won’t have paying jobs, that doesn’t mean those people will be irrelevant, only that the fraction of economic activity that is market based will have changed. 1000 years ago almost all economic activity was not market driven. People worked on a farm, and sold almost nothing and bought almost nothing. If they needed something they made it themselves, or a family member made it for them. If they produced something they used it themselves, or a family member used it, or they paid it in kind as rent/taxes to their feudal overlord.
It only makes sense to worry about the effect of labor saving automation if we assume that there is no way for the masses to benefit from that labor saving automation. Somehow only the “owners” benefit. If I bought a roomba to vacuum my house, do I benefit, or does only the roomba corporation benefit? But suppose I lose my job, now I can’t afford a robot to vacuum my floors! If only the roomba didn’t suddenly crumble to dust the second I lost my job! But you know, if I can’t afford a roomba, I can still sweep my floors with a broom, like an animal. Crap, a broom costs $6.00 from WalMart! The little guy can’t win. The dust will pile up in my house until I choke to death on it, thanks to the greed of my corporate masters.
Not buying it. A robot that costs 15,000 will be too expensive for an unskilled worker but that’s the annual salary for an unskilled worker. So a company buys a robot that costs $15,000 and if it lasts two years, it is half the cost of a human worker, plus it has worked 24/7 with no holidays during those two years, and it’s more expensive than a human worker could afford.
Once again, I’m worrying about the transition. Not the end game. End game is, everybody leads a comfortable life with computers and robots doing all the work, and people are paid for being people. But getting there will be rough, because we are socially not adapted for that, in fact, capitalism is leading us toward a future where One Percenters capture all the wealth. Getting them to share it will be … problematical. Why would a One Percenter rent a bot from a worker rather than just buy one for himself?
Do you even live on the same planet as me? Without a job how do you pay for rent? What do you use to buy food, clothing, pay utilities, etc? Forget the fucking roomba, get with the basics.
Today most working poor in the US own a “robot” that costs around $15k (add more for upkeep) that they use to perform their jobs and make money. It’s called an automobile. So we know that the working poor could afford the $15k for a robot if they needed one to make money.
I understand that the $15k is just a made-up number but I think the principle is the same regardless: if a robot is cheap enough to replace all workers it is cheap enough to afford.
[QUOTE=Evil Captor]
Not buying it. A robot that costs 15,000 will be too expensive for an unskilled worker but that’s the annual salary for an unskilled worker. So a company buys a robot that costs $15,000 and if it lasts two years, it is half the cost of a human worker, plus it has worked 24/7 with no holidays during those two years, and it’s more expensive than a human worker could afford.
[/QUOTE]
I guess I’m not seeing why an ‘unskilled worker’ would WANT to buy a robot. Someone building a business, however, is probably not an ‘unskilled worker’ making $15k/year (which is minimum wage, and most such workers are kids just getting into the work place…I assume you are limiting yourself to a completely US-centric view on all of this, and aren’t thinking about other highly technical nations).
Wouldn’t your ‘unskilled worker’ be better off buying a PC (or a laptop/pad or a smart phone)? Why would they want to get into manufacturing when there is a whole new world of information and data (plus porn and kitty/puppy pictures) on those interweb thingies? Seems to me that this is where the action will be in the future as billions of humans connect and start sharing data and content.
Ok, but why are you worried about the transition? We’ve been in this transition for decades now…do you think things have gotten substantially worse, world wide? Do you think that the vast majority of humans on the planet have benefited or been disadvantaged thus far in the transition?
Also, do you think of all of this as a zero sum game? Because you are spouting the standard communist line where wealth concentrates completely at the top, then those top guys vie for what’s left until we have some techno-dystopian Highlander game where THERE CAN BE ONLY ONE!
As to your last sentence, why would this theoretical One Percenter™ bother making anything for anyone if there is no one who will pay them? Why would they BOTHER making cell phones or whatever if everyone is out of a job? In your dystopian future during the transition (that is different than the transition we are living with back here in the real world) you have 10’s or hundreds of millions of poor ‘unskilled labor’ who has no use and no money, so why make anything for them at all? Why not just make stuff only for yourself and for the few other One Percenters(arr) still vying for the ultimate prize…?
You analysis of history is minimally different than that of most historians. Feudalism was in a long decline which began with the Black Death. I again refer you to the Economist article cited and quoted from for the take of most who know the history.
As to the rest of your post, what parts of what I have written are you not understanding?
Do you not understand what the phrase social and income inequality means? Because I have, from my very first post in this thread and in the very post you quoted, been stating that unemployment is not really the main impact, social and income inequality are, with the richest getting richer, much of the middle class moving down, and the poorest getting poorer.
Are you not only unable to click the links but also read the quotes provided from them that document those facts?
Let’s try to write this as clearly as possible:
The “computer revolution” has resulted in greater wage inequality.
Those who own the capital have gotten much richer. Those whose jobs could be replaced cost effectively by current levels of machine technology, from relatively unskilled workers on production lines to more moderately skilled workers such as bank tellers and clerical workers, have lost those jobs and moved into the jobs that machines cannot do cost effectively … aides in nursing homes and janitorial work, the caring and cleaning jobs, to a large degree.
Documented already in this thread - jobs have come back but not the same jobs. Those who were in the middle are now working in much lower paying jobs than before
Now those who have the skills that are above the level that computers can do are in a competitive market as more come on board with those skills fighting for those same jobs but some are in enough demand for now that their wages are moving up.
Thing is the machines are advancing in capability very quickly. As the technology advances such that computers can read X-rays and pathology slides with as great or greater reliability that human radiologists and pathologists then fewer of those highly trained individuals are needed, for example. Increased productivity does not mean there is increased need. It merely means there are fewer needed to read the X-rays and slides that need to be read. The level of jobs that smart machines will be able to cost-effectively replace is going to rise inexorably. There is no stopping that. The portion of the middle that gets hollowed out and gets dropped down will increase; the portion of wealth owned by the 1% and even more by the 0.1% will continue to increase. Those trying to climb up by learning higher and higher worker skill sets will come out of education with more and more debt, more competition for the jobs, eventually competition from smarter machines as well, and little chance to become owners of much capital themselves. The 0.1% becomes more concentrated as holders of wealth yet.
Again, yes we have an aging population that needs it diapers changed and we have lots of need for those who will do that. And people can still wash floors cheaper than machines can.
But social and economic mobility right now means moving down for most and upwards only for a very very few.
It will eventually change but boy I’d like us to help it along.
This is a rather striking statement to make without supporting it with at least some sort of objective evidence. Your argument amounts to “computers got rid of good jobs and replaced them with bad jobs.”
Really? I’d like to see some evidence that’s true. Quantify the losses (and gains; don’t IT admins, programmers, et al. have good jobs?) and show a net drop. How do we know how much the spread of inequality is due to computers? Remember, it’s not enough to make the claim inequality is rising; demonstrate it’s due to computers. And you’d better be able to show a LOT of job losses, because information technology itself employs a huge number of people in good paying jobs. There are over 100,000 people in the USA just classified as “database administrators.” Millions of Americans are programmers, IT managers, database admins or network admins, enjoying salaries generally well above the US median.
Holy moly.
Technology also meant we needed fewer farmers, phone operators, farriers, and scullery maids. Somehow unemployment isn’t 50%.
Honestly, you’d think this “technology” thing just started this month, the way people are terrified of it.
If the 1% continue making a lot more money than they used to, and the trend continues and continues and continues, maybe we could raise their taxes a little bit? And then problem solved?
I know that in 2015 America, it is not really politically possible to raise taxes on the rich. Will that be true in 2016 America? 2017 America? 2018 America?
Trends that can’t continue, won’t continue. Today there sure is a political party adamantly opposed to higher taxes for the rich, and a large base of voters who support that party. When the small businessmen and professionals and southern rural white guys who make up the voting base of that party all lose their livelihoods because of improved automation, will they keep voting the same way?
Yes, the rich can buy votes. The way they buy votes is by buying votes. As in, the voters have to think they’re getting a good deal trading their vote.
Anyway, it seems to me the biggest thing eroding working class wages is not just automation, it is the entrance of billions of new low-skill low-wage workers into the global economy over the last few decades. You’ve heard of China, right? We actually have two trends here that both result in wage erosion. Automated production has to compete, not just against American workers but against Chinese and Indian workers. Or more likely, a combination. Nowadays if you call a company, you get an automated voice tree, but if you navigate that and can’t get your issue handled by the automated system you’ll speak to a human being…who’s probably in Hyderabad.
Plus, can I complain one more time about the idea of a “digital high school dropout”? That’s ludicrious. A robot that can respond to natural language commands and perform complex tasks as well as a teenager is something that doesn’t replace the jobs of high school dropouts, it replaces all jobs. Unless by some magic, we can make an AI exactly as smart as a dumb human being, but that’s it, nothing more can be done, no more progress is possible.
But of course this is nonsense. Automated production doesn’t replace human labor by doing the same things humans do, only cheaper. They do totally different things. We don’t replace human dishwashers with humanoid robots that hold scrub-brushes. We put in a dishwasher. We don’t have humanoid robots who pull rickshaws except as jokes, we have cars. We don’t have humanoid robot ditchdiggers, because we have backhoes.
The point is, “stockbroker” is a job that is extremely vulnerable to automation. Banker, financial adviser, accountant, lawyer, all the guys who make up the current megawealthy are going to be out of jobs as well.
I am, of course, talking about global figures instead of limiting myself to the United States, but this is a reasonable thing to do when dealing with a global economy. When you complain about income performance of the bottom 40% in the US, you are mostly talking about the top 40%, or higher, of the world income distribution. A less parochial view of the data would show both less inequality for at least the last decade, and higher real wages for some of the poorest people on the planet.
All of this is to say you are genuinely focused on important issues, but are not making a compelling argument about those issues.
Here’s another example of a bad argument: If a poster cited data that differences in income were strongly correlated with certain group boundaries, and then asserted that the difference between the groups must be the result of inherent/genetic causes, then what would be your reaction to that? What would be the reaction of most SDMB posters? This doesn’t take much imagination. A lot of shit happens in the world that is more complicated than just our cultural groupings of people. History has a weight of its own. In order to isolate the effects of inherent ability, it must both be defined and controlled for. Most people who try to make that sort of argument don’t bother with any of that hard stuff, and that’s why their arguments should be treated brusquely.
Well, you are not controlling for anything in your argument here.
We don’t need a formal statistical analysis, just some indication that we’re considering all possible data – worldwide, not just developed world – and also considering all plausible causes. Inequality is an important issue, and you’re right to bring it up, but it’s also a complicated issue, the blame for which can’t be casually dumped onto the machines. A couple billion folks have been integrated into world labor markets in recent decades. They were originally straight off the farm from near subsistence conditions. They are unskilled, competing most directly with the lower 40% of developed world workers you previously referred to.
So if we’re interested in cause and effect, what’s the most obvious place to look when pondering the apparent real income stagnation we see in the developed world data? I know where I’d look. There are around a couple billion reasons why computers aren’t to blame.
You also make a casual reference to the Industrial Revolution, as if it’s obvious that that’s the closest parallel to modern times. Well, in China maybe. But in the developed world, such a connection is not obvious at all. Literally the only thing you have to cite is inequality figures, and the inequality we see in the data could easily have other causes such as the aforementioned two billion reasons (which is where I’d lay my money) or maybe even something more pedestrian like how housing is measured in the figures.
But wait. Inequality is even more complicated than that. China is a more unequal society now that wages are growing 10% a year than it was when millions of their people were starving to death. They have enough to eat now, and the result has been a more unequal society. While they have been playing part of the role in levelling out global inequality figures ever so slightly, their domestic inequality is growing. As far as I can tell, they all pretty much agree that this is a good trade-off for them. This is not to deny that inequality can be a problem, but we have to keep track of the underlying causes of inequality and the costs of reducing it. Or maybe even the benefits of increasing it. The single most important thing that the United States could do to lower world poverty is to open its borders more broadly. That would raise the incomes of the very poorest, while also increasing inequality measures within the United States, from what would have been the case otherwise. And although people can’t move here as easily as they should be able to, global trade is still having its own similar effect. They can’t work here so easily, but at least their products can be shipped here.
We don’t live in the Age of Ultron. We live in the Age of the Containership.
One last point: you are complaining that many of us have been defending the point, over and over again, that jobs are not being destroyed. I want to emphasize this point again: jobs are not being destroyed. Literally hundreds of millions, and maybe even a billion or more, of new city jobs have been created. They count, too, even if they’re not in the United States. Robots aren’t replacing those jobs. You know this, and you have said repeatedly you know this. And that’s fine. That’s good. But others posters in this thread, who are less familiar with what a “fact” is, are still talking about things like the robot job holocaust which they in their limited imaginations are taking very seriously. So when we respond to them about jobs, without talking about real income or inequality, it actually makes sense. That is what they are talking about. That was what they sincerely believe, and we have to confront that belief directly. You are engaged in higher level rationalizations, and you want that acknowledged. Sure. Real incomes and inequality are important issues. You’re totally right about that. But if a response is addressed to a different poster and not to you, someone who is making a different argument from the ones you are making, you can expect that response to their arguments to concentrate on different things from what you are rightly focusing on.
You didn’t understand my point. Does the roomba benefit only the corporate masters, or does it benefit both me and and corporate masters?
The roomba is an EXAMPLE of automated technology that benefits everyone. Why is it that I’m not worried about losing my job sweeping the floor in my house? Why is it that I can clearly see the benefit of a robot vacuum cleaner in my house, but I get terrified of the idea of robot vacuum cleaners being used outside my house? Should I be worried that the next time I come home I’ll find that a maid from a housecleaning service has smashed my roomba?
No maid is going to smash my roomba for taking her job. Why is that?
Look, if automation was bad, why do people have dishwashers in their houses? The answer is obvious, the dishwasher does work for them so they can do other things. So why is it that in the future world of the future, nobody will be able to afford dishwashers except the 1%? Why won’t there be the future equivalent of dishwashers for all sorts of things to keep the average guy from busting his ass all day? A dishwasher isn’t that expensive, it would be much more expensive to hire a maid to come to your house and wash your dishes by hand, wouldn’t it? Even if the maid was an illegal immigrant you could pay below minimum wage. So why doesn’t the dishwasher threaten the jobs of your average joe? Would low skill workers be better off if dishwashers didn’t exist?
No, because if we outlawed mechanical dishwashers tomorrow, by the day after tomorrow people would start switching to paper plates. There are multiple technologies that substitute for human dishwashing labor. It would not be better for humanity if we banned them all.
The 1% of the future aren’t going to own all the automated systems of the future, any more than they own all the dishwashing machines of the present. Maybe they’ll own a ludicrously out-sized share, but you think they’re going to be grumbling that the poor own their own phones and dishwashers, and don’t have to pay for the right to use a dishwasher owned by the corporations? And even if the rich really do own all the dishwashers, and human dishwashers can’t compete because mechanical dishwashers are a lot more efficient, and so regular humans don’t have jobs and can’t afford to get their dishes washed…then maybe they could wash their dishes by hand? They can’t afford a robot babysitter, so they watch their own kids? They can’t afford robot-made clothing, so they stitch their own clothing out of old newspapers? And maybe exchange these hand-made goods and services by barter with all the other billions of people who have no money and no jobs and therefore can’t afford anything? And maybe those billions of people could use some sort of token to represent the handmade goods and services they can provide even though they can’t afford robot-made goods and services. And they could call that “money”?
I mean, they’re so broke they literally can’t buy anything made the cheap robot-made way, since robots can outcompete any human, so they have to buy expensive things made by other humans by bartering using expensive things they made themselves. If only they could get a job they could buy the cheap robot stuff that undercuts all human labor, but because they have no job they can’t afford it and instead will have to spend all their time working making stuff or providing services either for themselves or to exchange with other human beings who also don’t have jobs.
Funny thing though, the correlation of job creation since WW2 was cited as if no other factors played in other than technology.
If one is going to post see how many jobs have been created over the past during the computer revolution as evidence that there is nothing to worry about then one cannot complain too much when it is pointed out that the job market over that time has become increasingly bifurcated into the unskilled and the skilled sets with much of the slightly skilled being now done by machines of various sorts with that set growing and moving up the skill ladder every year, that the majority of those jobs don’t pay so well.
Your point about the world economy and the rise in real income in places like China is noted, albeit income inequality has increased there as well (but as you note, with more above the poverty line in the process). It will be interesting to see what happens in places like China though over the next decade or so. Human labor there has so far still been cheaper than automation, but as incomes rise that may cease to be the case. Do you think that Chinese business owners will continue to hire workers once the price point is such that machines doing the job cost less? Or will they either move their operations to the next area of low cost unskilled workers or invest in the technology?
Note also that even in China the jobs are also there for the unskilled, not so much for the skilled:
Now to be fair, they are also doing it because they have a labor shortage … “one child” resulted in fewer workers. But the labor shortage means higher wages, which means more pressure to automate …
A pretty good article that explores both sides of the technology and inequality debate in MIT Technology Review - for the interested.
The arguments that we were engaging were the fear of no more job creation. “Robot jobs holocaust”, remember?
If that’s going to be their argument, then that’s the point we will engage. If someone else offers a more sophisticated argument, then of course that will demand a more sophisticated response. There’s no need to drop Einstein into a discussion that can be settled with Newton. So to speak.
If the discussion is incomes based on ability, we can’t just flippantly assume the entire driving force is “genetics” and ignore historical factors. If the discussion is quality of jobs, we can’t ignore globalization.
When the entire world is developed, with real incomes relatively higher everywhere, the story of real wages will be different. The poorest in the US are taking a hit from a sort of cooperation between US capitalists and the poorest in the world.
This is, I believe, the real parallel with the Industrial Revolution. As long as factory owners could pull more unskilled workers away from the farms, they gained relatively faster than the rest of the population. When they ran out of cheap farm workers to entice into the city, what happened? Inequality started to level out. What the new age of globalization (the Age of the Containership) actually is, at core, is a couple billion new farm workers lured into the factories of the city. The winners are the very, very rich and the very, very poor. The people who are relatively less well-off in rich countries are not taking such a big slice of the pie at this time. Which makes perfect sense. They are suffering the most vigorous competition.
That will end when more of the world is properly developed.
Obviously, I’m telling a story here and narratives can be dangerous. But it’s a story that seems to fit both the theory and the facts, including the historical progression that we’ve witnessed. It wasn’t until the late 1910s that most people in the US no longer lived in rural areas. 1920 was almost a 50/50 split. Today it’s 80/20.
It is already the case that the most labor intensive industries have moved away from China. Bangladesh, Vietnam, Cambodia, and other relatively poorer countries have been receiving the spillover benefits because wages in China are comparatively too high for those particular jobs. Comparatively too high, when other options are available for firms.
Median wages in many of those countries are now at record levels, higher than they have ever been in history. Give it another twenty years, when Bangladeshi wages are closer to where China is today, and those industries will move shop again. I don’t do development, but one of the most interesting parts about development economics is that pretty soon (speaking on a generational timeframe) development might be a purely historical field with no further contemporary relevance. Imagine that. And we in the US will be better off, too. It’s nice to trade with equals. We have more to gain trading with wealthy productive people than we do from trading with poor uneducated farm-workers.
Now we can put another spin on this, to bring a better perspective.
Even if we posit that the 1% owns all of the robots, we still have to acknowledge that the entire purpose of automation is to provide mass-produced goods. People get caught up by “money” in these discussions, but ultimately it’s not about money. It’s about transfers of tangible goods and services. The owners of the robots in the car factory don’t want to personally own the hundreds of vehicles the robots produce every day. They have their Rolls and their Lamborgini and that’s enough.
They want to trade the mass-produced output of the factory to the masses in exchange for what the masses can offer them. Stuff for stuff. All that money is an abstraction. The underlying reality is an exchange of services.
There is a cost-benefit analysis, not just of “cash” but of tangible stuff. They think automation will be profitable, meaning that if they can invest their stuff into robots to mass-produce items for the masses more efficiently, selling at a higher volume and at lower margins, then the masses have something tangible to offer in return. If the masses didn’t have that, then the cost-benefit analysis wouldn’t actually work out. There would no longer be an incentive to automate.
So when I speak of a world where development economics is a historical subject, where wages are high everywhere, where automation is highly incentivized, I’m also speaking of a world where real incomes are increasing. That’s true even if the 1% owns the capital: comparative advantage is a deep underlying principle that will still exist. Real incomes are increasing because automation is efficient, and makes things cheaper, and the owners of machines are automating mass-production precisely because they believe the mass of people who purchase those mass-produced objects will be able to offer something valuable in return. That’s ultimately what drives the cost-benefit. That’s the reality of stuff that underlies the equations.
All of this is a strange combination of the very abstract and the very concrete. I think in concrete terms of stuff, but in order to do that, I have to think about the abstract mechanics of trade, marginal costs, comparative advantage, and other juicy stuff that can’t be so easily visualized. I can’t point to specific future jobs because I don’t know what the future will bring. I can’t even guarantee that this will definitely be the case. As I’ve said repeatedly in this thread, I could be wrong. But I’ve never seen a good argument against it. This abstraction we use to think about the concrete has worked out as a good guide for a very long time.
It fits with economic theory, and it fits with the historical record.
The tech singularity thingy changes everything, but up until that point I expect the economy to continue to function in the way it has – for economic processes not to be truly different underneath the surface of things – because the fundamental characteristics of how people interact with each other haven’t changed. If firms can no longer jump to new countries, I expect both higher real wages from more wage pressure and more incentives for automation. Not one or the other, but both together, because they’re driven by the same processes. And if I’m wrong, of course I would support a minimum income guarantee/negative income tax/something similar. Hell, I might just support those ideas anyway (although I think right now wage subsidies are probably a better idea…)
The point is not to be dogmatic. If I’m wrong, I’d like to be gracefully wrong. I just have not seen a convincing argument for it. With one unfortunate but fully anticipated exception, the posters in this thread have been very good. I don’t blame people for disagreeing with me, but I would like people to understand that we have a well-reasoned position here and there’s a very good chance we’re right.
Maybe so.
But the problem would be the same, that China is integrated into world markets as much as everyone else. There are still people in the world to pull off farms. But China and India? That’s a couple billion right there. Much bigger than the US. I mean hell, the whole EU is only half a billion. Firms are going to run out of people to pull off farms, just as they did before the containership came around and made ocean transport dirt cheap. I don’t mean to imply that this is the only possible thing driving inequality, but it’s an important thing and it shouldn’t be ignored. Globalization is important. We have to figure it into our story.
Here’s one more perspective on things.
So let’s say our pie that is the whole real economy is 100 units, and the 1% capitalists earn 20% of the total income. We can use a cheap visual for that. (I’m leaving out differences between consumption and investment, and I’m drawing an unrealistically stark separation between the owners of machines and everyone else. But this is a beginning.)
----- ----- ----- ----- ----- ----- ----- -----|
----- -----|
Workers: 80 units
Capitalists: 20 units
Each dash is two units, each block of dashes as ten. The 1% receive twenty units of income, marked in red.
The underlying transaction is the same I wrote above: the owners of machines (physical capital) don’t create those factories so that the entire production of the factories is to be consumed personally by them. They sell to everybody else. They’re considering more automation. Not because they want even more of what they already create, but because they believe it will be more efficient: The marginal cost will be lower, the output will be higher. The price will also be lower. All of this is to say it will increase the total size of the pie.
The following is a picture that I don’t believe works at all.
The horrible capitalists take everything picture:
----- ----- ----- ----- ----- ----- ----- -----|
----- -----|-----
Workers: 80 units (73% of output)
Capitalists: 30 units (27% of output)
Does this even make sense?
I don’t see how. The machines create mass-produced goods. The owners of a car factory don’t run hundreds of vehicles off the assembly line daily so that they can personally own hundreds of new and identically manufactured vehicles for each turn of the earth. They run the line to create vehicles, so that they can sell them. They trade those vehicles for housing, food, jewelry, clothing, gadgets, trips to Italy, etc etc etc, from everybody else in the economy. The entire point of automation is to decrease the cost of mass production in order to trade with more and more people in the world.
Mass produced items are items created for the masses. For the owners of the machines, that necessarily means their extra benefit must involve trading the extra production from the machines in exchange for more stuff created from the masses. At core, it’s not about money. It’s about stuff. Automation mass-produces stuff, and that output can thereafter be traded with more and more people. If there are more and more cars produced by the machines, that means there are more cars for the rest of the people.
This picture is somewhat better:
----- ----- ----- ----- ----- ----- ----- -----|---
----- -----|--
Workers: 86 units (78% of output)
Capitalists: 24 units (22% of output)
This is starting to strike closer to the truth. Automation created a bigger pie, and the benefits were shared. The richest got an extra 4 units of production, but they did so by trading the extra units of automation with everybody else. Both groups gained.
It pretty much has to look like something along these lines, else there would be no incentive to automate. The vast majority of those more efficiently produced goods must flow out to the people at large in exchange for what the majority of people create. I can give one more example, though.
Global perspective:
----- ----- ----- ----- ----- ----- ----- -----|----.
----- -----|.
Workers: 89 units (81% of output)
Capitalists: 21 units (19% of output)
This last example shows a possible decrease in inequality.
Inequality is a tough topic. It seems to be increasing in the US, increasing in places like China, but actually decreasing from worldwide figures. The world is becoming a little bit more equal, at least at present (although that could change again) even as it becomes a bit more unequal within some countries. Given the enormous disparities between rich and poor countries, it’s possible for every domestic measure of inequality within every country to have increased, with world inequality simultaneously going down as the poor countries quickly converge to the rich as they develop.
But a couple things:
I don’t think it’s reasonable to blame the apparent real income stagnation for least skilled workers we see in the data to automation. Not at all.
It is perhaps, possibly, maybe correct to blame increasing inequality partially on automation. The third example above shows how that might be true. But we need to be careful about our measure. If we care about poverty, I think global measures are generally more important than domestic. And even more broadly, inequality of consumption is much more important than inequality of initial income. Unfortunately, most inequality measures focus on raw income. That’s a mistake, but it’s an ingrained mistake that has become a habit.
Bottom line is that we are ultimately looking at picture 3 or 4, not picture 2. Long run, I very much lean toward picture 4, all else equal, because that is what seemed to happen before. Of course, all else is never quite equal when we’re looking at the big picture. But I genuinely don’t think we should be over-concerned about the things that increase the size of the pie.
Higher real wages mean more incentive to automation, yes, but automation also means higher real wages. Not one or the other separately but both together.
So agreed that extant unskilled and lower skilled jobs in any single country are in competition with both workers globally (who are willing to work for less and with less protections and rights built in) and with automation. Once wages for the un- and lower skilled are higher than either of those two options those jobs become less available for those workers. Yes?
In the case of jobs moving out of the individual country, well the dropping down of income level for the middle and below in a richer country is the gain for a poorer one and globally inequity and extreme poverty decreases. Our kids future lower SES (assuming none of us are the extreme elite) is the gain for the world’s poor (and some subset of the rest of the world’s elite).
In the case of automation taking the jobs … well that is the question of this thread. Again, right now, those people are overall finding other jobs, lower paying ones mostly. The thesis you present is that new higher paying jobs will happen and that even if they do not it is a good thing from a global perspective anyway. Is that a fair brief summary?
Onto your graphics …
First note that money is not the same as tangible stuff and services. It is the abstract ability to have stuff and services that can be passed on in increasing amounts intergenerationally and is in our political system greater “speech” and power. Wealth is not owning hundreds of cars; it is the power that comes with the ability to own hundreds of cars. Yes, agreed that increased productivity means more stuff for all, possibly even, but not necessarily, of higher quality, for the same money. But not more power for all.
My take is that the reality within our country is that in terms of stuff your 78/22 (3 add’l units to “workers” and 2 to “capitalists”) is accurate and in terms of power (which is more related to wealth than income and I know you at least comprehend the difference between the two) is more like the 73/27 one (all add’l units to capitalists who accumulate more wealth, more than more stuff).
Adding in global considerations wealth (power) likely moves out from the richer country’s “workers” to other, overall poorer, countries, where it is divided into some portion that allows for workers there to have more stuff than they have ever had before and a larger portion that goes to their “capitalists” to have more wealth and power. Until the workers wage line crosses with either the line of cheaper labor elsewhere or the cost of automation (which continues to drop).
The driverless cars that Google is tooling around the streets of California have god knows how many millions upon millions of dollars sunk into them, not just parts but programming hours and better sensors and better road data and better everything. Millions upon millions of more dollars will be invested before it’s properly ready for customers. Henry Ford didn’t put nearly as much effort into his first factories.
When the tech is finished, the cost will be lower. Those babies will be sliding off the factory floor nearly as easily as normal cars today. But there is more cash to burn and many more years to wait, because automation is not getting easier. It’s getting harder and harder to pull off new innovations because all the easy low-hanging fruit has already been picked. The next big automation revolution after the driverless car will be something even harder than that, because the driverless car is this era’s low-hanging fruit.
Yes, but that fact doesn’t mean anything by itself.
The problem is not “those jobs” being less available, it’s the quality of the newer jobs that become available. Automation has been creating better jobs, on net, for a long damn time. The difference between now and subsistence conditions is our machines. No one argues against that.
We’ve seen an apparent change in the progress of the poorest among us and we’re looking for causes. People immediately rush to blame the machines like they have for forever,* even when they were always wrong before. “This time is different!” they say. But coincidence of coincidences, this period of stagnant wages has aligned with the current age of globalization. Two billion human beings, who are more flexible than any single machine and who can adapt to nearly any manufacturing task an unskilled worker in the developed world can do. As you’ve acknowledged, this hasn’t meant that jobs are no longer being created. New jobs are still being created. But those new jobs must be created with the knowledge that those jobs also compete with those same two billion, because those two billion can adapt nearly as fast as a replaced worker in the developed world.
I see zero reason to blame robots for this. They’re simply not that general, not that adaptable.
*Some people are “sensible” enough to blame the Chinese. But I don’t much cotton to that either, because when China is properly rich it will be an incredible boon to us, including our low-skilled workers.
No, not mostly lower paying ones. Over relevant time frames, ignoring business cycle fluctuations, real incomes for the lowest 40% are basically stagnant when adjusting with the CPI (which isn’t a particularly good measure but it’s what we got). Not lower paying, just flat.
And that is really an excellent sign. Unskilled workers have had billions of competitors enter world labor markets, and the worst we see is a flattening out. They’re not the winners here, but at least they’re not losing ground in absolute terms.
They will win eventually, but a lot more people have to leave the farm first.
Yes, that’s pretty fair. I’d add that if wages don’t eventually pick up, we’ll need to do something about that, but we should do it in a smart way. But getting into details would soon venture off topic.
As for the other, I’d give it more emphasis: The recent era of globalization marks the most successful fight against poverty that this world has ever seen. The record-breaking successes are not happening in our own backyards, but that doesn’t make them less important.
Many of the rest of your comments are about relative power. I don’t necessarily disagree with the general outlook. But my point within the context of this thread is that when you’re looking at real wage stagnation in the US, you should be looking at the global markets and not at the robots.
I think the problem is both sides extrapolate a future based on their own economic ideologies. The right believes the free market will create new jobs to replace the ones lost to automation while the left believe socialism will be required to redistribute the wealth generated.
In reality, we can’t predict what an economy will look like where 90% of the work can be performed by advanced automation any more than people hundreds of years ago could imagine an economy where 90% of the people didn’t farm. That’s why they call it a “singularity”.
No, low hanging fruit is the automation that can be done cheaply and easily. Driverless cars are the fruit that you need a long ladder to get to. Automating a factory is much easier because you can buy programmable controllers and robotics, and get the advantage of leveraging the development cost over many more customers. When most companies automate they will be the nth company to do it, not the first. Being a technology driver is always more expensive and riskier than being a follower, though there are advantages.
