DBC Reed in the comments here:
If you replace skilled workers with easy to operate machines, you reduce the amount of dosh in circulation ("demand") and end up in a deflationary spiral as the replacement machines don't get paid and so don't maintain demand: Major Douglas.
Sooner or later you have to give people the money to buy the products of robots. And Uber is robot brain power or memory.
Quite clearly this is not true. Let's assume that somebody is clever enough to build a totally automated factory that churns out stuff at virtually zero cost. He will have to drop the price to what people are prepared to pay, i.e. a very low price indeed.
If you wind back the clock a few hundred years, most people were agricultural workers just above subsistence levels and by today's standards, in terms of material quality of life, health, life expectancy etc, we were very poor indeed. When processes become automated or people work out a cheaper substitute, there are unpleasant short term consequences for those who suddenly become unemployed, but this just results in a gradual shift from farming to manufacturing, and then from manufacturing to services.
The total value/amount of food grown in the UK is as high as it ever was, manufacturing output is as high as it ever was, it is just that the bulk of overall economic growth was down to increases in the amount of services provided (or leisure time, same thing, really). So in relative terms, agriculture and manufacturing output have fallen. Agricultural output at farm gate prices is only one or two per cent of GDP, and only one or two per cent of people work in agriculture, even though the UK is or could be self-sufficient in terms of food. If they'd realised this a few hundred years ago, the knee-jerk response would have been "Then surely we will have 98% unemployment!"
Overall unemployment rates are not materially higher now than they were a few hundred years ago, and what unemployment there is is largely down to the tax system driving a huge wedge between supply and demand. The welfare system solidifies and amplifies this.
We're all singing from the same hymn sheet here:
Bayard: "Mobile telephony, the internet and satellite-based route guidance systems were not invented to put traditional taxi drivers out of business, they were invented and someone thought to put them together to compete with established taxi-drivers. To this extent, technology is amoral. I'm not saying that's a good or desirable thing, it's just how it is.
To answer your question about purchasing power, today's poor are much richer in real terms than the poor of a hundred years ago, so if a hundred years ago there was not a problem with purchasing power, why should there be now? Again, I am not saying this is a good or desirable state of affairs either."
The Stigler: "Once you get robots making things, you reduce the price and increase the reliability of things. People need less money to buy a smartphone or a hard disk recorder.
Being rich now isn't so much about having stuff that others don't. It's more about having a Philippe Starck lemon squeezer instead of a normal one, a Mac instead of a PC, Diesel jeans instead of Tesco jeans, sitting on a warm beach in the Caribbean instead of sitting on a warm beach in the Vendee."
Lola: "The other lie that is bandied about (and to some extent what Douglas was on about) is that demand creates supply. It doesn't. It is precisely the other way about. If that was not the case then helicoptering money would be a sensible policy which it isn't because that is essentially a 'something for nothing' economics (rather like socialism). We are not the 'consumer society. We are the 'producer society'.
As regards redundant jobs, yes that is a sadness, but the beauty of human beans is that we are adaptable, have a cognitive ability and an opposable thumb. We can retrain. Robots usually cannot adapt as they are designed (by man) for a specific role, the classic division of labour. Asimov (I think) coined a phrase for people with worries like you - The Frankenstein Complex."
Sunday, 5 October 2014
DBC Reed in the comments here:
My latest blogpost: Economic myths: Machines will put us all out of workTweet this! Posted by Mark Wadsworth at 11:43