Sunday, March 20, 2016

Will Robots Leave Only Low Skilled Jobs?

EPJ reader Александр Фамилия asks:
You have been writing about robots and minimum wage laws lately. What's your take on this Huffington Post article, where they talk about the correlations between high- and low-skill jobs and basically use this to come to a conclusion of the necessity of basic income
I have my own thoughts, but you are the expert and I'd like to request an article on the subject from you personally. Hope it's not too much to ask, a lot of people are discussing this is all.
First of all. I find such historical data used, and the conclusions reached, in the HuffPo column highly dubious. As I have pointed out before, (SEE:Will Robots Eliminate 5 Million Jobs in the Next 5 Years?), (sophisticated automation) robots are simply highly complex forms of capital. Without capital, we would all be working at subsistence level on our hands and knees. Great writers would have never had time to write, great movies would never have been made, the internet wouldn't exist, etc.

The HuffPo columnist, who wrote the column on the dangers of sophisticated automation, wouldn't have had time to write the column he wrote, The MIT economist who reached the conclusion that only low-skilled workers would survive, wouldn't have had use of o a computer to do the calculations he did and draw the pretty graphs he did.

So I find their premise way out of touch with reality.

But, let us assume this premise is true. that the only jobs left would be unskilled jobs, that is, jobs like barbers and bartenders. So what? When we think of an economy with more capital, be it robots or any other kind of capital, we should be thinking "more goods and services," becasue the only reason a businessman would invest in capital is to more efficiently produce product.  If there is more product, that is goods and services, there are more choices for everyone.

A barber or a bartender would be much better off in such a world. Think of the way life currently is because of the massive amounts of capital investment: All sorts of products are produced that are available to even someone at a lowly dishwasher job.

A dishwasher is likely to have a better life than a king did 200 years ago. He is likely to work in an air conditioned environment, have a smart phone that is capable of piping news, music and conversation at any hour.

The big problem with those who make the grave projections about sophisticated automation  is that they are using improper methodology for the social sciences including economics (SEE Hayek: The Counter-Revolution of Science) and they fail to consider all factors in their analysis. The big failure in their analysis here being the failure to consider that additional capital, including from the capital subset robots, means greater product, that is, a greater number of goods and services. The greater the number of goods and services, the higher the general standard of living. All hail the robots!



  1. Great post.

    Agricultural combines (moving crop pickers and processors) don't look like robots with defined arms and legs, but they and other automation have displaced 97% of agricultural workers in the US since 1880.

    One could have forseen revolution and starvation in 1920 if one only complained about "what will all of these low-level workers do without their agricultural jobs?" The same sort of bad analysis is everywhere today.

  2. What get's automated is driven largely by ROI. He is right about low skilled workers, but today's minimum wage insanity and fixation on $15/hr will change that. At a $15/hr minimum wage, low skilled jobs will become low hanging fruit for the automation business. And because these jobs are easy to automate, this automation will be driven entirely by the minimum wage increase and related increases in labor burden.