Wednesday, May 11, 2016

A Fundamental Confusion About Productivity, Robots and Jobs

At my recent post, Is It Time for Bill Gross to Retire?, the following comment was left:
Matt@Occidentalism.orgMay 11, 2016 at 7:02 AMLet's be clear. Robots will mean new/different jobs, but probably not for the people that actually lost their jobs. Retraining has its limits. Some people are limited by IQ, etc.
There is a fundamental flaw in this comment that you see regularly. Gains by the growth from robots occur  regardless of retraining, limited IQs, etc. These factors have zero to do with the gains.

This is what needs to be understood. A worker is not going to be replaced by a robot unless there are productivity gains. It doesn't make sense otherwise.

Let's take an extreme example, all workers in the television manufacturing business and the clothng industry are laid off and replaced by robots that produce twice as many televisions and clothes---the productivity gains.

The laid off workers can only find jobs pumping gas, but because there are now twice as many televisions and clothes, it becomes much cheaper for them to buy these products.

In other words, what occurs is that an economy sees a magnificent increase in the quantity of goods produced and we now have workers freed up to provide a service that makes life easier for us.

As I have already noted:
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.
More robots mean a general gain in the standard of living and this has nothing to do with  retraining, limited IQs, etc. The more products around the better it is for all of us.

(Note: There are no gains, of course, for those who are forced out of work because of minimum wages laws see: Minimum Wage Laws, Robots and the Poor Saps Who Aren't That Productive)



  1. You have missed my point. Better machines for production and robots and whatnot means more goods, but those people that lost their jobs may not be able to find a new one. Or their new jobs may pay far less than their old job producing TVs, for example. In this case there is an aggregate benefit, but the person that is unemployable or working for far less is not personally benefiting.

    Look at all the people with the family name "Weaver". Their ancestors were skilled craftsmen put out of work by the loom. It is ludicrous to say that the invention of the loom was beneficial to the weavers of that generation.

    I want to hold libertarians to the truth. This is one instance. Another is how libertarianism is bad for black people as net tax consumers. Libertarians are trying to BS black people saying that no affirmative action, no welfare, etc, is going to benefit black people when it is not (not that black people are dumb enough to believe it anyway). Libertarianism is a bad deal for black people which is one of the main reasons why there are so few black libertarians.

    A lot of the people losing their jobs will not be able to find another, as we have seen in the formerly industrial states. Why try to sugar coat it?

    1. RW addressed your point directly. Even the lowest IQ gruel can pump gas. The gas pumper's standard of living increases by large scale productivity gains. Even people working for far less benefit. Air conditioners, flat screen TVs and smart phones are ubiquitous.

      The Weavers bought clothes for far cheaper after the loom's invention than they could have prior. The loom wasn't the only technological advancement of its time. The Weavers benefited from all the productivity increasing technological advancements of their time.

      Long term unemployment is much more a function of government unemployment and disability benefits than technological advancement, which create even more unforeseen jobs.

      Creative destruction is a beautiful thing.

      Your premise on blacks and libertarianism is wrong. You can say libertarianism is a bad deal for black people who want to collect welfare. Same thing as libertarianism is a bad deal for businessmen who want special privileges from government.

      Second, how well off are black communities currently? How good are the government schools that educate blacks? How good has the drug war been for blacks? How about the minimum wage? Or planned housing developments?


    2. Thomas Sowell Destroys Affirmative Action in 2 minutes

      Thomas Sowell: Welfare Does Not Work

  2. I don't see reasoning to explain why the entrepreneur would replace labor with robots at an equal ratio.

    Why would that manager not spend less capital to buy half as many robots, still eliminate all the labor expense, and leave the final price unaffected? Or some other ratio the manager might anticipate is more in line with market demand and the price of non-labor inputs?

    1. Because competition. If it's profitable for one firm to utilize automation than it's profitable for their competition to do the same. One of them, at least, is going to want to get more customers by passing on the cost savings.

  3. Regarding Libertarians appeal to blacks, it is not blacks who suffer when welfare is withdrawn, it is welfare recipients. Libertarians of all color favor Liberty over theft and handouts.