Tuesday, November 8, 2016

Forget Robots, I Need a ManServant

By Robert Wenzel

While at the H.L. Mencken annual conference in Baltimore, Maryland this past weekend, I participated on a number of panels.  During one of the panels, a participant raised concerns with regard to robots and the unemployment it would cause.

I suggested this view was a result of the failure to understand basic fundamental supply and demand economics. I said there would be no employment problem. That there would be plenty of jobs. Indeed, that a massive number of unemployed would be an internal contradiction.

If there were suddenly tens of millions unemployed because of robots, wouldn’t they start providing goods and services to each other, starting with food? Or would they just all decide to starve to death?

The real problem with the participant's comment was his seeing the economy in a very narrow manner zero-sum game rather than the very complex system it is.

At the heart of Henry Hazlitt’s classic Economics In One he was really addressing this complexity in economics, where there are seen in and unseen consequences that must be considered.

F.A. Hayek was making pretty much the same point when he wrote in The Fatal Conceit:

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

Every sound thinking economist should have a t-shirt that says:

Economics is much more complex than you think.

In the case of robots, the simple view is:

OMG, robots are going to replace laborers. They will never be able to find jobs. All the profits are going to go to the capitalists,

Here’s the complex understanding of what is going on:

Robots must be more productive than the laborers they replace otherwise, they wouldn’t be replaced by laborers. But more productive robots means more product. Robots will for sure be employed in producing for the mass markets (or those in those sectors won’t even face unemployment.)

If more product is available for the masses, it is a general improvement in products available in a given economy. This, however, doesn’t mean there aren’t jobs available for those that must find jobs after being replaced at a particular type of job by robots.

We are not in the Garden of Eden where every product is at our beck and call.

If robots are more productive in a given sector, then the laid off laborers find other jobs. We then end up with more product from the robots AND new services provided by the new jobs the laborers take. That is more products and services to bid for labor. It is dangerous to do this because it can be stretched and misunderstood, but from one perspective, money is just a veil where it is products and services that are bidding for labor. This is at the heart of Say’s Law that supply creates its own demand.

Consider a situation where robots are created that can produce mass amounts of caviar, champagne, mansions, and personal private jets and that all the laborers in these industries are laid off. They would have to find new jobs but there would be massive amounts of new product available for the many, including them. That is, the laid off when they find new jobs would find more product being offered for their services.

The downward pressure on prices because of such mass production would be enormous. We need more robots, a lot more!

At the Mencken conference, I said that if the participant expected mass unemployment, I would bid for 5 servants paying them each $5.00 a day.

In thinking about this more now, I really do need 5 servants, a  manservant to make me a Spahire tonic when I get home and to know when I want the TV turned on (like when the Knicks are playing) and to turn it on for me.

I need a beautician to keep me with a fresh manicure and pedicure and to keep my hair groomed and to shave me every morning followed by a hot towel massage on my face.

I need a maid who keeps the pace clean and puts the toothpaste on my toothbrush whenever I want to brush my teeth.

I need an errand boy, well, to run errands.

And I need a body man to hand me gum when I want it and carry my cash and credit cards.

Right now, I only have a maid who comes in once a week. This means that laborers have better alternatives than what I have to offer. (With government welfare programs a complicating factor, preventing some with an incentive not to work.) If prices of labor ever did drop so low because of robots that I will be able to afford 5 servants as described above (working as independent contractors to get around minimum wage laws), robots would be producing so much product that my servants would all be living like kings!

The world needs to start understanding complex economics, failure to do so means that the foundations of prosperity will not be understood and that impediments will be put in the way of moving toward greater prosperity.


  1. I agree with you RW, but I think your argument needs to be a bit more sophisticated because these people think robots are going to do EVERYTHING. And, to some limited extent, I understand the argument. Your reply appears to be written with a relatively short timeframe in mind, say the next 50-100 years. What about 1000 years from now? Again, I think the infinite wants of man and says law still saves us, but I'm still looking for a really good reply to this argument.

    1. So in a thousand years when robots "do everything" people will just starve themselves to death instead of growing their own food and exchanging?

    2. Suppose in 1000 years robots "do everything". That means a man could live extremely well by giving pedicures to Robert Wenzel, Jr., robot engineer, for $5 a day. He would eat and live in vastly greater abundance than any of us currently dream possible. Seems paradisical, but...

      Every day this man would notice that Wenzel Jr. was even better off than he was, by several orders of magnitude. And how would that be fair? Bernie Sanders, Jr., would assure him it was not, and that Wenzel Jr. should kick in just a little extra for being so fortunate in life.

      Technology drives inequality of outcomes, inequality of outcomes drives envy, and envy drives legalized theft and murder, even or especially when the human race has never had it so good. This is one sure way robots could lead to the masses starving to death.

    3. This is one of those Onion pieces - right ?
      I mean it is so ridiculous it has to be.
      I have an apartment in the City and will survive on 5 tomato
      plants grown on my firescape. Along with the other millions in the City.
      My neighbor will grow 5 ears of corn on his, and we can exchange.
      You too will grow your own food and exchange.
      We can all grow tomatoes in a 3 month summer and have abundance in
      late August and September and exchange them all. tomato for everyone
      Maybe I can be taught to grow a steak and potatoes too.
      That's right, I will raise cattle in my living room
      and fish in my bathtub, I rarely take a bath anyway.

    4. So if it came to this, which it won't, you are going to stay in your apartment and starve instead of relocate?

    5. Where would I relocate to Bob ? I can suddenly pack my bags
      and buy 100 acres in Ohio ? Is that your suggestion, even
      though I don't have any equipment
      and don't know a lick about large scale farming ?
      What about those that do not have funds to buy 100 acres ?
      And is there even enough land to go around if as you suggest
      we all relocate and farm ?
      You have your " real world " example right now in Venezuala Bob.
      And what do they do - stand on line for food Bob...
      I tire from hearing from economists that cannot
      see that hey, they are trying this right now in Europe, or
      Venezuela and look what is happening. Real Life.

  2. If, a thousand years from now, robots are doing everything, who are they doing it for? Demand must still exist. This, imo, translates into abundance.

    1. Bingo. In a world where robots grow food, build houses, make clothes, and provide transportation, the abundance of all of these things will mean the living standards of everyone will rise dramatically.

    2. It is a waste of time searching for an answer to people who complain that "robots" will take their jobs. Because they are focused on the immediate impact and they are correct. They will lose their job, they will need to learn new skills for a new job and may need to relocate. For people who like the status quo this is not an improvement. And it is likely their new job will simply be a new status quo. They are unwilling to endure the short-term pain of the "creative destruction" the free market requires for long-term gain. I agree with Mrs. K that "robots" result in abundance and rising living standards for everyone. IN fact I believe we already enjoy this reality. And it is this reality that will save the free market not the persuading of the status quo people.

    3. "It is a waste of time searching for an answer to people who complain"

      I've had some success by demanding that such a person talking to me hand over their iPhones. I want to bring back all the lost jobs: the calculator makers, alarm clock builders, map-makers, encyclopedia salesmen, phone booth manufacturers, etc., that have been displaced due to that terrible, horrible technology. Then I demand their car keys, being in favor of helping the horse and farrier trades.

      They laugh, but they get it. Then I laugh and say something like, "Yeah, it's not like the advent of autos created any jobs anywhere, right?"

  3. The last century or so has been spent trying to turn the economy into a zero sum game. A closed system. It has been successful in creating barriers of entry, price supports, and more. To keep people paying grossly high prices for things. Medical care is a prime example. Throwing robots into this system will cause considerable economic harm to many. Robots can only make us richer in a just and fair system but we don't live in anything close to that.

    Regulated goods and services will remain high priced while unregulated goods and services will drop in price. The number of regulated areas of the economy will increase and there will be a struggle to create new ventures against ever greater barriers. There will be difficulty affording what robots make cheaper, which will largely be optional purchases because the mandatory things of life which are considered "too important to leave to the free market" will increase in price consuming the wages people will be able to earn.

    Wasn't it Mises who wrote there is really no such thing as a mixed economy? That's the problem with robots in the present system, there's really no such thing as a mixed economy and this system has been tipping to political (or as VonMises put it, public) control for quite some time.

  4. A lot of displaced workers will not have the skill or intelligence to find or do other work.

    1. It's entrepreneurs that create the opportunities not necessarily the workers. Do you think entrepreneurship is somehow going to disappear?