8 ms·

You've got the 1st order effects completely right, but there would be several second-order effects that would undermine this result. (1) There would be a fall

by oli5679 10y ago

You've got the 1st order effects completely right, but there would be several second-order effects that would undermine this result. (1) There would be a fall in non-skilled wages, increasing demand for non-skilled labour output. (2) The reduction in marginal costs would increase supply of the good and reduce its price. (3) The increased profits earned by the firm/robot inventor would increase demand or saving/consumption of other goods. (4) The change in relative wages would encourage workers to retrain and switch industries. In 1850, 60%+ of the American labour force were farmers and over the next 100 years their jobs were automated out of existence by range of more efficient 'robots'. This was no-doubt harmful for many specific farm labourers, but didn't 'screw over the economy'.

cousin_it 10y ago
I don't think the existence of jobs you could quickly retrain to is an eternal law of nature :-(
- oli5679 10y ago
  Definitely not, but it needs to be explicitly discussed. The previous claim seemed to have the implicit assumption that any retraining/reallocation is de-facto impossible. Automation isn't unambiguously bad news for society at large, although you would expect it to be negative for the people being automated. The extent to which this can be mitigated by retraining/wealth transfers is an interesting question that depends as much on the country's culture and political climate as the properties of the technological advancement.
- yummyfajitas 10y ago
  No, but at the moment there are many such jobs. Maid, cook, child care, a significant amount of construction labor, etc. I blogged about this a while back. Until robots do all the jobs that are actually done in India (e.g. robot cooks, robot maids, robot cigarette walas), there still exist jobs people can do. Americans just refuse to do them, since it's easier to not work. https://www.chrisstucchio.com/blog/2016/robots_didnt_take_our_jobs.html https://www.chrisstucchio.com/blog/2016/robots_didnt_take_ou... That may happen one day, but at the moment we have a scarcity of labor rather than a surplus.
  - cousin_it 10y ago
    Interesting. It seems like a big culprit is high cost of living, which makes many jobs no longer worthwhile. Any ideas why it's so much higher in the US than in India? Is it due to landlords?
    - leereeves 10y ago
      Americans expect and demand a lifestyle most Indians only dream of. For example, electric power consumption per capita is 765 kWh in India, 12,988 kWh in the USA. [1] 1: http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC
      - eli_gottlieb 10y ago
        Admittedly, the vast majority of India is nowhere near as cold as the vast majority of America. Americans have to spend energy avoiding death by frost much of the year.
        leereeves 10y ago
        If we were willing to accept India-like population density and energy use, we could all live in the parts of the US where that's not the case.
        ozborn 10y ago
        Like many living in the southern USA my air conditioning expenses are much higher than my heating expenses, I'm sure many Indians wouldn't mind air conditioning either.
    - yummyfajitas 10y ago
      I discuss in the article a bit. India is more capitalistic than the US, at least in this regard. Their safety net is a job guarantee rather than the US's ragbag of free money programs (welfare, disability fraud [1], etc), so you don't get to enjoy a life of leisure under any circumstance. In the US, it's pretty easy to get free money and play video games all day. Second, their regulatory structure doesn't destroy as many low skill jobs as ours does (e.g. in the US, a cigarette wala like Eric Garner gets executed, and the cops shut down many food trucks). [1] NPR did an expose a while back on the massive levels of disability fraud in the US. Apparently it's now a shadow welfare system, significantly larger than actual welfare: http://apps.npr.org/unfit-for-work/ http://apps.npr.org/unfit-for-work/
- crdoconnor 10y ago
  I think if you're going to reject 200 years of historical trends you ought to have a pretty good justification for why this time it's different.
  - unprepare 10y ago
    But extrapolating 1850s trends onto 2020 makes perfect sense, gotcha.
danielbln 10y ago
In 1850, 60%+ of the American labour force were farmers and over the next 100 years their jobs were automated out of existence by range of more efficient 'robots'. This was no-doubt harmful for many specific farm labourers, but didn't 'screw over the economy'. I hear that argument all the time, but I wonder if it takes into account the ever increasing pace of technological advancement.
- grp 10y ago
  And with the Civil War and the two World Wars, it greatly reduces the need for jobs.
- oli5679 10y ago
  I think the labour-market effects of technological advancement are slower now than they have been at any time in the last 100 years. The internet and mobile phones have large impacts on media-consumption and social dynamics but they aren't dramatically reshuffling the labour force in the same way innovations like the combine-harvester, container-ship, car and washing-machine did every decade between 1900 and 1970. http://www.tradingeconomics.com/united-states/gdp-growth http://www.tradingeconomics.com/united-states/gdp-growth
dragonwriter 10y ago
> There would be a fall in non-skilled wages, increasing demand for non-skilled labour output. Er, no. A fall in non-skilled wages does not lead to an increase in demand for non-skilled labor output. It leads to an increase in supply of non-skilled labor output. This, under usual conditions, leads to some combination of decreased market clearing price and increased market clearing quantity of those goods. > In 1850, 60%+ of the American labour force were farmers and over the next 100 years their jobs were automated out of existence by range of more efficient 'robots'. This was no-doubt harmful for many specific farm labourers, but didn't 'screw over the economy'. Since the 1850s, quite a lot of social support mechanisms have been adopted within the US economy, largely to deal with problems encountered during the process of industrialization, including the displacement of traditional labor (including farm labor). The idea that further disruptions of that kind might need improved corrective measures when the cracks in the compensatory mechanisms are already visible is hardly outrageous.
- oli5679 10y ago
  1) 'Quantity demanded' would have been more precise (and more verbose) than 'demand' but you tell exactly the story I was attempting to. 2) I was critiquing the claim that 'automation reduces efficiency', not the claim that there could be distributional issues. You are attacking a straw-man. "This was no-doubt harmful for many specific farm labourers"

by oli5679 10y ago

cousin_it 10y ago

I don't think the existence of jobs you could quickly retrain to is an eternal law of nature :-(

oli5679 10y ago
Definitely not, but it needs to be explicitly discussed. The previous claim seemed to have the implicit assumption that any retraining/reallocation is de-facto impossible. Automation isn't unambiguously bad news for society at large, although you would expect it to be negative for the people being automated. The extent to which this can be mitigated by retraining/wealth transfers is an interesting question that depends as much on the country's culture and political climate as the properties of the technological advancement.
yummyfajitas 10y ago
No, but at the moment there are many such jobs. Maid, cook, child care, a significant amount of construction labor, etc. I blogged about this a while back. Until robots do all the jobs that are actually done in India (e.g. robot cooks, robot maids, robot cigarette walas), there still exist jobs people can do. Americans just refuse to do them, since it's easier to not work. https://www.chrisstucchio.com/blog/2016/robots_didnt_take_our_jobs.html https://www.chrisstucchio.com/blog/2016/robots_didnt_take_ou... That may happen one day, but at the moment we have a scarcity of labor rather than a surplus.
- cousin_it 10y ago
  Interesting. It seems like a big culprit is high cost of living, which makes many jobs no longer worthwhile. Any ideas why it's so much higher in the US than in India? Is it due to landlords?
  - leereeves 10y ago
    Americans expect and demand a lifestyle most Indians only dream of. For example, electric power consumption per capita is 765 kWh in India, 12,988 kWh in the USA. [1] 1: http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC
    - eli_gottlieb 10y ago
      Admittedly, the vast majority of India is nowhere near as cold as the vast majority of America. Americans have to spend energy avoiding death by frost much of the year.
      - leereeves 10y ago
        If we were willing to accept India-like population density and energy use, we could all live in the parts of the US where that's not the case.
      - ozborn 10y ago
        Like many living in the southern USA my air conditioning expenses are much higher than my heating expenses, I'm sure many Indians wouldn't mind air conditioning either.
  - yummyfajitas 10y ago
    I discuss in the article a bit. India is more capitalistic than the US, at least in this regard. Their safety net is a job guarantee rather than the US's ragbag of free money programs (welfare, disability fraud [1], etc), so you don't get to enjoy a life of leisure under any circumstance. In the US, it's pretty easy to get free money and play video games all day. Second, their regulatory structure doesn't destroy as many low skill jobs as ours does (e.g. in the US, a cigarette wala like Eric Garner gets executed, and the cops shut down many food trucks). [1] NPR did an expose a while back on the massive levels of disability fraud in the US. Apparently it's now a shadow welfare system, significantly larger than actual welfare: http://apps.npr.org/unfit-for-work/ http://apps.npr.org/unfit-for-work/
crdoconnor 10y ago
I think if you're going to reject 200 years of historical trends you ought to have a pretty good justification for why this time it's different.
- unprepare 10y ago
  But extrapolating 1850s trends onto 2020 makes perfect sense, gotcha.

danielbln 10y ago

In 1850, 60%+ of the American labour force were farmers and over the next 100 years their jobs were automated out of existence by range of more efficient 'robots'. This was no-doubt harmful for many specific farm labourers, but didn't 'screw over the economy'. I hear that argument all the time, but I wonder if it takes into account the ever increasing pace of technological advancement.

grp 10y ago
And with the Civil War and the two World Wars, it greatly reduces the need for jobs.
oli5679 10y ago
I think the labour-market effects of technological advancement are slower now than they have been at any time in the last 100 years. The internet and mobile phones have large impacts on media-consumption and social dynamics but they aren't dramatically reshuffling the labour force in the same way innovations like the combine-harvester, container-ship, car and washing-machine did every decade between 1900 and 1970. http://www.tradingeconomics.com/united-states/gdp-growth http://www.tradingeconomics.com/united-states/gdp-growth

dragonwriter 10y ago

> There would be a fall in non-skilled wages, increasing demand for non-skilled labour output. Er, no. A fall in non-skilled wages does not lead to an increase in demand for non-skilled labor output. It leads to an increase in supply of non-skilled labor output. This, under usual conditions, leads to some combination of decreased market clearing price and increased market clearing quantity of those goods. > In 1850, 60%+ of the American labour force were farmers and over the next 100 years their jobs were automated out of existence by range of more efficient 'robots'. This was no-doubt harmful for many specific farm labourers, but didn't 'screw over the economy'. Since the 1850s, quite a lot of social support mechanisms have been adopted within the US economy, largely to deal with problems encountered during the process of industrialization, including the displacement of traditional labor (including farm labor). The idea that further disruptions of that kind might need improved corrective measures when the cracks in the compensatory mechanisms are already visible is hardly outrageous.

oli5679 10y ago
1) 'Quantity demanded' would have been more precise (and more verbose) than 'demand' but you tell exactly the story I was attempting to. 2) I was critiquing the claim that 'automation reduces efficiency', not the claim that there could be distributional issues. You are attacking a straw-man. "This was no-doubt harmful for many specific farm labourers"