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One upside to automation is that comparative advantage with regard to labour costs becomes much less important. This means that manufacturers can more easily af

by tmnvix 10y ago

One upside to automation is that comparative advantage with regard to labour costs becomes much less important. This means that manufacturers can more easily afford to keep production in high wage economies. There are other considerations of course, such as proximity to resources, transport hubs, and markets. Ultimately though, this doesn't change the fact that automation is mostly beneficial to capital owners and not the wider workforce, so capitalism's tendency toward inequality (as described by Piketty) still applies.

hamandcheese 10y ago
> This means that manufacturers can more easily afford to keep production in high wage economies. But this doesn't really bring jobs back, since they'll just be automated. That's not to say there aren't other benefits aside from job creation, though.
- blackguardx 10y ago
  Someone has to service the machines. Also, big machines are expensive to transport, so it makes sense to make them closer to where they will be used, leading to more service jobs. There are also a lot of engineering jobs designing the hardware and software of these automated factories.
  - torpfactory 10y ago
    Doesn't the question then become how many and at what salary do these engineering jobs exist? Seems like there typically are fewer jobs and the total compensation for labor is reduced when manufacturing is automated (why else would the company pursue such a course of action?)
    - blackguardx 10y ago
      The engineering jobs already exist. Factory automation has been a big business for decades (Siemens, Rockwell Automation, Mitsubishi and others). They generally aren't high paying compared to Silicon Valley software engineers, but pay more than civil engineers. Automation will continue, but labor will probably never be completely replaced within our lifetimes. I think it makes sense to have factories and make physical goods in the US. It is easier to bring hardware to market when the production is in the same timezone. I think it leads to a more robust economy even if there is heavy automation. There are still ancillary jobs associated with factories.
  - seanmcdirmid 10y ago
    Yes, but this isn't very many jobs. The amount of labor per unit of productivity is drastically reduced in any case. If we can attract new factories then it could be a net win, but someone will lose out (not china, but Bangladesh, India, Vietnam, and other countries that are trying to break into middle income).
    - blackguardx 10y ago
      Some jobs is better than no jobs, right?
      - mjevans 10y ago
        Actually no. Zero jobs would be best, because then -everything- that people didn't do for their own sense of enjoyment would be automated.
        blackguardx 10y ago
        One outcome would be a utopia where everyone would share equally in this new prosperity. Another would be a distopia where the prosperity only went to the factory owners.
        seanmcdirmid 10y ago
        Well, there is the theory that employed masses are too busy to cause trouble (e.g. demand more equality), and much of our society is structured around keeping the non-upper class busy, even if that means making them move dirt between holes. The distribution of wealth sort of bears this out.
  - wott 10y ago
    The whole point of automation is to increase benefit by increasing productivity, i.e. by either increasing the production output for the same amount of jobs, or decreasing the amount of jobs needed for the same production. Since we already produce about everything in the amount we need (and sometimes much more than we need), there is no point in increasing production (it would not be sold, consumed), so productivity gains will translate into cost reduction, i.e. less jobs.
    - blackguardx 10y ago
      No one is arguing that. The argument is if we should have automated factories in high paying regions (like the US). I'm arguing that having automated factories here is better than no factories here.
- twblalock 10y ago
  It won't bring manual assembly line jobs back, but let's be honest: nothing will.
- tmnvix 10y ago
  > But this doesn't really bring jobs back, since they'll just be automated. Yeah, that's right. There would certainly be other benefits (and a limited number of jobs created) that are more indirect. The real issue around automation in my opinion is how we as a society manage it. If we stay the course, it is clear that capital owners stand to benefit most (almost entirely I would say). We are already seeing problems with rising inequality due to diverging returns from capital and labour. This is going to exacerbate that hugely. I'm generally in favour of capitalism but I think we are going to need to revisit 'the social contract' that allows capitalism to exist in exchange for a share of the rewards being used to ensure that society's basic needs are met. Just as when it was first negotiated by Bismark, this is going to have to be an initiative of the capital owners if serious unrest is to be avoided. I'm hopeful and think that it is possible. Rich people are not inherently sociopathic. A good example of this sort of compromise in more modern times was the reaction of Kennedy snr when the US faced economic and social unrest. Partly through correspondence with Keynes he was convinced that if himself and his peers didn't take a hit for the good of wider society then they stood a good chance of losing a great deal more. Every so often the social contract needs a reset (e.g. Bismark, the labour movement, the new deal, etc). Automation is going to make this more urgent. The one thing I am sure of is that it will be a political solution and not simply an economic one (e.g. less regulation, more free markets, etc).
cm2187 10y ago
> Ultimately though, this doesn't change the fact that automation is mostly beneficial to capital owners I think that inequality will increase but not because of owning capital. Rather because this automation will shift demand away from unskilled workers and into software developers, marketing experts, etc. And I do not think that the supply of skilled worker can adapt fast enough, if any. The good news (for the US) is that China will be the main casualty. In a way the US has already largely paid this tax to automation by outsourcing factory jobs to China. It is chinese factory workers that are going to be automated the first. Some low skilled jobs that couldn't be outsourced offshore like construction, taxis, etc will suffer but I'd argue a large part of the impact is behind us. Obviously the tax paid to outsourcing is also having Trump at the white house.
- tmnvix 10y ago
  While we'll have to agree to disagree about ownership of capital leading to increased inequality, I definitely agree with you when you say that you "do not think that the supply of skilled worker can adapt fast enough" to the demand. I think that while education is fundamental, even if it were always of a high quality and free, not everyone has the temperament or innate ability necessary to make the commitment to getting sufficiently qualified.
  - yourapostasy 10y ago
    > ...agree to disagree about ownership of capital leading to increased inequality... If it is not capital ownership, then some other inequality mechanism is at work if the automation trend is true, considering that as automation scoops the obvious and not-so-obvious patterns of workflows in the economy out of the labor market, proportionally none of the benefits accrue to those who are left creating that automation. Think about that for a second. If you are one of the few who create the automation, then by definition what you are doing is currently not amenable to automation. You are creating a fabulous wealth machine with the automation, but by and large, unless you own a capital stake in that exercise, you will not see compensation proportional to the value you bring to the table. It's a curious dynamic to me, because due to classical economics, I would have expected capital to flow more readily to those whose work could not (yet) be automated, to accelerate delivery towards the proven benefits of automation.

by tmnvix 10y ago

hamandcheese 10y ago

> This means that manufacturers can more easily afford to keep production in high wage economies. But this doesn't really bring jobs back, since they'll just be automated. That's not to say there aren't other benefits aside from job creation, though.

blackguardx 10y ago
Someone has to service the machines. Also, big machines are expensive to transport, so it makes sense to make them closer to where they will be used, leading to more service jobs. There are also a lot of engineering jobs designing the hardware and software of these automated factories.
- torpfactory 10y ago
  Doesn't the question then become how many and at what salary do these engineering jobs exist? Seems like there typically are fewer jobs and the total compensation for labor is reduced when manufacturing is automated (why else would the company pursue such a course of action?)
  - blackguardx 10y ago
    The engineering jobs already exist. Factory automation has been a big business for decades (Siemens, Rockwell Automation, Mitsubishi and others). They generally aren't high paying compared to Silicon Valley software engineers, but pay more than civil engineers. Automation will continue, but labor will probably never be completely replaced within our lifetimes. I think it makes sense to have factories and make physical goods in the US. It is easier to bring hardware to market when the production is in the same timezone. I think it leads to a more robust economy even if there is heavy automation. There are still ancillary jobs associated with factories.
- seanmcdirmid 10y ago
  Yes, but this isn't very many jobs. The amount of labor per unit of productivity is drastically reduced in any case. If we can attract new factories then it could be a net win, but someone will lose out (not china, but Bangladesh, India, Vietnam, and other countries that are trying to break into middle income).
  - blackguardx 10y ago
    Some jobs is better than no jobs, right?
    - mjevans 10y ago
      Actually no. Zero jobs would be best, because then -everything- that people didn't do for their own sense of enjoyment would be automated.
      - blackguardx 10y ago
        One outcome would be a utopia where everyone would share equally in this new prosperity. Another would be a distopia where the prosperity only went to the factory owners.
      - seanmcdirmid 10y ago
        Well, there is the theory that employed masses are too busy to cause trouble (e.g. demand more equality), and much of our society is structured around keeping the non-upper class busy, even if that means making them move dirt between holes. The distribution of wealth sort of bears this out.
- wott 10y ago
  The whole point of automation is to increase benefit by increasing productivity, i.e. by either increasing the production output for the same amount of jobs, or decreasing the amount of jobs needed for the same production. Since we already produce about everything in the amount we need (and sometimes much more than we need), there is no point in increasing production (it would not be sold, consumed), so productivity gains will translate into cost reduction, i.e. less jobs.
  - blackguardx 10y ago
    No one is arguing that. The argument is if we should have automated factories in high paying regions (like the US). I'm arguing that having automated factories here is better than no factories here.
twblalock 10y ago
It won't bring manual assembly line jobs back, but let's be honest: nothing will.
tmnvix 10y ago
> But this doesn't really bring jobs back, since they'll just be automated. Yeah, that's right. There would certainly be other benefits (and a limited number of jobs created) that are more indirect. The real issue around automation in my opinion is how we as a society manage it. If we stay the course, it is clear that capital owners stand to benefit most (almost entirely I would say). We are already seeing problems with rising inequality due to diverging returns from capital and labour. This is going to exacerbate that hugely. I'm generally in favour of capitalism but I think we are going to need to revisit 'the social contract' that allows capitalism to exist in exchange for a share of the rewards being used to ensure that society's basic needs are met. Just as when it was first negotiated by Bismark, this is going to have to be an initiative of the capital owners if serious unrest is to be avoided. I'm hopeful and think that it is possible. Rich people are not inherently sociopathic. A good example of this sort of compromise in more modern times was the reaction of Kennedy snr when the US faced economic and social unrest. Partly through correspondence with Keynes he was convinced that if himself and his peers didn't take a hit for the good of wider society then they stood a good chance of losing a great deal more. Every so often the social contract needs a reset (e.g. Bismark, the labour movement, the new deal, etc). Automation is going to make this more urgent. The one thing I am sure of is that it will be a political solution and not simply an economic one (e.g. less regulation, more free markets, etc).

cm2187 10y ago

> Ultimately though, this doesn't change the fact that automation is mostly beneficial to capital owners I think that inequality will increase but not because of owning capital. Rather because this automation will shift demand away from unskilled workers and into software developers, marketing experts, etc. And I do not think that the supply of skilled worker can adapt fast enough, if any. The good news (for the US) is that China will be the main casualty. In a way the US has already largely paid this tax to automation by outsourcing factory jobs to China. It is chinese factory workers that are going to be automated the first. Some low skilled jobs that couldn't be outsourced offshore like construction, taxis, etc will suffer but I'd argue a large part of the impact is behind us. Obviously the tax paid to outsourcing is also having Trump at the white house.

tmnvix 10y ago
While we'll have to agree to disagree about ownership of capital leading to increased inequality, I definitely agree with you when you say that you "do not think that the supply of skilled worker can adapt fast enough" to the demand. I think that while education is fundamental, even if it were always of a high quality and free, not everyone has the temperament or innate ability necessary to make the commitment to getting sufficiently qualified.
- yourapostasy 10y ago
  > ...agree to disagree about ownership of capital leading to increased inequality... If it is not capital ownership, then some other inequality mechanism is at work if the automation trend is true, considering that as automation scoops the obvious and not-so-obvious patterns of workflows in the economy out of the labor market, proportionally none of the benefits accrue to those who are left creating that automation. Think about that for a second. If you are one of the few who create the automation, then by definition what you are doing is currently not amenable to automation. You are creating a fabulous wealth machine with the automation, but by and large, unless you own a capital stake in that exercise, you will not see compensation proportional to the value you bring to the table. It's a curious dynamic to me, because due to classical economics, I would have expected capital to flow more readily to those whose work could not (yet) be automated, to accelerate delivery towards the proven benefits of automation.