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Depending on our economic policies, there are a few different ways automation's impact on labor can express itself. The key thing that automation does is that

by Suncho 9y ago

Depending on our economic policies, there are a few different ways automation's impact on labor can express itself. The key thing that automation does is that it substitutes for labor thereby making labor less valuable. If labor is less valuable, it doesn't have to mean fewer jobs. It doesn't even have to mean fewer hours worked. It can just mean less money going to labor (i.e. lower wages). If our economy is operating below its productive capacity, which it is, then our levels of production are constrained by how much people can spend. And if consumers get their incomes from labor, then automation means consumers have less spending money. If consumer incomes are constrained by wages, you'd therefore expect our level of production to decrease with increased levels of automation. And because economic policies are keeping the hours worked high, you'd expect the amount of production per man hour to decrease. Hence... "1. The U.S. economy is in a productivity recession." Furthermore, if firms need to keep production levels low in order to clear markets, you'd expect that they wouldn't have much of a need to figure out ways to boost production. Hence... "2. Companies don’t seem to be investing in technology nearly as much as they used to." Technology and automation allow the use of resources to be more efficient. One of those resources is labor. That means that in cases where we're actually using labor for production -- instead of, you know, just as an excuse to give people incomes -- we can get that labor really cheap. "3. Globalization is a much bigger deal than automation for work and wages." Globalization is automation. But because we're Americans and we believe in the American dream, we need to force the labor market to provide incomes for hard-working Americans. Naturally, since many jobs amount to little more than token busy-work, we should then expect the labor market to become exceedingly boring and uneventful. After all, these are just fake jobs propped up by economic policy. Hence... "4. The U.S. economy’s creative-destruction engine is broken." "This isn’t what the end of work was ever supposed to look like." Yes it is. This is exactly what it's supposed to look like.

vlehto 9y ago
> The key thing that automation does is that it substitutes for labor thereby making labor less valuable. I think you may have gotten this backwards. If you replace four pipe bending guys with pipe bending robots and highly trained maintenance mechanic, do you really think the highly trained mechanic is going to get paid less than single pipe bending guy? Automation should increase wages for those lucky enough to get employed. >Globalization is automation. Globalization predates automation by at least few centuries.
- halomru 9y ago
  But if a pipe-bending machine has a total cost of ownership of $100 per operating hour, your four pipe bending guys have a job as long as employing them costs less than $25/h. Where before they might be able get a higher wage, their wage is now capped and the cap is decreasing over time. Of course there's other reasons to employ people (parent mentioned spending power, I would add political influence to the list). But the labor part of the employment decreases in value.
  - vlehto 9y ago
    If labor part decreases in absolute value, then the bikes too get cheaper in healthy competition. So the net effect is just inflation. Historically the period from inventing the assembly line to the large scale deployment of factory floor robots is roughly from 1920 to 1990. The same time period saw the highest wages/GDP ratio in US than ever before or ever since.
- tormeh 9y ago
  1) That's not the real ratio, and we know it. 2) Those pipe-bending guys are now unemployed and willing to work for les thanks they did at their previous job.
  - mljoe 9y ago
    They won't necessarily look for pipe bending jobs either, they'll try to get any job they can get. So entirely unrelated and non-automated fields can become devalued due to the increased supply of labor.
    - vlehto 9y ago
      ...as if pipe bending was not already "any job they can get". If we assume that the most mundane jobs get automated first (as has happened so far) the effect of automation should again be rising wages for those who get to keep their jobs.
      - 9y ago
elementalest 9y ago
In the second last paragraph the author agrees what you argue in your comment is possible: > Finally, it’s conceivable that the ostensibly tranquil and low-turbulence economy is masking something more disruptive underneath the surface. Ryan Avent, the author of The Wealth of Humans, has thought about this question deeply and offered a plausible explanation. In his telling, automation has created an abundance of labor, including machine labor and human labor. Just as rising supply typically leads to falling prices, the oversupply of labor has put a downward pressure on wages. Companies, seeing that they have access to cheap labor in a slowly growing economy, invest less in new risky technology, which leads to less productivity growth. High employment, low productivity, low wage growth, and automation can all live together in the same story.
bovine3dom 9y ago
The whole point of the economy is to allocate our scarce resources in the way that maximises the benefit to society. Automation is a way of reducing costs; it is a way of making our scarce resources go farther. On the micro level, it is a Kaldor-Hicks improvement [0]. This means that there are winners (all of society because goods are cheaper) and losers (people who have lost their jobs) - but, overall, there is a net gain. We can tax some portion of this net gain (e.g, with income tax, or corporation tax if you are really worried about foreigners) and compensate the losers (with training so they can be employed in a different industry). In many ways, the "arguments" people have against automation are similar to those against immigration, and are befallen by the same fallacies. The difference is that we don't have to give robots health care. We already have a nice case study on rapid automation (and how the sky didn't fall in) - just look at the Luddites. My main concern with current levels of automation is that, with patents and network effects, we are creating a new generation of monopolies (Google, Facebook, Uber, AirBnB) with very little oversight. [0] https://www.wikiwand.com/en/Kaldor–Hicks_efficiency https://www.wikiwand.com/en/Kaldor–Hicks_efficiency
eli_gottlieb 9y ago
>But because we're Americans and we believe in the American dream, we need to force the labor market to provide incomes for hard-working Americans. Naturally, since many jobs amount to little more than token busy-work, we should then expect the labor market to become exceedingly boring and uneventful. After all, these are just fake jobs propped up by economic policy. Or in short, work is ending, but instead of creating a post-work economy, we're creating bullshit jobs. David Graeber did nothing wrong.

by Suncho 9y ago

vlehto 9y ago

> The key thing that automation does is that it substitutes for labor thereby making labor less valuable. I think you may have gotten this backwards. If you replace four pipe bending guys with pipe bending robots and highly trained maintenance mechanic, do you really think the highly trained mechanic is going to get paid less than single pipe bending guy? Automation should increase wages for those lucky enough to get employed. >Globalization is automation. Globalization predates automation by at least few centuries.

halomru 9y ago
But if a pipe-bending machine has a total cost of ownership of $100 per operating hour, your four pipe bending guys have a job as long as employing them costs less than $25/h. Where before they might be able get a higher wage, their wage is now capped and the cap is decreasing over time. Of course there's other reasons to employ people (parent mentioned spending power, I would add political influence to the list). But the labor part of the employment decreases in value.
- vlehto 9y ago
  If labor part decreases in absolute value, then the bikes too get cheaper in healthy competition. So the net effect is just inflation. Historically the period from inventing the assembly line to the large scale deployment of factory floor robots is roughly from 1920 to 1990. The same time period saw the highest wages/GDP ratio in US than ever before or ever since.
tormeh 9y ago
1) That's not the real ratio, and we know it. 2) Those pipe-bending guys are now unemployed and willing to work for les thanks they did at their previous job.
- mljoe 9y ago
  They won't necessarily look for pipe bending jobs either, they'll try to get any job they can get. So entirely unrelated and non-automated fields can become devalued due to the increased supply of labor.
  - vlehto 9y ago
    ...as if pipe bending was not already "any job they can get". If we assume that the most mundane jobs get automated first (as has happened so far) the effect of automation should again be rising wages for those who get to keep their jobs.
    - 9y ago

elementalest 9y ago

In the second last paragraph the author agrees what you argue in your comment is possible: > Finally, it’s conceivable that the ostensibly tranquil and low-turbulence economy is masking something more disruptive underneath the surface. Ryan Avent, the author of The Wealth of Humans, has thought about this question deeply and offered a plausible explanation. In his telling, automation has created an abundance of labor, including machine labor and human labor. Just as rising supply typically leads to falling prices, the oversupply of labor has put a downward pressure on wages. Companies, seeing that they have access to cheap labor in a slowly growing economy, invest less in new risky technology, which leads to less productivity growth. High employment, low productivity, low wage growth, and automation can all live together in the same story.

bovine3dom 9y ago

The whole point of the economy is to allocate our scarce resources in the way that maximises the benefit to society. Automation is a way of reducing costs; it is a way of making our scarce resources go farther. On the micro level, it is a Kaldor-Hicks improvement [0]. This means that there are winners (all of society because goods are cheaper) and losers (people who have lost their jobs) - but, overall, there is a net gain. We can tax some portion of this net gain (e.g, with income tax, or corporation tax if you are really worried about foreigners) and compensate the losers (with training so they can be employed in a different industry). In many ways, the "arguments" people have against automation are similar to those against immigration, and are befallen by the same fallacies. The difference is that we don't have to give robots health care. We already have a nice case study on rapid automation (and how the sky didn't fall in) - just look at the Luddites. My main concern with current levels of automation is that, with patents and network effects, we are creating a new generation of monopolies (Google, Facebook, Uber, AirBnB) with very little oversight. [0] https://www.wikiwand.com/en/Kaldor–Hicks_efficiency https://www.wikiwand.com/en/Kaldor–Hicks_efficiency

eli_gottlieb 9y ago

>But because we're Americans and we believe in the American dream, we need to force the labor market to provide incomes for hard-working Americans. Naturally, since many jobs amount to little more than token busy-work, we should then expect the labor market to become exceedingly boring and uneventful. After all, these are just fake jobs propped up by economic policy. Or in short, work is ending, but instead of creating a post-work economy, we're creating bullshit jobs. David Graeber did nothing wrong.