Robotic Nation - requesting criticism

Economics Economics Questions
1

Robotic Nation, by Marshall Brain

An (unfortunately long) article on how in the not too distant future robots and automation will displace over 50% of the workforce with some absurd socialist solutions.

I’ve been discussing liberty related politics and economics with my auntie recently, and she asked me to read this article which she claims as evidence we are moving towards a change in society where ‘free market forces will not save us’. I’m not terribly experienced in economics, and the author is very respectable so I’m wary of being too hasty but I can recognise that this article is a goldmine of economic fallacies.

Any help with some more informed critcism would be appreciated. The third page in particular has some exceptionally bad solutions and reasoning.

EDIT: added some specific requests for thoughts below.

2

Such as?

3

“What if we, as a society, simply give consumers money to spend in the economy? In other words: What if the way to achieve the strongest possible economy is to give every citizen more money to spend? For example, what if we gave every citizen of the United States $25,000 to spend? $25,000 sounds impossible the first time you hear it, but consider the possibility.”

He gives the Alaskan welfare check as an example and says “Alaska shows that such a system will actually work and will provide real economic benefit to the citizens of the United States.”

He calls for “extreme income” taxes, “extreme profit” taxes, sin taxes, email taxes, massive increases to minimum wage, etc.

I just noticed that there’s actually an entry on the mises economics blog specifically ridiculing this article, though I’d still like some informed criticism if someone would be so kind. Specifically of his ‘solutions’ or his explaination of how people will end up jobless, or the idea that spending is what stimulates growth in an economy (that’s the keynesian mantra, isn’t it?).

The reason I’m asking for help is I’m quite new to economics, and while I can identify some of the fallacies, it would be nice to have someone more knowledgeable back me up.

4

The problem is, as always, the state. Without the state, capital and land ownership would not be nearly as concentrated as they are today, rendering the issue moot. Besides, even assuming the scenario comes out to play as the author fears, it would open up enormous oppurtunities in other fields, such as programming, and would allow for human labor and creativity to be applied to other areas.

5

Its nonsense. It was nonsense 150 years ago when Marx thought coal fired factories were going to destroy jobs and its nonsense today.

The amount of laboring saving today is many powers higher than it was in Marx’s time, yet wages have risen.

6

You can find responses to his “solutions” in any economics treatise, be it Man, Economy & State with Power & The Market or Reisman’s Capitalism. It’s just typical “progressive” hogwash, as if for example “extreme” taxes will not cripple the economy. Welfare cheques tend to incentivize unemployment and if paid by debt money, will further boost inflation. BTW most “respectable” economists are anything but so do not be afraid to criticize them.

7

Maybe it wasn’t such a good idea to ask you to read the whole article, here are a couple of statements from the article that sound fishy to me, but I don’t know how to respond to them.

In respect to the market adapting to create jobs for this hypothetical mass of newly unemployed:

If the economy is going to be creating millions of high-paying, exciting, fulfilling jobs for all of these displaced workers, it would be doing it now. Why can’t all of the Wal-Mart/Target/McDonald’s/etc. employees who are going to get displaced in 2015 step into their new, exciting, higher-paying jobs right now, instead of waiting? It’s because the economy tends not create jobs like that in any sort of volume.

At this moment, instead of creating exciting new jobs, the economy is locked in a race to the bottom. This race is marked by a workplace that continuously creates lower-paying jobs instead of higher-paying ones.

As justification for his $25,000 per person, per year, ‘stimulus’ handout:

Goal #1 - For the strongest possible economy, we need to create the largest possible pool of consumers, and those consumers need to have money to spend.

Goal #2 - For the strongest possible economy, we need maximum economic stability. Every economic downturn has occurred when people stop spending money, either because they don’t have money to spend through unemployment, or because they are afraid to let go of their money for fear of future unemployment. Consumers need to have confidence in the economy, both on the spending and the receiving ends of the equation.

With the rank and file employees gone, all of the money in the corporation flows upward to the executives and shareholders. The concentration of wealth will accelerate dramatically because robots allow real automation in the service sector for the first time in history. The amount of money paid to executives and shareholders will be remarkable.

and

Since 1980, CEO salaries have risen by a factor of 10, and that same trend is increasing all executive compensation. William McDonough, president of the New York Federal Reserve Bank, notes:

“I find nothing in economic theory that justifies this development… I can assure you that we CEOs of today are not 10 times better than those of 20 years ago.”

Thanks for the replies so far, Man, Economy & State is next on my reading list.

8

The guy’s a bleeding idiot. He - like a lot of hopeful science journalists (real scientists are nowhere near as hopeful in those regards) - shows a vast ignorance of Moore’s Law, the field of electrical and computer (and by extension robotics) engineering, what is even meant by “operations per second” and how it really affects people, the complexity of even the “simplest” motions within the human body, and (by George!) Economics. Frankly put, a Terminator scenario where mankind ends up at war with the machines (for mere survival’s sake) is likely to happen long before anything he describes, because for even something as simple as a soccer team to hope to beat humans - or even for there to ever be a 100% automated factory - it would have to be capable of adaptation and improvisation. If robots became capable of learning to the extent that they could ever make accross the board replacements of human beings in any field, then losing our jobs or losing to a robot soccer team would be the least of human worries.

9

It is so garbled up one does not know where to begin. A mere understanding of capital theory would send the entire article propelling into oblivion (e.g. it will provide an understanding of why one cannot merely increase consumption and experience growth.) CEO pays, to the extent that they’re not justified, have been inflated due to monetary bubbles. If a firm’s owners do not believe a CEO’s pay reflects their productivity and thus eats away at their profits, they will dispose of them. If, on the other hand, the CEOs are delivering high profits, their salaries are justified. I do not see where the difficulty lies in this, other than perhaps for people who still believe in a labour theory of value.

I think people who fear robots taking over are as barmy as those who advocate rule over humans by sophisticated AIs - as if such an intelligence would not be corruptible, were it to develop genuine sentience.

10

Does auntie know how the tuna fish she had for lunch got in the can? And why aren’t there thousands of unemployed fishmongers roaming the streets as a result?

11

Economists

Like jon irenicus wrote, when he realizes that capital accumulation and not capital consumption spurs economic growth then his whole theory of growth by consumption collapses.

I don’t know anything about the dynamics of firms and their policies -I’m not a corporate manager -but even if wealth concentration accelerates why should the economist care if it is the result of free markets?

12

many of these utopian ideals think that if they eliminate one type of scarcity (in this case labor) that all the humans will suddenly dance and sing songs together all day.

there are at least 3 other scarcities to contend with:

time

natural resources

human ingenuity

I have serious doubts about any utopia that doesn’t address all of these. there will always be competition over scarce things. a free-market is the most efficient and fair form of competition.

13

If machinery replaces manual labor in the future, everyone will be better off. First of all, this means that prices will drop drastically as businesses will be able to increase productivity while lowering production costs. Secondly, wages might also fall, because there’d be an increased number of people competing for jobs. However, these people would still benefit from the massive productivity increases.

14

Wow. The only thing more annoying than a Luddite is a Luddite who thinks he’s being smart and original.

15

As far as the idea that this will be the case in the next 50 years I find it hard to believe even though I am an optimist. I would say less than %5 chance within 50 years to the degree this Author is stating especially given the fact that in our current system their will be resistance from the service sectors and working class (unions etc) which will slow down any such progress (look at the auto unions). By the end of this century barring any catastrophes the likelihood rises drastically since we are already beginning to see the partial automation of service industries which could be seen as the start of relegating personal to supervision of machines more and more, examples are automated call directories, self checkout at department stores, warehouse management incl retrieval storage etc. Fast food restaurants are looking into automation already and other than P.R. concerns they will likely be cost feasible in the near future. Comparing technology from 100 years ago to now it does not seem to far fetched to think that automation could be dominant in a 100 years unless there are extreme technological barriers in the meantime (processing power, vision and image processing, programming etc)

Even though I would say this writer is jumping the gun, though not as much as Marx, this could be a bigger problem than outsourcing seems to be now, in the future, but then again it might not. Predictions about the end of labor probably came part and parcel with both the agricultural and industrial revolutions and to whoever experienced the transitions the predictions probably rang true only to become taken for granted by the next generations as they became acclimated to the new prosperity and focused on the drudgery of a different type of work once again.

Most likely if these predictions came true it would be much like before where new jobs that machinery are not suited for would become the mainstay of new labor markets but too just assume this will be the case seems risky because at some point in the future most manual labor will likely become obsolete and not everyone can be an entrepreneur. What is needed is monitoring to make sure that huge sectors of society are not being marginalized especially if large segments of the labor force suddenly become obsolete. If jobs were not forthcoming very soon after that point in time then it might be wise to equate the new rewards of progress into a higher minimum standard of living much like what has been happening on our planet for millennia. When the agricultural revolution occurred the entire civilization rapidly benefited from the idea of whoever discovered it and all were soon given a better quality of life same with the industrial revolution. To bring everyone up to a guaranteed basic survival income after the implementation of such a breakthrough (if no replacement work materialized) would not be very different than the benefits acquired from previous labor revolutions. The difference in quality of life between rich and poor might still be as it is today with shelter, medical care, education, and food as a new base of a step up for everyone. This would most likely happen organically as having large segments of a population (%25) without work, prospects or food would destabilize society so much that changes would be demanded by the general population very quickly.

It could also turn out that there will be 10x as many goods and services with the new jobs supervising mindless automation where all prices drop and the average consumption is driven by the middle class supervisory jobs it is very hard to concretely say what is going to happen in a capitalistic society and just because it is hard to see what is beyond the horizon does not mean that there is no job there. The big question would be if consumption could keep up with the massive efficiencies an automated revolution portends but so far in history it always has. Natural resources then human ingenuity might be the next limiting factors to overcome with education gaining greater importance.

16

If anything greater innovation will bring about new jobs, new kinds of jobs even. If some people are worried the machines are going to “take over” they can live as the Amish do.