Lousy robots are taking our jobs

Did you think that when Jonas Salk discovered the polio vaccine in 1955, he worried about all the people he was putting out of work? The people who made, sold and repaired iron lungs. The doctors and nurses and attendants for the ill. The morticians. All those children will still die, eventually, but not for decades, and even an undertaker has a family to feed today. Did Salk ever think about that?

No, I’m guessing Dr. Salk did not worry a single second about the effect his vaccine would have on unemployment, if only because he wasn’t a sociopath.

But a writer with the truly adorable name of Chunka Mui, writing in Forbes did catalog all the people — hard-working Americans, as any elected official would call them — who will lose their jobs when another technological advance, self-driving cars, comes to market:

The fact is that a driverless car would slash hundreds of billions of dollars of annual revenue, or even trillions, from all sorts of entities: car makers, parts suppliers, car dealers, auto insurers, auto financiers, body shops, emergency rooms, health insurers, medical practices, personal-injury lawyers, government taxing authorities, road-construction companies, parking-lot operators, oil companies, owners of urban real estate, and on and on and on… Emergency rooms would lose millions of patients a year, and hospitals would have hundreds of thousands fewer people who needed to stay overnight. Health insurers would have to give up revenue as car-related injuries plummeted.Personal-injury lawyers would see car-related cases all but disappear.

Mr. Mui — I don’t know him well enough to call him Chunka, though I’d love to — isn’t being callous, just thorough. He isn’t wrong, but for reasons I’ll discuss, his point is largely irrelevant.

Automobile accidents in the US cost between $100 billion and $200 billion a year (depending on who you believe). And that’s just medical expense, property damage, and so forth. The 32,367 traffic fatalities in 2011 would presumably prefer not to have died, even if were free.

As Chunka (what the Hell) points out, “One man’s savings are another man’s lost revenue.” That $200 billion went into the pockets of ER doctors, body-shop owners, insurance companies, and so forth. Once self-driving, virtually accident-free automobiles become the norm, that gold stream will slow to a trickle.

But here’s the thing — the frustratingly obvious, utterly irrefutable fact that economists have been shouting into the ear of a stubbornly deaf world for 200 years — one man’s savings may be another man’s lost revenue, but they are the gained revenue for a third man!

So a computer-driven car brakes quickly and avoids running me over, and therefore I don’t have to pay $1,000 to an orthopedist to set my broken leg. I don’t celebrate my narrow escape by piling that thousand dollars in a little heap and setting it on fire. No, I spend the money on steak or a vacation or going to 130 movies. The $1,000 the orthopedist didn’t make goes towards creating jobs in ranching or the hospitality industry or Hollywood. The doctor is worse off but I am better off for not having my leg broken, and the cowboys, desk clerks, and Brad Pitt are better off for having my business.

The difference may be that the orthopedist knows why he’s losing out. This is his business, after all. He follows the numbers, he knows a precipitous drop in traffic accidents means an empty waiting room. He might have to become a dermatologist, or a plastic surgeon, or heck, a garbage man. He knows there’s much less money in orthopedics than there used to be.

The people raising beef or operating hotels of course don’t know why their business has suddenly picked up. The effect is too removed and, as it is spread over the whole economy, too subtle to be tracked down.

A blogger with the disappointingly average name of Andrew McAfee gets this important fact explicitly wrong. He shows a drop in manufacturing — well, not a drop but lackadaisical growth and concludes:

The number of hours worked, however, has increased by only 2.8% over that same time, and the total number of jobs by 1.9%. Those latter two numbers are pretty close to zero. Is it so hard to believe that a realistic future combination of fast automation and relatively slow GDP growth could cause them to turn negative?

So if we assume that automation destroys jobs, is it unreasonable to believe that someday automation will destroy jobs? No, Andrew, tautologies aren’t hard to believe.

But his antecedent is off: automation, and technology generally, doesn’t destroy jobs, it destroys job categories. Someday, the growth in manufacturing jobs might in fact turn negative, and automation might be part of the cause. However, the very savings those lost jobs created becomes demand for other jobs in other categories: service jobs, or retail jobs, or whatever.

Obviously, if it is your job that’s at risk, you should pay close attention. If you’re an orthopedist or a factory working or a car-insurance agent, you better be thinking what else you do if the machines make your current job obsolete. The good news is, there will be plenty of jobs out there — those people not buying car insurance and paying off medical bills will be eager to hire people for other stuff.

And really, we’ve been having this same argument for 200 years. The Luddite side, those who believe that technology causes unemployment, has been perfectly consistent in two ways over all those years: they’re always wrong, and they never give up.

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7 thoughts on “Lousy robots are taking our jobs

  1. You’re right…but the problem is that this is all going down at an accelerated rate.

    Before, one could plan out a career, make the required sacrifices for it (education/training, for example) and if that job was going to be phased out due to technological paradigm shifts it would happen within a generation, mostly. So a buggy whip manufacturer’s job might go away within his lifetime, but that mostly would impact the next generation of would-be buggy whip manufacturers more than him.

    However, technologically-caused paradigm shifts in the labor markets — especially automation — is not a linear phenomenon but a exponential one. For the buggy whip manufacturer the pace of change made it seem linear. But today, it won’t. Such exponential progressions on a graph look like a hockey stick. We are now at the part where it is starting to shoot straight up on the ‘stick’ end with regards to automation.

    That means within the next 20 years we’ll see massive amounts of change…more so than we saw in the previous 40. The end game will be an automated utopia of sorts, but the path between now and then will be very wrenching for people. It is that fact that has so many concerned. I know I am. The problem is that many people just can’t logically differentiate the forest from the individual trees like I just did and so sign up to generic Ludditism and all its inherent lunacy.

    What we need is 1) massive economic growth (like 6% annual increases in GDP at least) and 2) more distribution of ownership of income-bearing capital investment. My currently favorite solution to providing both would be some form of applied binary economics like Capital Homesteading. One book that covers very ingeniously vis a vis specifically to the automation issue is Path to a Better World.

  2. seems like just another variant of the ‘broken’ broken windows economic model….

    ‘quick, pour some more of that cow’s milk into the field so we can get prices up’

    i have a slightly different view on this than your previous comment.

    technological advancements make things better/cheaper/faster for all, and thus create a world that is inherently deflationary. In other words, ‘savings’ from work when you are young SHOULD be sufficient to sustain your lifestyle later in life…as advancements accelerate and thus necessitate more and more change in a working person’s career, the advancements SHOULD also make it very inexpensive to have a similar lifestyle (better, cheaper, faster).

    but they don’t.

    the world is actually inflationary…

    why?

    because if money becomes worth more over time if left in the mattress, it’s difficult to convince savers to ‘chase yield’ and take risks in the marketplace in an effort to stay even or grow the value of their savings. so the question is: who benefits from forcing people to take risks in the marketplace with their excess work product (savings)?

    central control over the creation/value of savings/exchange is the original sin. all the other exponential growth planning/mistakes (like social programs in the us budget) grow out of that original sin….and THAT is what makes a ‘hockey stick’ of accelerated technological change anything other than good news.

    if you’ve read this far and you don’t agree, don’t worry. you’re not alone. i’m not sure i’ve convinced anyone to agree with me yet. :-)

    • Yes, the world is naturally deflationary: if the supply of money — which is the demand for goods — is kept more or less constant while natural improvements in efficiency increases the supply of goods, the price level will drop.

      Our GDP has doubled since 1995. If the money supply had held constant, a dollar would be worth roughly twice as much.

      But the Fed regards a slightly rising price level to be a good thing — and they may be right — so they “inject liquidity” into the economy.

      I’m not aware of any country that had long-term deflation, and I’m not sure what would happen. Would you just be in a permanent liquidity trap? Or some kind of reverse liquidity trap? My brain is hurting.

      • the fed regards ‘slightly’ rising prices as a ‘good thing’ because it forces people into the ‘market’ — chasing yield, and generally subjecting oneself to all manner of graft risk and scams — because they are the ones that OWN that racket.

        the fed is owned by banks and bankers.

        if there was deflation, you’d put your money in your mattress and be set when it was time to retire. that serves everyone EXCEPT FOR — bankers — and people who live off of administering ill-conceived ponzi — er — i mean ‘social’ programs predicated on ‘semper-growth’….which makes the govt borrow more money…which helps…oh yeah, that’s right…bankers again. hmmm…

      • i did a poor job of pulling that together to make it relevant to your post…but…in short, without the ‘artificial’ inflation, a worker displaced by massive and rapid technological change would have the offsetting benefit of all of his previous ‘saved labor’ be worth many times more than when he had originally performed it.

  3. Technology brings seismic shifts in job categories, and during the transition individual jobs seem to evaporate. But truly, the way that people actually live their lives has only shifted a few times in human history. We may be on the brink of another one, but I am not so sure.
    The first shift being the agricultural revolution of 10-12,000 years ago, when everyone suddenly realized that it would be a lot easier and more reliable if we planted some of these plants we like nearby, and in sufficient quantities, rather than run around all day trying to find them. After all, if we plant them ourselves, we always know where they are. The same goes for animals…why chase the big scary ones, risking life and limb, not to mention dinner? How about catching some of the little ones and keeping them corraled, til they produce some edible offspring? Sure, some of them are not easily corraled, or controlled, but several of them are. Just saying.

    And, as a result we have communities, and a need for organization, a systemic power structure, money. Permanent living spaces, places to conduct trade, plus time to decorate and ponder the meaning of life. Seismic shift.
    Over the next several millenia, nothing really changes all of that. The power structures change, the decorations and the philosophies change, and we as humans experiment with a number of different power structures, but basically, a good portion of the planet’s occupants are farmers, a smaller group consists of trades and artisans, and a finally, a small, powerful ruling class. The one notable exception towards the end is the United States, with its uniquely large class of traders, and they upset the applecart with their quaint notion that the large middle class should choose the ruling political class. This rummbling spreads, but does not cause an immediate seimic shift, until—

    150 years ago, when the control and use of energy and motion cause a period of rapid expansion and economic change, resulting in for the first time, a minority of people doing the farming, and the majority doing the manufacturing or management of goods and services. Since then, very little has changed. The decorations are different, and the philosophies have shifted once again, but the reality is that today’s 16-year-old has a life that while on the surface seems to be remarkably different from his great-grandparents’ lives at 16, is almost identical.
    We all get up in the morning, and the majority of the household leaves to conduct business, whether that business be school or work. We all come back around dinner time, after which we eat something, do domestic chores, prepare for tomorrow’s work or school, and spend some time entertaining or communicating with friends and family. Often, electronically. The great grandparents sat around the radio, and the 16 yr old has a screen with a multitude of applications, but his life is essentially the same as Grandpa’s. The one thing that has changed is the speed at which he receives that information and entertainment. The increased speed makes room for more of it to choose from, but nonetheless, he has homework and chores, has a favorite song, and hopes to hook up with that cute girl. And he probably is not a farmer.

    The next seismic shift will once again have to change what the vast majority of people do every day to aquire goods and services. There are rumblings, as we do not have to actually “go” to work, in some sectors. There are additional deep rumblings regarding the technology of how goods get produced and serviced. The next century may indeed bring profound changes in that regard. But the type of seismic shift to humanity that changes how and where we live, the entire power structures of human society, well, I think we are a long ways away from that. And I’m not sure we should be so anxious to see it.

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