Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Against the High Tech Luddites
Several of the United States' high technology billionaires have apparently recently fallen prey to the foolish arguments of neo-luddites. For instance, Bill Gates has recently proposed a tax on robotic automation. Economists have rightly rejected these claims. Indeed, if we want to have rising incomes the best thing is for robots to take more jobs. That's how we become more productive. And ultimately how living standards can rise. It is this kind of ingenuity which has kept Malthus' grim prognostications at bay in much of the world for the last two centuries.
At the present moment, indeed, the US is facing a crisis of low productivity growth. The robots are not being invested in rapidly enough. The graph below shows the BLS estimate of non-farm productivity growth over time. The last several years have been ones of low productivity growth. The five year average rate of productivity increase is among the lowest in the time series.
How will robots make us richer? Let's consider the example of transportation. Suppose that in a few years self-driving trucks become a reality. With a self-driving truck, a truck driver will be able to operate the truck almost 24 hours a day. Most of the time he or she will be sleeping or doing other things. But when the load needs to be delivered or some unusual circumstance arises, the driver will take manual control. The result will be a massive increase in the productivity of the trucking industry. This will have two effects. The price of shipping will drop. And the profits of those operating the new more efficient trucks will increase. The net result will be good for the economy.
Let's not listen to the neo-luddites, not even if they made billions in tech. Bring on the robots!
The key problem is not that we have too many robots or that rising productivity is taking jobs. The data just doesn't support that notion. As I've noted previously, the growth in China's urban manufacturing employment alone dwarfs the declines in US and other western manufacturing employment. The robots are not the problem. The problem is that not enough is being invested by US businesses in making US workers more productive through new technological advances and automation. It is the construction of new plants, offices, trucks, and equipment using the best and most modern technology that will raise the incomes of US workers.
Comment by Bruce Bishop, 2/27/2017:
When you export all of the labor intensive manufacturing,, what you have left is highly-automated manufacturing which, naturally, generates more value per hour of labor. It is simple-minded to say that this represents an increase in productivity.
Most of the automation and robotics, which displaced American factory workers, were in place by the mid-eighties, before any U.S. jobs were offshored to China.
The biggest breakthrough was Surface Mount Technology, where the old labor-intensive "through hole" stuffing of printed circuit boards was replaced by a high-speed "robot" that placed the components on the circuit board at blinding speed, and with near perfect accuracy. This had become common by the mid eighties.
The automatic spreading of fabric on forty foot tables, followed by computer guided cutting of the pattern pieces for apparel was around in 1979, as I saw it myself. In 1982, I saw teachable robots painting poster sized cartoons of the Roadrunner, and Wiley Coyote, at a trade show. That same year, I saw similar robots painting the tops of washing machines at the General Electric Appliance Park plant in Louisville, KY.
There is no way to automate the actual sewing of apparel. It requires skilled operators, who possess a high degree of dexterity. Likewise, there is no way to automate the assembly of complex devices involving many parts, or the threading and connecting of wires.
As an Industrial Engineer for several Fortune 500 manufacturing companies, my focus was to look for, and to justify, the use of automation and robotics to reduce labor cost. By 1985, we had squeezed as much labor out of manufacturing as possible. It is only the theorists, who know nothing of manufacturing, who imagine a factory full of robots.
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