Don’t Fear A Robot Apocalypse; They’re Here To Help
If you don’t read Matt Yglesias, you’re doing yourself a big disservice.
Skynet Without Guns Is Your Best Friend
A lot of people have a bad feeling about productivity gains. The fear that workers will some day be replaced by robots and will be out of a job sounds like common sense but, as in most cases, our senses are too commonly wrong.
I think a better way of looking at this is to say that productivity is increasing all the time in the American economy. And technologies that increase productivity always do displace some workers.
Wait, didn’t I just promise you that productivity won’t displace workers?
Did I lie? Would I lie to you? (Don’t answer that.)
So what about those job losses. Do historical surges in productivity lead to job losses or not?
…that’s just not there in the numbers. What’s more, there’s really no use in fearing or not fearing a possible future technology-driven surge in productivity. The question to ask is what should we want to do if one happens.
One thing that’s obvious is that you have to continue to get macroeconomic stabilization right. A productivity surge plus deficient demand is a recipe for an awkward deflationary period in which many people will suffer. Something like that happened during the Long Depression of the 19th century, and it’s as avoidable as it is undesirable.
What does this mean? Let’s dissect this.
Where Matt says “have to continue to get macroeconomic stabilization right,” he’s saying that we need to make sure we maintain economic growth whether we have productivity gains or not.
“A productivity surge plus deficient demand is a recipe for an awkward deflationary period in which many people will suffer.”
So, if we have people replaced by robots, yes people will be out of a job! It does make intuitive sense. Again, did I lie? No…
Because we don’t have to leave it at that. We don’t have to replace people with robots and leave those people to rot.
What happens, then? We get “macroeconomic stabilization right.”
Say 1 million people get replaced with robots. This would lead to “an awkward deflationary period” because 1) the prices of goods become cheaper due to lower production costs (thanks robots!) and, 2) displaced (by robots) workers will not have an income to buy things (thus lower demand, which means even lower prices of goods).
You would think cheaper stuff is good, but… if you’re a business owner, lowering your prices lowers your revenue – and lower revenue means you’ll have to pay your workers less. Try telling your workers they’re going to have to take a pay cut. Will you accept that? Not easily. Wages are sticky in the short run. Because of this, employers will likely have to cut production and jobs, leading to even more deflation.
However, if we get “macroeconomic stabilization right” through monetary policy, such as increasing the money supply in order to increase demand for goods, those originally displaced (by robots) workers will end up finding jobs again in a different firm (or even in the same one, in different positions).
Here’s where the party gets started!
The more productivity we get, the more leisure time we will have.
The last leg of the stool here is that a surge in productivity should increase the amount of time we spend not-working. It’s not sketched into the fabric of the universe that people have a five-day workweek. The weekend is a social invention. Conceivable future people should have a three-day weekend every week. Or maybe just more holidays and more vacation days. If the productivity surge isn’t paired with a big increase in life expectancy, we should start retiring sooner. Not only is leisure valuable on its own terms, but increased leisure will reduce some of the environmental pressures associated with higher productivity.
Three-day weekends every week?
This makes sense. With higher productivity, human beings have to work fewer hours to produce the same number of goods. We can choose to produce more goods by maintaining hours worked, which means more people will be able to buy more goods. Or we can take vacations, work short work weeks like the socialists in Europe do, or retire earlier.