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More Robots, Fewer Jobs: capital vs. labor in production

bloomberg.com

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Re: More Robots, Fewer Jobs: capital vs. labor in production

#21

Post by dv_dt »

colorint wrote: post #6
60654 wrote: post #4

Glad to see they're framing as a capital/labor question, because there are additional important considerations about robots replacing labor, in addition to increased productivity: 1. Robots are capital, and therefore investment, while labor is a pure expense. Capital will generate income that can be reinvested back into more capital etc, generating more wealth for the owner, and they can sell those robots later to tu…

The arguably more important issue is that spending is income, in both directions. Wages are an expense to companies, but revenue to workers---and likewise, buying goods is an expense to workers and revenue to companies. Those two factors have to be relatively balanced; if you bias too far in favor of capital, you kill growth because you cut off demand for goods. And hoisting ever-increasing debt on workers only works…

> And hoisting ever-increasing debt on workers only works for so long.

I think you are underestimating the capacity for greed as well as the effect of globalization. Even if whole nations of workers are eviscerated, it is possible to sit in comfort and growing your wealth and power with little regard to the balance or even efficiency of the overall system.

Re: More Robots, Fewer Jobs: capital vs. labor in production

#22

Post by crdoconnor »

"Those increases tended to mean fewer jobs. Of course, lots of factors weigh on manufacturing employment. Foreign competition, overvaluation of the dollar and rising productivity all play a big part, too. But even after taking all those other factors into account, Acemoglu and Restrepo still found that additional robots in an area reduces workers and cuts local wages."

I'd be interested in seeing (paywall, unfortunately) how they took that into account because the last paper I read with this thesis (Michael J. Hicks and Srikant Devaraj, Myth and Reality, CBER, Ball State U) explicitly did not take those factors into account, and in fact deliberately conflated the effect of offshoring, outsourcing and automation to make their point that automation, not outsourcing was to blame.

It's worth noting the exceptionally strong political imperative to blame the effects of trade on automation given the profits involved, the strong desire of business to continue to engage in labor arbitrage & maintain cross continental supply chains. This makes automation a critical scapegoat.

More likely is that the rate of automation-related job destruction (which is about 400 years old, not 10 years old) and automation-related job creation (ditto) hasn't changed over the years, it's just that low skill technology related job creation has been moved abroad to arbitrage the wage differential and is assumed out of this study's model (correct me if I'm wrong).

For example, those million odd people working at Foxconn making iPhones are likely not counted in this study as jobs that "could have been created in America, but weren't" even though that's exactly what they were.

Re: More Robots, Fewer Jobs: capital vs. labor in production

#23

Post by djschnei »

Jabanga wrote: post #12

Industries that lose jobs due to automation cause job growth in more slowly automating industries: http://www.vox.com/new-money/2016/10/24/13327014/productivit... This has been the pattern for over 200 years of labour-saving automation: http://www.economicshelp.org/blog/6717/economics/the-luddite...

Unfortunately, this myopia is and will always be perennial. I think in large part it's a misunderstanding of what the goal of an economy should be; many think it's maximum employment - it's not. Maximum employment is a side effect of a healthy economy, not the goal. The goal of an economy should be maximum productivity. When maximum employment is the priority, you tend to get less of everything. It's a subtle difference, but with it comes an unbelievably strong basis for misunderstanding.

Would the economy be better off if we replaced excavation equipment with spoons? Surely this would create tons of excavation jobs, but would the effect ripple outwards past that specific job type? Would it be a positive ripple or a negative ripple? It's a ridiculous hypothetical, but accurately illustrates the point.

Re: More Robots, Fewer Jobs: capital vs. labor in production

#24

Post by ThomPete »

paulpauper wrote: post #14
ideonexus wrote: post #5

While the scope of the article is confined to manufacturing, which impacts less-specialized labor, I felt a sense of dread reading it for what it means for people losing their jobs to software. Fresh out of college in the late 1990s, one of my first "high tech" jobs was manually building HTML pages for job listings, copying-and-pasting advertisements from word documents all day long. One day, I recommended the compan…

that's kinda like the fallacy of composition: what is good for the individual, is not always so good for the economy

And vice versa

Re: More Robots, Fewer Jobs: capital vs. labor in production

#25

Post by coredog64 »

HillaryBriss wrote: post #2

interestingly, the most intense clusters of robots are in Michigan, Delaware and Texas. by contrast, there's not so much robotic clustering in California. also, this optimistic note: Some of the sectors with the biggest job losses were ones that didn't automate intensively, like textiles and paper products. That goes to show that keeping out robots won't necessarily protect your job.

How much manufacturing happens in California? Of that manufacturing, how much has been started in the last 20 years, and how much is left over from when the regulatory regime was more friendly to manufacturing?

Re: More Robots, Fewer Jobs: capital vs. labor in production

#26

Post by jstanley »

gech wrote: post #7
60654 wrote: post #4

Glad to see they're framing as a capital/labor question, because there are additional important considerations about robots replacing labor, in addition to increased productivity: 1. Robots are capital, and therefore investment, while labor is a pure expense. Capital will generate income that can be reinvested back into more capital etc, generating more wealth for the owner, and they can sell those robots later to tu…

>labor is purely an expense Unless you expand the view and see that an employee that gets paid has money to participate in the economy and buy your goods. Economics is a sham science.

If an employee only receives an income from me, then the maximum amount that he can spend on my goods is the amount that I'm paying him for his work.

If his work is of no inherent value, wouldn't I be better off just keeping the money rather than hope that he'll spend it all on my goods?

Re: More Robots, Fewer Jobs: capital vs. labor in production

#27

Post by msluyter »

For a mathy discussion related to this topic, I ran across this interesting and depressing paper a while ago:

http://www.danielsusskind.com/research

The depressing conclusion: " In a static model, increasingly capable machines drive down relative wages and the labour share of income and force labour to specialise in a shrinking set of tasks. In a dynamic version of the model, labour is driven out the economy at an endogenously determined rate, forced to specialise in a shrinking set of types of tasks, and wages steadily decline to zero."

Re: More Robots, Fewer Jobs: capital vs. labor in production

#28

Post by jstanley »

djschnei wrote: post #23
Jabanga wrote: post #12

Industries that lose jobs due to automation cause job growth in more slowly automating industries: http://www.vox.com/new-money/2016/10/24/13327014/productivit... This has been the pattern for over 200 years of labour-saving automation: http://www.economicshelp.org/blog/6717/economics/the-luddite...

Unfortunately, this myopia is and will always be perennial. I think in large part it's a misunderstanding of what the goal of an economy should be; many think it's maximum employment - it's not. Maximum employment is a side effect of a healthy economy, not the goal. The goal of an economy should be maximum productivity. When maximum employment is the priority, you tend to get less of everything. It's a subtle differe…

"The economy" shouldn't have a goal. The economy consists of individuals, who all have individual goals, which may or may not align with each other. But "the economy" as a whole should have no goal.

It's like asking what the goal of "nature" should be. Nature consists of individuals who have their own goals, but nature has no goals of its own.

Re: More Robots, Fewer Jobs: capital vs. labor in production

#29

Post by ThomPete »

crusso wrote: post #19

Wasn't there an article the other day on HN[1] regarding how we're nearing "Full Employment"? How does that comport with the notion that somehow our increased automation is eliminating jobs? Shouldn't we see a trend of higher unemployment as we continue to automate? The Bloomberg article seems to focus more on the impact in localized areas, but at the national level, there are reallocations of jobs to new industries.…

The jobs are mostly temp jobs not full time jobs. Bush changed how jobs are defined obama continued that with the result that 95% of jobs created since the financial cricis are temp jobs. This is a big deal in the us as it cuts of access to ex healthcare. Its very grim whats going on.
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