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Does Automation Lead to Mass Unemployment?

TsaiDec 20, 2016, 4:52:57 AM

The fear of automation has been with us since the dawn of the industrial revolution. For over two hundred years, people have been saying that automation would lead to mass unemployment, yet there has never been an example of where this has been the case. When Man invented the combine harvester, agricultural workers moved into factories. When Man invented the automated assembly line, factory workers moved into offices. When Man invented the computer, office workers moved into the internet. When Man invents AI-managed networks, internet entrepreneurs will find something else to do. There is no limit to our imagination. There is no limit to the things we want. There is no shortage of work to do. Knowledge and creativity is an infinite resource, and we are its only source.


Certainly, there have been times of high unemployment and economic downturn. The Great Depression comes to mind. The high unemployment rate during this period was not the result of automation. Rather, it was the result of bad economic policies and general business cycles.


Today, we are now entering a time of rising unemployment. Is this the result of automation? Or is this the result of companies moving their production overseas in order to evade unfavourable taxes and regulations? If you think the answer is automation, explain why companies are moving their factories out of industrialized countries where there is generally more automation, and into developing countries where there is little to no automation. How are poverty-stricken, under-educated people able to out-compete machines?


Think about it. As more and more businesses automate their production, goods and services will become cheaper and cheaper. Prior to mass automation, you would not have been able to afford to live on a lower wage. Now that the cost of goods and services is so much lower, you can now afford to cut your wage and become more competitive against the machines. This is how low-skilled labourers can out-compete machines, and this scenario assumes that no new high-value jobs are created in the intellectual or creative industries (which is a big assumption that is guaranteed to be false due to historical precedent, by the way).


Moreover, it is not necessary for people to directly compete against machines. There will always be something that a human can do more cheaply than a machine. For example, who's going to replace a janitor with a machine? You'd need to build a humanoid robot, which is very difficult and very expensive. Alternatively, we'd have to build machinery into each and every room such that the room would clean itself when not in use. This is all very expensive, highly impractical, and we'd be better off just hiring someone to do it.


Let's take another example. Very soon, cars will be self-piloting. Anybody who's a driver is at risk of losing his current job, but there will always be a need for someone to take control of the wheel in case the electronics fail. Did you know that airplanes can already fly themselves? Pilots just have to make sure everything goes smoothly, and they have to handle landing and takeoff. The same will be true for cars. Somebody needs to be present in case the self-driving feature fails. Somebody needs to clean up after some drunk Uber passenger barfs all over the backseat.


It's true that Uber employees won't be paid as much in this future because they're now doing less work, but that's fine. The cost of living is now cheaper due to driverless cars, so they can still live comfortably even with a wage cut. With the advent of self-driving cars, you won't even need your own car anymore. You can Uber your way everywhere, and you can do away with car insurance, high gasoline prices, car maintenance, parking fees, and traffic tickets. There would be fewer accidents and fatalities on the road, which will further decrease the cost on society.


In summary, automation will create such an abundance of goods and services that the cost of living will be significantly lower than what it is today. The more automation we have, the less expensive it will be to live. The lower cost of living will make it possible for low-skilled workers to do less work, work fewer hours, and get paid less, and still be able to live comfortably. As an example, medieval blacksmiths were highly skilled workers who needed to be physically strong. Modern steel-workers don't need to be as skilled, they don't need to be as strong, and they don't even have to work as many hours. The more automation we have, the easier it will be for low-skilled workers to survive. For highly creative, intelligent and motivated people, they will create entire new industries through the power of knowledge and imagination. Things will keep getting better.


But... this bright future can easily turn into a nightmare if the fear-mongering over automation causes the population to vote for government intervention. The government will impose a high minimum wage in order to counter the deflationary pressure on wages caused by automation. Low skilled workers will now be punished for offering to work for a lower wage. The government will institute massive welfare programs, and this will trap low-skilled workers in a state of permanent unemployment. As the economy tanks, and large numbers of people fall into the welfare trap, the government will nationalize all the factories and businesses and put the machines to work for the 'common good' of the people. Business owners will see this takeover coming from a mile away, and so they will not invest in automation only to have their machines stolen from them. Goods will no longer get cheaper. They will now become more expensive. Innovation will grind to a halt. Our technological civilization will enter into a period of stagnation, and then it will collapse. It will be a dark age of the likes not seen since the actual Dark Age.


People, automation is a good thing. Automation will lead us to a better future. On the other hand, the government is bad. The government will pave the way to hell. If you really want to worry about automation and unemployment, fine, just be aware that the government generally causes more problems than it fixes.