The Obama Watch

Overdrawn at the Ideas ATM

The president's Luddite moment.

By 6.17.11

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President Obama recently blamed today's high unemployment on… automation. Yes, you heard at right. He singled out automatic teller machines (ATMs), which he said have eliminated many human bank teller jobs. Blaming an invention for job losses is a display of economic ignorance worthy of the Luddites. Not only are Obama's comments wrong at a factual level, they display a complete lack of basic knowledge about the means of human progress. For a self-styled "progressive" to make this mistake displays how bankrupt that ideology is.

For a start, President Obama is wrong as a matter of fact. From 1985 to 2002, U.S. banks added some 300,000 ATMs around the country, but also added 42,000 bank teller jobs. The Bureau of Labor Statistics predicted in 2010 that a further 40,000 or so teller jobs would be added by 2018 -- presumably not as the result of mass removal of ATMs. ATMs allow banks to employ tellers in more useful services than simply counting and distributing money, as well as serve customers during late night hours when it is not feasible to keep branches open.

Automation doesn't destroy jobs. It frees us from mundane tasks so that we can do other, more complex -- and more rewarding -- tasks. The washing machine didn't put housewives out of work; -- it enabled them to have careers. The industrial revolution allowed people to leave the fields and enter factories, where, despite popular conceptions of "satanic mills," they could earn far better livelihoods. As the great economist Joseph Schumpeter noted, the genius of the free market and the automation is that it "does not typically consist of providing more silk stockings for queens but in bringing them within reach of factory girls in return for steadily decreasing amounts of effort."

This, incidentally, is why affordable energy is important. We burn fossil fuels to provide energy so that men and women do not have to supply their labor directly. As Thomas Edison remarked, "I am ashamed at the number of things around my house and shops that are done by animals -- human beings, I mean -- and ought to be done by a motor without any sense of fatigue or pain. Hereafter a motor must do all the chores."

The progressives' failure to appreciate the value of automation is at its most apparent in their greatest invention -- bureaucracy. At a time when, by my calculations, a quarter of the American labor force works either directly or indirectly for government, the administration appears intent on increasing that number. As more and more pages of new rules are added to the Federal Register (a record 81,000 of them last year), more and more people must be employed, not by the government, but by businesses to comply with the new rules.

So far from freeing humanity from fatigue and drudgery, which is the story of automation, "progressive" policies have only added to the burden. Lip service to more "efficient" government does not obviate the fact that people have to read, interpret, and understand the regulations in the first place, under penalty of law. The more new rules accumulate, the harder this task becomes.

It is no wonder that the stimulus failed, if the President so misunderstands the way the world works. In Los Angeles, two city departments received between them $111 million from the stimulus but "saved or created" a mere combined total of 55 jobs. Such is the cost of bureaucracy.

Automation is a product of innovation, which is America's genius, and has proved essential to making our lives better. When the President denounces it as a bad thing, we may be in economic trouble, indeed.

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About the Author
Iain Murray heads the Center for Economic Freedom at the Competitive Enterprise Institute and is the author of Stealing You Blind: How Government Fatcats Are Getting Rich Off of You.