While browsing CBS's 60 Minutes segments last night -- in my defense, the informational content and interview subjects are often interesting -- I was reminded that expecting a journalist to consistently apply economic concepts is like expecting an octopus to play tennis. Yes, technically they can take a few swings, but going through the motions of a game is very different from understanding it.
Behold Steve Kroft, longtime CBS newsman. Last night, to my horror, I discovered that on January 13th he broadcast a story asking, “Are robots hurting job growth?” This question has badly tested my Lenten resolution against profanity. The short answer is, “No.” The slightly longer answer is, “No, you idiot.”
Robots are ultimately a form of technology. Kroft’s piece focuses on machine learning, which allows computer systems to use trial and error to understand how to process information and complete tasks. His main interview subjects are two MIT business school professors who published a book called Race Against the Machine in 2011. Their thesis is that robotic systems, which can be hardware or solely software, are fundamentally undermining the labor market’s recovery from the Great Recession. Robots are permanently replacing mid-skilled domestic (and, increasingly, unskilled foreign) workers; the rate of technological innovation is so high that workers are having trouble retraining and adapting to the changing economy. Though the story also notes that U.S. manufacturing employment has increased in the last few years, it emphasizes a narrative worthy of Ned Ludd.
The Luddites were wrong to destroy looms two centuries ago because technology increases productivity, and thus wages, but also creates new opportunities and industries that ultimately dwarf the short-term losses of creative destruction. It is this process of radical transformation that yields radical increases in human welfare. It is this process that has elevated the current poverty line standard of living above that of John D. Rockefeller 100 years ago, and elevated his living standard above that of the Sun King. Innovation is a positive-sum process that creates opportunities. Even Kroft noted that in his interview of Messrs. Malthusian.
In theory, technological innovation could accelerate to a point that truly outstrips the ability of our current economic institutions (broadly defined, e.g. markets) to adapt. However, this is most reminiscent of the singularity, a self-sustaining evolution of technology predicted in the very near future by radical futurists. This revolution is associated with an end to economic scarcity as we know it, the fundamental problem of economics.
People respond to incentives: For example, a journalist named Steve Kroft should not be surprised to find that a vocal critic of co-location high-speed traders who “exploit a technological advantage” cannot compete with them. New technology tends be misunderstood and thus greeted with hostility. It is resented by those who cannot compete and feared by those who feel directly threatened -- the intended audience of Kroft’s ludicrous robot story, which ends with clips from 2001: A Space Odyssey. The MIT professors offer the silver lining that robots will probably not become self-aware, which would allow them to disobey human commands.
I can do a lot better. To reiterate, technological innovation increases productivity, which increases the value and wages of labor while decreasing the costs of production, and therefore the prices of products. It also creates new opportunities for entrepreneurs to conceive novel arrangements of resources. This is how Henry Ford employed hundreds and thousands of people, how Google created its constellation of free services. Machines tend to supplant humans in dangerous, dirty, or repetitive tasks. The record of history shows that what is gained ultimately trumps whatever is lost. I, for one, welcome our robot “overlords,” because they will help humanity become overlords of our world in way our ancestors could hardly conceive.