Here’s a counterpoint to my previous post. We hear much about growing income equality, but generally in terms of greed and class warfare. We also hear much about the decline of manufacturing jobs in the US, but we rarely hear that our manufacturing output is actually increasing. What’s happening is that machines, including robots, are displacing human labor.
Christopher Mims has chronicled this process of displacement by machines in
He describes the emergence of a new robot called Baxter that quickly learns to do simple tasks and costs only $22,000. Mims quotes Erik Brynjolfsson, director of MIT’s Center for Digital Business, who worries about the effect of increasing reliance of technology on the increasing income disparity that is emerging worldwide:
“As an economist, it’s not a bad thing when we get more stuff for less work,” says Brynjolfsson. “That’s what the system is designed to do. The issue is, can we reinvent and redesign our economic institutions to keep pace with this change so not all of the benefits accrue to a very small slice of people?”
Here’s an example of displacement of human labor by technology that everyone over the age of about 15 can remember. When we moved to our small town eleven years ago, there existed about 6 video rental stores. Each of these stores employed several people. I have no statistics, but let’s suppose the number was about 8 per store. That’s 48 jobs.
None of these video stores remain. What happened? Principally, Netflix. Netflix exploited a number of weaknesses of the bricks-and-mortar approach to video distribution. First, they eliminated the need for travel entirely. Renting a video from a store required a trip there to pick it out (and usually not with the opportunity to browse availability online beforehand), and a trip to return it. Netflix disassociated travel from video rental.
Second, that return trip generated a great deal of revenue for the video stores due to late fees. I hated, loathed, and despised late fees. They often more than doubled the price. Netflix ingeniously exchanged this for a subscription. I could keep the video as long as I wanted. There was still a penalty; I couldn’t get the next video until I returned the one I had, and I still had to pay the subscription fee. But because the subscription happened automatically (i.e., by software robots rather than by an attendant swiping my card or my cash), it was less painful.
Not only did Netflix somehow figure out how to get the post office to deliver movies on time, they eventually eliminated the need for any wait at all for large swaths of their content via online streaming.
I got convenience and easy access to the world of fine video content, but it was at the cost of roughly forty-eight jobs locally, a number that must be astronomical when multiplied to every city and community across the country. We’ve seen this happen in many other retail fields; think Amazon.
What to do about this? All the cries about the evil one percent are doing nothing to slow the process. In fact, I don’t want to slow the process of technological innovation. But I also don’t want to see millions, perhaps billions of people robbed of the opportunity to do meaningful work, to be productive. I’m skeptical of governments’ redistributive policies. The benefits of these policies accrue mostly to government — the hiring of bureaucrats searching for ever-more-intrusive ways to restrict human liberty. Nor do direct payments to individuals lift them out of poverty, and certainly do not provide them with productive work, in most cases. Instead, they promote the development of generations of free riders. I’d like to believe that Gene Roddenberry’s Star Trek vision of a future in which technology meets the basic needs of all people displaces the need for money, and people are free to pursue their interests. I can’t, however, see the pathway that gets us there.