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Tuesday, August 21, 2012 2:55 AM

Part II - Robots to Rule the World? Taking All Jobs? Replace Women?

In part I of Robots to Rule the World? Taking All Jobs? Replace Women? I took a deep look at numerous robot and computer technologies that are displacing workers at a rapid pace.

Will Robots to Rule the World?

Right now it appears that way. Manufacturing may be returning to the US, but automation has eliminated the human workers.

And it's not just manufacturing. For example, consider, JCPenney to Eliminate All Checkout Clerks, Instead Using RFID Chips and Self-Checkout.

If that idea catches on for major retail stores, tens-of-thousands of jobs will vanish. Will anything replace those jobs?

Two Viewpoints

What follows is a pair of widely-differing viewpoints from an email exchange with a couple of friends regarding technology and robots. One friend talks about a collapse of society, the other sees unimaginable numbers of jobs in industries we cannot even conceive of now.

Collapse of Society

One friend writes ...

When the vast bulk of production and services can be produced and delivered by computers, robotics, smart systems, and ubiquitous computing devices with only a small fraction of the human labor force we have today, we have no choice but to devise a system of income creation and distribution radically different than we have today or face unprecedented scale of labor underutilization, loss of purchasing power, collapse of the economy, and the risk of systemic societal collapse.
Unimaginable Numbers of Jobs in Unimaginable Industries

In response a second friend commented ...
10 and 20 years from now, there will be jobs we cannot even conceive of now. Just as today there are jobs and industries no-one could conceive of 20 years ago. Only 70 or 80 years ago, about 70% of the population worked in agriculture. Today not even 2% of the population works in agriculture and it produces an output that is an order of magnitude greater. This is the very definition of economic progress - to free up people from the drudgery of manual labor, so they have the time to do things that add far more value to our world.

When the car was invented, all industries concerning the horse and horse-powered transportation practically disappeared, except for the remnant that still exists today to serve the horse leisure industry.  Should we have opposed the invention of the car? Luddite visions of increasing automation destroying jobs forever and ever all rely on a fundamental fallacy, namely that the economy is static. The economy is however not static, but highly dynamic. If the Luddite version of history were correct, we would all be better off if we were still living in pre-stone-age conditions. After all, the invention of the first tool surely destroyed a number of stone-age jobs.

My assessment is also highly personal. Not even one of the jobs I am doing today would be conceivable without the inventions of the past 20 - 30 years, i.e. the PC, the internet, modern software, cheap electronic devices of all kinds, , free information at my fingertips, and so forth.

Sure, I could in theory do all I am doing now in some kind of variation that would take much more effort, cost hundreds of times more money, and I would entirely depend on the kindness of middlemen willing to market my output.

Since the internet has enabled me to get to know all those who hire my services today. I would be forced to do some sort of uninteresting provincial work, forever constricted by the fact that I could only afford a very limited version of the machinery that is at my disposal today.

My health does not allow me to engage in many tasks. I would be totally useless as a farmer. So when you tell me how modern technology destroys jobs, I must point out that it has created all of mine.
Case for Optimism

I completely understand both viewpoints but side with the second with a caveat about government and Fed interference in the free market.

I too am biased by personal experience. I made a living at computers for 20 years, then remade myself out of necessity. I could not have done it without the internet.

As a side note, if anyone told me at high school graduation that I would be writing for a living and have an international audience I would have responded they were out of their mind.

Looking back a couple of decades, the internet, and PC revolution created millions of jobs.
Currently, technology is at a saturation point of sorts where further advances generally cost jobs.

Yet, I believe that some new technology will eventually come along that will again create enormous numbers of jobs. I strongly suspect it will be energy related.

In the meantime, however, until something does come along, we are in a creative destruction phase in which technological advancement destroys more jobs than it creates.

Unfortunately this current phase can last quite some time, perhaps even a decade or more. Those looking for jobs now do not have a decade, and the wait is extremely painful.

Case for Pessimism

Technology cannot be stopped, and advances will lead to a new source of jobs eventually, but governments, fractional reserve lending, and Keynesian madness are making a mess of things now.

The irony is the cheap money the Fed supplies (allegedly to create jobs), instead creates huge incentives for companies to shed workers while brutally punishing savers on fixed incomes.

Robots are not inherently cheap. However cheap financing can make them seem so, even to the point of encouraging outright malinvestment to shed workers.


The case for pessimism is not that robots will rule the world, taking all the good jobs that humans need, but rather all the cries for the government and the Fed to "do something" leads to trade wars and other inept policy decisions setting back the global economy for a prolonged period.

Mike "Mish" Shedlock
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