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Saturday, August 16, 2014 4:32 PM

It's Different This Time: Humans Need Not Apply; Two Possible Solutions

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On August 7, I wrote about "McCashier" Your $15.00 Per Hour McDonald's Worker Replacement.

Sure. You can make $15 an hour at McDonald's, at least in Seattle. You just have to perform better than this machine.

Many commented along the lines of "What's the big deal? It's only a cashier. There are more cooking jobs that cannot be replaced."

For example reader Chris commented ...

A McDonalds worker isn't a "cashier." The person who works the front end doesn't just take orders and money. The person who works up front also fills drinks for drive thru. They clean the restrooms and dining areas. They help assemble food if needed(dropping fries.) Does the machine do all those things? If it doesn't then it isn't really replacing anything or more cost effective then a person. There is usually 2-3 people in the back assembling food and 2 people up front taking orders, handling money, assembling trays with ordered food, preparing drinks for drive thru, etc., etc. You could get the kiosk and the stupid burger machine and still have more than enough work for those 5 people.
Really? What about robot cooks, robot greeters, and even robot waiters?

Robot Cooks, Greeters, Waiters

The Times of India reports Robots Greet, Cook and Deliver Dishes at this Restaurant in China.
It's more teatime than Terminator — a restaurant in China is electrifying customers by using more than a dozen robots to cook and deliver food. Mechanical staff greet customers, deliver dishes to tables and even stir-fry meat and vegetables at the eatery in Kunshan, which opened last week.

"My daughter asked me to invent a robot because she doesn't like doing housework," the restaurant's founder Song Yugang told AFP.

Two robots are stationed by the door to cheerfully greet customers, while four short but humanoid machines carry trays of food to the tables.

In the kitchen, two large blue robots with glowing red eyes specialize in frying, while another is dedicated to making dumplings.

Song told the local Modern Times newspaper that each robot costs around 40,000 yuan ($6,500) — roughly equal to the annual salary of a human employee.

"The robots can understand 40 everyday sentences. They can't get sick or ask for vacation. After charging up for two hours they can work for five hours," he added.
Robot Waiters

A restaurant in China is electrifying customers by using more than a dozen robots to cook and deliver food. (AFP Photo)

Robot Cooks

This photo taken on August 13, 2014, shows a robot cooking vegetables in a kitchen of a restaurant in Kunshan. (AFP Photo)

Humans Need Not Apply

Many people sent me a link to Humans Need Not Apply.

The 15 minute video is well done and very thought provoking. It's well worth your time to play it.

Is It Different This Time?

The gist of the video is that "It's Different This Time", that no matter what your job is, your job is in jeopardy.

I have stated that over the long haul, technology creates jobs, but there are periods of creative destruction where the opposite happens. For example: How many millions of jobs did the internet revolution create? Did they all vanish?

No they did not vanish, and they all won't.

Yet, we are in a creative destruction phase where computers take jobs away. Will this change? I don't know the catalyst, but historically speaking, it always has.

What about the meantime? And for those who think the setup is permanent, the problem has even more severe implications.

Many readers have written this is why we need a "guaranteed income", not a guaranteed minimum "living wage". Let's quickly dispense with such nonsense.

Pay people to do nothing and you promote doing nothing. Do we have enough energy resources to give everyone on the planet, a guaranteed "living income"?

The answer is no, we don't.

Reflections on Productivity

The natural state of affairs because of increased productivity over time is an increased standard of living, more free time, and falling prices.

Productivity and technological breakthroughs are inherently price-deflationary. 

Enter the Fed and central banks in general. Central banks are hell bent on producing 2% or more inflation in a deflationary world.

That is the source of the battle over "living wages".

The problem is money does not go far enough, rather than people do not make enough. Realistically, no one in their right mind should care if wages fall, if increased productivity makes prices fall faster.

But central banks do not want prices to fall. Nor do those who control the assets (the banks, the bureaucrats, and the already wealthy) want prices to fall.

So, with the Fed promoting inflation, bureaucrats promoting higher and higher minimum wages, and with the Fed holding interest rates artificially low, corporations have every incentive to replace workers with robots at a Fed-induced artificially high rate.

Two Possible Solutions

The solution is not higher minimum wages. The solution is not a tax on robots like Paul Krugman wants. The solution is not a guaranteed income.

The solution is to eliminate the Fed, eliminate fractional reserve lending, and give the free market a chance to create jobs at its own pace, without all this government and central bank interference.

The alternative "solution" and not one I support, is to kill off a lot of needless people by starting WWIII.

Mike "Mish" Shedlock

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