Economics, Pethokoukis, U.S. Economy

How to stop the robots from taking all our jobs

Image Credit: Cleveland Fed

Image Credit: Cleveland Fed

For more than 200 years, the Luddites have been wrong. Technological advances have created a far wealthier West and millions of new jobs. As machines became more capable, so did humans, moving up the value ladder. But must it always be so, specifically the impact of automation on employment? “There is no economic law that says that everyone, or even most people, automatically benefit from technological progress,” write MIT’s Erik Brynjolfsson and Andrew McAfee write in Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy.

The disconnect in recent years between, on the one hand, rising stock prices and corporate profits and, on the other, falling median incomes and lackluster job growth, seems to give some credence to the idea that the Luddites weren’t wrong, just early. Financial Times columnist Edward Luce, for one, seems persuaded that “the spread of the robots will leave a large and growing chunk of the US labour force in the lurch.” Health care and education are just two low-productivity sectors that seem fertile ground for the future penetration of both robots and digital technology.

Assuming the answer isn’t to smash the machines, or at least unplug them, what can we do to create an economy that provides plentiful jobs and rising incomes? The good news is that the right policies to deal with technological acceleration are pretty much the same as if you’re combating technological stagnation. Brynjolfsson and McAfee offer a list of ideas, mostly centered around education and entrepreneurship, that work either way and could appeal to both the left and the right.

Among them: 1) pay teachers more so better students want to become teachers; 2) hold teachers more accountable for performance by eliminating tenure; 3) encourage more high-skill immigration; 4) create special visas for entrepreneurs; 5) teach entrepreneurship throughout higher education; 6) create a database of “startup-in-a-box” templates; 7) lower governmental barriers to starting a business; 8) upgrade the nation’s transportation, energy, and communication infrastructure; 9) increase government funding for basic research such as that carried out by DARPA and NIH; 10) resist efforts to regulate hiring and firing; 11) lower payroll taxes; 12) decouple benefits, such as health insurance, from jobs; 13) don’t rush to regulate new innovation business structures such as crowdsourcing; 14) eliminate inefficient, crony capitalist distortions such as the home mortgage deduction and the Too Big To Fail big bank subsidy; 15) shorten copyright periods and increase the flexibility of fair use.

In addition, it may become more important for people to generate income from capital, not just labor, if machines depress wages over the long run. That’s right, a return to the Ownership Society. A good first step would be to transform the income tax into a consumption tax by no longer taxing capital income. And we should make it easier for average families to own stock. But that’s becoming harder to do with many companies going private. Noah Smith,a finance professor at Stony Brook University, recommends reforming regulations like Sarbanes-Oxley “that make it risky and difficult to go public.”

Another option, suggested by economist Tyler Cowen, are so-called universal 401(k) plans where government would help fund tax-free retirement accounts for lower-income Americans, matching personal contributions to those accounts. “A fiscally responsible universal 401(k) plan would not make everyone happy. Libertarians and conservatives would be suspicious of government-created accounts. Liberals might not like freezing or reducing future expenditures on Medicare and Social Security.”

If we are really racing against the machines, time to leave the starting blocks.

39 thoughts on “How to stop the robots from taking all our jobs

  1. So…(disagreeing with Tyler Cowen)…we are supposed to trust the govt to fund 401ks, keep them safe like the Social Security “lock box,” not have them steal from it nor track us? And not say they have the right to inspect ALL 401ks? Wow!

  2. With robots etc, the cost of producing goods will go way down. Consider that we may heading into an era of abundance rather than scarcity, the way we humans have always lived. Read the book “Abundance” by Diamandis and Kotler. If we do reach abundance, who we are and the way we live will change drastically!

    • I read that book, and as someone deep in the trenches of computing and technology I had some serious issues with it.

      Especially galling was their assumption that computing would be enabling the world and Moore’s Law would continue unaltered. As someone working on the front lines, Moore’s Law broke 5 years ago, and it’s only slowing down more as we go on. There are fundamental limits we’re hitting: transistors are 160 atoms wide and have a vertical dimension of about 20 atoms right now. When the width hits 50 atoms or the height hits about 10, all hell breaks lose and we’ve got quantum devices and probabilistic computing in our future and nobody knows how to handle that yet.

      And that’s just the start of my complaints. I like their optimism, but their growth equation isn’t right.

      • That’s because it is very hard to raise money for new hardware start-ups. I know, I own one of the few hardware companies who have managed to survive, however we have had to adopt strategies that have slowed our entry into the market just to stay alive. SarbOx has been horrible for companies that need patient investors and Dodd-Frank is unchartered territory. We spend more money on lawyers than prototypes. They’ve also changed the patent laws in a way that benefit large corps over small inventors. The tech industry cannot continue to innovate on software alone, there needs to be major hardware innovations to support advancement but many investors do not see this.

    • A just machine to make big decisions
      Programmed by fellas with compassion and vision
      We’ll be clean when their work is done
      We’ll be eternally free, yes, and eternally young

      What a beautiful world this will be
      What a glorious time to be free

      Donald Fagen, “IGY”, 1982

  3. Once again we have well intentioned ‘experts’ attempting to deal with our problems in the same old hackneyed remedies — a few of them are good. It only shows a lack of understanding about our economy and society. See my blog: (Google search on) Economics Without The B.S.: Supply-Side Economics vs. Demand-Driven Economics. We will not fix our economy, or society, by handing out tickets to the Gravy Train. We need to tap into the American culture and way of life that wants to be challenged, explore, and innovate. WHERE IS THE DEMAND?

  4. Solving the teacher issue has two simple components first increase standards to enter Education Schools and restructure their programs so graduates have a double major one in edcuation and one in a disclipine.

    • Solving the teacher issue has two even simpler and significantly more cost effective components.

      1 – Eliminate “Schools of Education”. Require a real degree and have one semister of classroom management courses followed by supervised teaching.

      2 – Eliminate the NEA and AFT. No unions allowed.

      Then, if you really want to soup up the process, eliminate the US Department of Education and move the actual management of schools, including curriculum, to the local level.

  5. I think the challenge robots pose should not be taken lightly. It’s too easy to assume that markets will adjust and workers will merely become more productive while manufacturing costs go down. It’s been true in the past that some new technology might allow a worker to do their job more effectively, but robots might be able to do that workers job entirely. I’m afraid that if we reach this point in our technological history with a glut of unskilled workers, those workers may not just find themselves unemployed, but unemployable.

  6. “Another option, suggested by economist Tyler Cowen, are so-called universal 401(k) plans where government would help fund tax-free retirement accounts for lower-income Americans, matching personal contributions to those accounts.”

    Helping individuals fund their own accounts is infinitely preferable than the government administering and controlling them – giving people ownership, even with charity, puts them more in control of themselves and leaves government less in control of them.

  7. I build automated systems. Out equipment replaces humans, who would otherwise do meaningless repetitive work. It is a noble job as for every human we replace, we employ several engineers, scientists, technicians, and the SG&A portion of the business.

    May not seem like much, but employing scientists and putting non-highschool degreed people out of work is a pretty good cause.

    Not being mean, just looking to advance the species.

    True Story.

  8. Make the copyright term the same length of time as patent protection. Start paying engineers like attorneys, and our creations may spare you.

  9. ” 1) pay teachers more so better students want to become teachers”

    How does anyone know how much a teacher should be paid? Isn’t this central planning? Isn’t the better solution to turn schools into an educational marketplace where the markey makes these kinds of decisions?

    • Amen!

      Reforming the education system to include competition and choice as its central pillar would go a long way toward improving the abilities of students AND providing flexibility to meet an world of rapid change.

    • More kids would want to become teachers if more teachers added value to the learning process. With national mandates, state curricula, county rules and school policies, there isn’t much room for teachers to add awesome to the process.

      And it’s also against union rules to financially reward the teachers who DO bring the awesome, so having them on staff is simply the luck of the draw.

  10. Remember that unless robots find a way to use purchasing power, companies still have to sell us the stuff the robots make. This means we have to be able to buy it. There’s nothing sacred about a 40 hour work week-perhaps the 30 hour work week will become standard. Or maybe marriage and one income families will make a comeback. Lots of ways to skin this cat with a little ingenuity. Let the robots toil!

  11. After stripping out all the goodies that have little to do with the topic at hand, what makes you think that the average person can absorb the needed education, provide the necessary creativity, and surpass the cost effectiveness of the robots and computers? We are going to need a negative income tax, or we’ll all be slaves to the nannies and planners.

  12. Is anyone surprised that the first answer from the AEI is to pay teachers more? That is always the answer and it never works. The only way to educate the population is to get rid of teachers unions, get rid of tenure, and possibly replace the current schools with internet based home schooling. There is no public education today. Only public indoctrination.

  13. JDubya said…

    “It is a noble job as for every human we replace, we employ several engineers, scientists, technicians, and the SG&A portion of the business.”

    If you have to pay several high skilled workers for every low-skilled worker you replace, then there might be something wrong with your business model.

  14. We already spend way too much on education. Paying teachers more is not a solution to anything.

    You also seem to miss the point – not everyone is cut out to run a business, be a teacher or engineer or be a columnist.

    In the old days, jobs in retail and farming and repair were considered “good” jobs. People could make a living off of it. Now you can’t.

  15. Morlocks and Eloi

    The real issue is that knowledge is multiplicative while human abilities are only additive.

    That is, the brightest lights advance knowledge, which compounds. Only the best of the populace can keep up with the cultural evolution.

    So far, that productive few have produced enough to take care of the many.

    Let us hope that the productive few do not run out of tricks to sate the masses.

  16. There will always be jobs for people to do, as long as they:

    1.) Have the freedom to try new things.
    2.) Have the incentive to exercise that freedom and put their minds to work.

    What if, in 1975, someone had invented the omnibot, which could do every job then known to humankind?

    Oops. The genius inventor forgot to include inventing the personal computer as one of those jobs.

    Oops again. He forgot the “barista” function, probably because he didn’t know that people would be willing to pay three bucks for a few ounces of espresso topped with foam.

    Oops again. He forgot something called “Brazilian waxing”, which I wouldn’t even mention, except that it didn’t exist in 1975, AFAIK.

    When I was assigned an essay on a similar subject in high school (LBJ was president back then), I got all worried. I would guess that more jobs have been invented since then as existed at the time.

    Now, I consider those who worry: “Ack! What if we run out of jobs???” to suffer from the same lack of foresight as the apocryphal patent office head who thought, 120 years ago, that everything worth inventing had already been invented.

    As long as ideas can commingle and beget new ideas (Matt Ridley calls it “ideas having sex” in his book The Rational Optimist), and people are free to exploit those new ideas, there will be no shortage of jobs.

  17. The solution is FREEDOM! My 10 counterpoints:
    1) Privatize Education. Abolish Public schools and State Colleges. Allow a truly free market in education.
    2) See item 1. 3 & 4) Reform immigration enforcement of the present laws. Use the e-verify system to eliminate illegals from the workforce. Personally I am not convinced there is a need for special visas. End chain immigration.
    5 & 6) Free market environment trumps education and “templates”. 7) Couldn’t agree more. Return the Federal Government to its Constitutional role: Defense, Courts and Diplomacy. Leave the rest to the States.
    8) Absolutely NOT. Leave it to the private sector and/or the States. 9) All Federal spending must meet the strict Constitutional test. Is the spending for an enumerated power delegated to the Federal government? 10) Couldn’t agree more. Leave it to the states.

  18. None of the solutions proposed are possible in a society where women are into their 93rd year of voting rights.

    Democracy has a life-cycle, after which it is followed by a feminist police state where all resources are transferred to women, and the bottom 95% of men have fewer and fewer basic rights (except for the few men at the top).

    This is because while men vote for what benefits all people, women vote for what benefits women only. Often at the expense of children, not just men.

    That is the problem in a nutshell. What percent of Jimmy P’s readers are women? How many women are likely to read intelligent material like this ahead of celeb gossip?

  19. The nature of my work pretty much ensures that I will be one of the last workers replaced and my “give a ‘care’-o-meter” for the rest of the human race broke last November when that moron Obama was re-elected by people I don’t consider fit to shine a robot’s metal shoes. I think like a robot anyway (logically and without emotion), so I’ll feel more like I’m among my own kind once all my co-workers are robots. Bring it on.

  20. If you have a job that can be done by a machine you are toast as soon as the machine costs less than you do. Machines are getting cheaper all the time with advances in computers and manufacturing. People are getting more expensive as government drives up the cost of employees with expensive mandates.

  21. Jimmy P said :

    Health care and education are just two low-productivity sectors

    as well as :

    1) pay teachers more so better students want to become teachers; 2) hold teachers more accountable for performance by eliminating tenure;

    Now, this will not happen in an electorate where 54% of the voters are women.

    Any industry dominated by women will never, ever allow pay to be contingent on merit, productivity, or results. They will fight fiercely to ensure that the government erects barriers around these industries to ensure women are paid in a way that is not indexed to performance.

    Healthcare, education, and government. 65% of govt. employees are women, and probably 95% of the govt. jobs that should not exist at all.

    This only gets solved via massive technological disruption that happens in a way that regulators and feminist lobbyists cannot anticipate and thus cannot thwart.

    But don’t underestimate how much women will resist the fields they are in being held to performance standards.

    • Women can resist all they want, but when robots replace teachers, nurses and DMV workers, that will be that.

      IBM’s Watson technology and its future offshoots will probably end up putting nearly everyone out of work in classrooms and all but the upper echelon of workers in hospitals.

      If your IQ is less than 120, your best bet for a financial future is to buy IBM stock because you yourself will be made obsolete by IBM products, in all likelihood.

  22. Well, I fix the robots. The idea is to upgrade your skills as your life proceeds. Keep learning and keep advancing.

    Automation frees us from the repetitive and mundane.

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