Robots and Jobs – the Bet

Keith Ablow, a Fox News analyst, asked Should Trump stop robots from stealing jobs?

Economist Don Boudreaux responded:

It’s true that the pace of introducing new labor-saving techniques has magnificently quickened in the past two hundred years.  This fast pace continues today.  Yet still we encounter no evidence that labor-saving techniques permanently increase unemployment.

You’ll reply “This time is different!”  Perhaps, but I doubt it.  And I’m so confident in my prediction that I’ll put $10,000 of my own my money where my mouth is.

Terms of the wager are at the Boudreaux link. I’m not sure if the bet has been accepted or not.

Meanwhile, here is Bill Gates, suggesting that robots should be taxed.  Left undefined, at least in this interview, is a question of Exactly What is a Robot?  Is a CNC machine tool a robot?  I’d say it absolutely is, as was the case with earlier numerically-controlled machine tools that became pretty common in the 1970s and 1980s.  How about an automated teller machine in a bank?  And what about “robots” that have no direct physical incarnation but are purely software, such as the office productivity software that accounted for a huge portion of Microsoft’s success?  It was largely Microsoft Word and similar software that made secretaries an endangered species in most organizations.  (Can you imaging the lobbying, litigation, and regulatory struggles that would surround this definitional issue if politicians were to take Bill’s proposal seriously?)

The proposal also ignores that fact that the United States is not the entire world–taxing robots here would harm our competitiveness vis-a-vis those countries pursuing no such policy.  (Which would clearly include China.)  The only way to make a US-only anti-robot policy ‘work’ would be to establish very high tariff barriers.

See also my posts Attack of the Job-Killing Robots and Attack of the Job-Killing Robots Part 2.   I hope to soon complete Part 3 of the series, which will focus on automation technologies and their impact in the post-WWII era.

19 thoughts on “Robots and Jobs – the Bet”

  1. “It’s true that the pace of introducing new labor-saving techniques has magnificently quickened in the past two hundred years.”

    This really gives it away. He is not paying attention. The nice smooth curve he is looking at, over the past 200 years, is going asymptotic right now. It’s not like it was, even 20 years ago.

  2. Boudreaux offers a sucker’s bet on cowardly terms.
    “I will bet you $10,000, straight up, that in not one of the next 20 years will the annual U.S. labor-force participation rate, as measured by the U.S. Bureau of Labor Statistics, fall below 58.1 percent – which is the lowest rate on record at the Bureau of Labor Statistics.”

    If he really had courage in his convictions, he would bet that the participation rate will increase from where it’s at now (~62.5%), or that it will exceed the recent average. Betting that it could decrease significantly from today but not break its historic lows is lame.

    I’d be interested in hearing his theory as to why there are strong inflection points on the graph from sharp rise to flat, occurring in ~1990, then to a sharp decrease starting in ~2008. Obviously there is a lot of stuff buried in the chart, but “robots have zero impact” seems like a dubious proposition.

  3. Which leads me to wonder, when Gates talks about taxing all the evil robots, maybe he’s really talking about taxing individuals and groups that the technology would have naturally diffused down and out to if the government didn’t get involved.

  4. “Not ONE of the next 20 years” actually seems like a pretty strong test to me, given that employment rates are influenced by lots of things other than technology…financial crises, government policies, social trends (such as the educational credentialism obsession), etc. A better metric might have been some sort of moving average.

  5. How much will these lead to productivity? And if it does, won’t that, in the end, be the most important metric? I thought productivity was what led to a rise of all boats. You all know economics and business better than I, but there were no jobs running xerox machines before the time of my little business – I remember copying over passages from works I wanted to use, typing and retyping when I wanted to revise or just fix typos before laser printers. Sure my kids couldn’t get extra money typing for others because everyone could when they were going through, but I have a hard time thinking that was a tragedy. And sure they made some of their earnings in fast food and maybe that will be gone for their children – but they’ll have to look around and find their own,

  6. I’ve just had an epiphany.

    While the vulgar American – and French, and German, and so forth – support for mercantilism, tariffs, (and robot taxes?) and so on is contemptibly foolish and ignorant, there is a more fertile way to look at the matter. That is, they would be a way of capturing many of the benefits of a welfare state without many of its disadvantages. For example you could scrap unemployment pay (after the first few weeks of unemployment) and housing subsidies because there will be jobs to be had, created by the tariff barriers. The cost of the tariffs has to be borne by the consumers, of course, but in compensation they are saved the cost of funding the unemployment pay and housing subsidies with their taxes. The cost of social security can be cut because there will be more jobs available for codgers to fill. And so forth. Moreover to ensure that the jobs created are filled by citizens and legal residents who are actually likely to pay tax, you expel illegal immigrants.

    So now there is a simple test for the honesty and intellectual coherence of anyone who advocates Trumpism. Are they prepared to cut welfare spending, at least as a long term goal? If Trump could find ways of releasing more market forces within the US – e.g. in “health care”, agriculture, and business life – he might have an economic policy worthy of the name. Here an acid test would be whether he would be prepared to attempt to scrap agricultural subsidies, or prepare to apply strictures on commercial cartels and monopolies. For example, the anti-competitive system of public schooling could be disrupted with vouchers: the fact that he’s sympathetic to such a line of argument is encouraging. The anti-competitive features of medical education could be disrupted. And so on: big banks too! Or even big banks first!

    This epiphany also makes me realise that a lot of American braggadocio about the rise of the US as a matter of unfettered capitalism is only half true: by running high tariffs she was running a welfare state for workers but one that probably had fewer, or at least different, disadvantages than a Bismarckian welfare state.

    This also explains to me why the American left has been keen to do away with trade barriers – it give them an rationale to increase welfare state spending in a way calculated to increase their political power.

    All in all, I’m arguing that a reduction of market competition between US businesses and businesses abroad could make sense as long as there was a huge increase in competition within the US. How any electoral support for such a thrust could be assembled, God knows. And how the vested interests could be defeated, and a corrupt Congress overcome, beats me. But a start should be made and maybe the Trumpster is the man for that.

  7. P.S. I’m cocky enough about this notion that I’d like to see serious economists look at the possible trade-offs between lowered competition across the borders versus heightened competition within them, with the latter to include a large reduction in the scope of the welfare state, and the application of the rule of law to corporations and illegal immigrants.

  8. “the application of the rule of law to corporations and illegal immigrants.”

    That’s a huge stretch, and although immigrants may be subject to the rule of law, corporations will not be, in any real sense.

    Who do you think owns the media, and most of the other doors to power, anyway?

  9. Wait, there are jobs and then there are JOBS.
    What are the jobs in the future going to look like for everyday regular working people? You know who they are, the ones for whom being productive and contributing matter. Will there be a gap between high end credentialed jobs and stoop labor; a gap (ie middle management/ sales) that used to be filled by all the people who are not exceptionally gifted in math, or abstract knowledge, or are not ultra creative or beautiful, or sports figures. Is your job an endangered species; even the Professions are impacted. We know that there will be dead end, short term service jobs. How many times are workers supposed to reinvent themselves in their lifetimes?

    Is there a tipping point, when automation becomes counterproductive. Who are going to be the consumers, the tax payers, if they don’t have a reasonably reliable and sufficient income stream? Doesn’t automation require a certain minimum volume to be efficient, as in economies of scale. How does that impact small businesses and other birth places of innovation?

  10. No major shifts in policy really happen without the relevant people knowing about it and a decisive number of them supporting the change. The insider game is generally about shrinking the relevant number of people down and guiding things so that the ones who know overwhelmingly support the change. This has led to objectively sub-optimal policies in area after area. People on the left and the right (for different reasons) rail against certain subsidies but can’t get the votes to overturn them.

    Wrecking that machinery (of slipping in changes that the opposition doesn’t know about and keeping the machine of governance so complex overall that it’s hard to figure out that they’re doing it) would be a major accomplishment.

  11. DearieMe…interesting thoughts.

    “by running high tariffs she was running a welfare state for workers”

    Don’t high tariffs also benefit the entrepreneurs who employ those workers?

  12. Exasperated…”Will there be a gap between high end credentialed jobs and stoop labor; a gap (ie middle management/ sales) that used to be filled by all the people who are not exceptionally gifted in math, or abstract knowledge, or are not ultra creative or beautiful, or sports figures.”

    I’m an investor in a manufacturing startup, located in an area where the economy may not be awful but is also not all that great. When I visited the factory, the Operations VP told me he had considerable difficulty getting people to take Supervisor jobs…he found it very strange, but there it was.

    Being exceptionally gifted at math wasn’t a requirement, though one would need to know the basics…didn’t have to be ultra creative, but did have to have enough creativity to solve problems when they come up…certainly did not need to be beautiful.

    I think there are and probably will continue to be a lot of jobs for people who (a)want to take responsibility, (b) have a problem-solving mindset, (c) have not been crippled by the education system, as far as reading/writing/basic math go, and (d) have sufficient social intelligence to deal with inevitable conflicts without making them worse.

  13. Bill gates doesn’t make sense. On what basis should a robot be taxed as a subtitute person?

    Robots are not paid a salary, so no income tax. Robots don’t need medical care or retirement, so no social taxes. They are machines with eyebrows pasted on over their camera eyes.

    Does Gates mean to just apply some sort of tax to make robots too expensive? That is a laugh, as Gates’ software has done more economic rearrangement (“disruption”) than most products in history.

    Are we supposed to freeze every worker and company into their economic position at the moment? Maybe only for a transition period, but that would stop the transition. As a consumer, would you like all prices to stop decreasing, or increase faster? All products to stop improving or improve more slowly? That is something to look forward to.

    Who of you wants the government to say to you, do everying next year just as you have done it this year, unless you apply for permission. And, shop at all the same stores for about the same quality and amounts of goods. Report this on form 9321-P.

    Don’t buy a snowblower or grass mower, because this puts good people out of work, and only saves you money. We will keep you from buying foreign goods just because you might prefer them. You owe your spending to the projects of your neighbors, and ones not too far away. Buy goods locally, as if transportation had not improved since 1700.

    Oh, and the government should spend say $500 B on improving infrastructure, the same improvements which make it possible to buy from a wider range of producers, even foreign ones.

    Gates is an innovative leader who now takes the position of the landed gentry of the 1700’s. Keep the peasants in their field work, not thinking so much, and happy. How did that work out? Also, he thinks he should order all of the rest of us according to this plan. He is another grasping, self-important, self-appointed leader.

  14. David:
    Since you brought up manufacturing, I am under the impression that it is not a hot growth industry in the United States. As for myself, I happen to be in a high mix, low volume, job shop which serves a niche market. In any case, part of the problem for the last decade is that the industries that have emerged and expanded in the USA, are not the industries that create a high volume of jobs suitable for the Middle.
    Though the focus here is on automation, lest we forget the jobs problem is a consequence of instant global communication, and, as has been mentioned, software, exacerbated by globalization. It is not any one thing but all of these factors come together and amplify each other. It can be laid at the feet of George Laurer, Larry Ellison, Malcolm McLean, Roger Easton, and all those people involved in satellites……… Are there countervailing forces, if so I’d like to hear about them.

  15. So Bill Gates thinks taxing robots is good idea. Does this include taxing the robotics tools that test Microsoft software? Robo-assist customer service? Does this incent faster relocation of work, even automated work, off shore?

    Weakening the successful never helped the less advantaged.

    Gates’ remark is so naive that suspect taken out of context,

  16. Are robots stealing jobs? Locomotives travel faster than horses; mining machines mine ore faster and better than miners; welding robots are more precise and tireless than welders; no one ever caught sick because a robot ignored the “employees must wash hands” sign. The jobs aren’t being stolen. The jobs are being done better.

    I know of no serious examination of a society in which robots create most goods: fiscal SF barely exists. Apparently we’re going to trade money wth each other for social services (at best), some of which will be skimmed to buy robots.

  17. David, hope you don’t mind, but have you seen any stats comparing total employee compensation to net sales by industry, and maybe even by company size?

Comments are closed.