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Why We Need Robots to Win the Technology War

Peter Thiel had a good piece in the FT today on the debate about robots and whether the rise of technology is a good thing or a bad thing.  I tend to fall on the side that says robots are a good thing, but I do acknowledge that the pace of technological acceleration is frightening precisely because humans can’t come up with enough alternative jobs to offset the rapid growth in robot-led job losses.  Still, Thiel makes an altnernatively superb point:

“Spiralling demand for resources of which our world contains a finite supply is the great long-term threat posed by globalisation. That is why we need new technology to relieve it.”

Technology is costing us jobs, but it’s also keeping costs down by reducing our dependence on the finite supply of natural resources.  We not only need the robots to win this war, but we are dependent on them to win this war.  Technology is the path to energy independence and resource independence.

As for the jobs, well, profit maximizing capitalists aren’t likely to solve that problem because they’re the ones leading the robot charge.  Which is great.  They’re not the bad guys in this war.  But we should realize that if they’re not going to fix the job problem then smarter government policy has to play a bigger role.  And that means lower taxes and more government investment.  Unfortunately, we’re still waiting for the capitalists to reach that magical and mythical “equilibrium” point for us.  And it just ain’t happening…

  1. Shervin

    There will always be jobs available as long as the market can adjust. Even today with all the technology and automation, advanced economy unemployment rates are in the single digits. That tells you a lot about the whole “robots are taking our jobs” problem. It just means more labour will shift to the service sector and in particular jobs that can’t be done by robots yet (aged care, child care, entertainment etc.).

    Maybe the deflationary forces of technology will mean wages will have to also decline to remain competitive or you will end up low skilled labour being priced out of the market by technology. I was at LaGuardia and for the first time saw an entirely automated burger joint (see attached picture). I can only laugh at those who claim (e.g. Paul Krugman) a higher minimum wage or more labour regulations will not cause unemployment because minimum wage jobs are in the service sector and can’t be exported. Well they can be outsourced if possible or replaced by technology!

  2. tealeaves

    My one concern, is if corporate america uses robotics to transforms the economy into a lower cost export driven economy without passing on the “productivity” gains to the household through
    – lower priced goods (price deflation which is unprecedented outside of tech) or
    – with increased real wages which maybe limited given the current and future employment slack through automation

    That is, they “squeeze” the aggregate american consumer cash cow by not passing on productivity gains and grow profits on the margin with exports or foreign investment. As business owner, shareholder or corporate debt holder that seems like a perfectly rational decision for a firm to maximize (short term) profits.

    The economic risk is twofold.
    – The US economy today is consumption driven so limited wage growth to keep pace (or outpace) inflation may produce limited domestic credit and thus consumption GDP growth.
    – Household who maintain high debt levels and have borrowed “future” dollars to fund their current expenditures (housing, educations, vehicles etc) and maybe forced to cut back consumption to cover those ongoing interest expenses. And the worst case being that during an economic downturn or sustained job losses from automation, the household sector faces substantial delinquinces.

    I’d note that personal income and in particular wages as a percentage of profits and labor share have declined since 2000. I sound marxist don’t I by arguing that labor needs to get its “fair” share of productivity improvements.

  3. nitris

    Lower taxes and more government investment? Is that an oxymoron?

    A robot is just another kind of labor saving appliance until they start replacing police. However they might make good congressmen.

  4. nitris

    It’s 2075 and population did not peak in 2047. There are now 15 billion people and the robots run everything. Resources are very tight and your Fox news commentator (a robot) is urging people to vote for tighter birth control regulations so people will have more children to out populate the robots.

  5. John Daschbach

    Government investment is mostly all in the discretionary portion of the budget, which has decreased significantly to it’s lowest level since before the Great Depression. If you include defense spending in investment then it’s even more dramatic. Near the start of the Reagan era discretionary spending reached 11% vs GDP. Now it’s about 1/2 of that and unless the long term trend is changed it will be under 5% in a couple years.

    An economy with decreasing labor input into production will inevitably become more unequal even if the market adjusts through wage contraction for lower value labor. Our belief in the free market leads the US on a trajectory towards a 2nd world type economy.

  6. Jonah Thomas

    It’s potentially easy for government to take up the slack. As standard of living goes down for ordinary people, it will get increasingly easy to make military service pay-competitive. The military can absorb an unlimited amount of labor, and also an unlimited amount of economic production including robots.

  7. John Daschbach

    This is part of the Kalecki argument about achieving full employment. Fascism worked, he argued, because the government can provide full employment by building weapons (which is hugely profitable for the capitalists) and building up armies. In various ways, many civilizations have done this throughout history. But eventually, people want the weapons and armies used.

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