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thepreston

Responding to Luddite-ism

Dec 8th, 2013
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  1. There are a number of incorrect assumptions and misunderstandings of economics in the original post:
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  3. "If society were to advance towards maximum efficiency... the next step would be-"
  4. None of us can know what the next step will be, and even if we assume it is 'robots' we have no idea what form those robots will take and what they will do. We can guess of course, but entrepreneurs are ultimately going to decide the means that will be applied to any ends we ask of them (we demand, they supply). In 1950, no one knew that super computer touch screen cell phones would be in the hands of every american. We will just have to wait and see what the market comes up with.
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  6. "(no wage to pay, more efficient, 100% obedient, can work 24/7, etc.)"
  7. Wages are not important to an entrepreneur, but cost is. Unless we are talking about some kind of impossibly perfect self-repairing robot, then that robot will need programming, maintenance, repair/troubleshooting, retooling, updating, and will eventually need to be replaced. Those are all costs that an entrepreneur has to consider compared to his other options, one of which is hiring a worker to do it.
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  9. "not everyone that gets replaced by a robot is going to get a job maintaining that robot because that would be utterly counter-productive and expensive"
  10. That is correct. Just like any other innovation in the market, whether it is a new piece of capital equipment, a new technique, a new software program, etc each worker is becoming more productive, as in, each 1 worker at time X + Y is doing as much as 1 + Z workers at time X. The immediate assumption is that + Z workers will become unemployable, but what actually happens is entrepreneurs switch their demands from workers with general skills to workers with specialized skills pertaining to the new innovation. The + Z workers, should they be capable of acquiring the specialized skills needed, will stay at their job, or will be employed at another firm using this specialized skill, further boosting productivity (ex: if you have 100 workers each making you $15 per hour, and all of them get trained to use a new machine that makes you $20 per hour, why fire them?). Not everyone is capable of acquiring these new skills, but the situation is no different than saying 'not everyone is capable of being a hair stylist' or 'not everyone is capable of being an architect'. The market doesn't need everyone to be capable of everything, in fact the market is built on increased productivity through the division of labor and trade. When productivity increases, real resources in the economy increases, prices come down, savings increases, then interest rates come down. All of these factors allow projects that were impossible at time X to become profitable at time X + Y, leading to more entrepreneurs, leading to more workers being hired at higher wages due to innovations and increases in productivity, and so on. A good example of this would be the changes that occurred during the industrial revolution. Most people in the high middle ages were farmers who barely managed to scrape by paying rent to their lord, with just enough surplus food and possibly handcraft goods to sell at the local market to get them enough money to pay for things that they couldn't produce (such as smithed goods, construction materials, or foreign imports). When entrepreneurs built factories, and started producing volumes of high quality, low cost consumer goods, this provided opportunities for farmers to learn factory skills which paid-out higher than the occasional surplus of food or comparatively poorly made handcraft goods. This lead to cheaper supplies for the remaining farmers to buy, in addition to an increase in demand for the farmer's produced food (people switched to manufacturing jobs which means they needed food to eat as they were no longer growing their own). The result is the most gifted and specialized farmers remained farmers, using the improved economic conditions to further increase their farming yield, while the least gifted and least productive farmers sought opportunities in the factories, improving their own and everyone else's conditions in the process. Both the farmers and the new factory workers need to overall learn and be good at -less- than they needed to before, as they only need to concentrate on their more specialized task, and at the same time both gained a richer and more stable living standard than they did -before- the factories.
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  12. "I'm sure the living standards as a whole would increase as a result of the increase in efficiency, but how will most people get money to purchase things if robots are doing, say, 90% of the work? Prices may plummet and quality may skyrocket, but how will people benefit if they are jobless and have no money to spend at all?"
  13. The answer is that robots are no different than any other piece of capital equipment. They increase yields using less labor. The more efficient capital equipment becomes, the more specialized all participants in the market become. Human labor will always be combined in a production process somewhere by an innovative entrepreneur who sees the potential of that labor in the market, as our demands could always be fulfilled a little better, if not infinitely better. They do this with seemingly mundane things like iron and apples all the time, why should something as versatile and capable of ingenuity as a human go to waste?
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