The Robotics Revolution

The pace at which technology is replacing workers is growing, and could become exponential as improvements in robotics accelerate.  While the United States remains the largest manufacturing nation in the world, with value added of $1.8 trillion per year, manufacturing employment in the United States has declined over the past two decades.  Technology is enabling us to make more things with fewer workers.[1]

The robots are just getting started.  Improvements in robotics may soon allow robots to move beyond the factory floor into basic service industry jobs – like making your hamburger or your latte.  Certainly, technology that takes jobs also creates jobs – people have to research, design, develop, make and service the machines themselves, and the machines may create new industry that doesn’t exist yet – but according to Erik Brynjolfsson of MIT[2], currently technological job loss exceeds job gain.  Job loss will increase as this robotics revolution moves into the white collar world, replacing white collar workers as artificial intelligence improves.

There is historical precedent for what we are going through.  In the 1870’s, the United States went through an agricultural revolution that changed our economy.  Before 1860, most Americans lived and worked on farms.  In fact, for most of human history, most people worked trying to feed themselves.  Only a small percentage of the population was able to engage in other work.  The agricultural revolution changed that.  Over a relatively short time, it became possible for only a small percentage of the population to grow enough food to feed us all.

In the long run, this was a great development.  Not only was food scarcity and famine largely eliminated (or at least greatly reduced), but also the pool of unemployed farm workers enabled the industrial revolution to take place.  People now worked in factories and lived in cities, and the availability of goods increased while the cost of those goods decreased.  This did not, however, happen overnight.  First, there was a great deal of displacement and misery as the economy slowly retooled, and before the laws regarding working conditions and fair labor standards for factory workers caught up to the new economic conditions.  This is the world of Charles Dickens.

There is no good reason to believe that this newest revolution will not also, in the long run, be a boon to society.  Replacing human workers with robotic workers means, for example, that the wage rate of factory workers may play a lesser role in decisions about where to manufacture goods.  Already, some commentators are reporting on the “re-shoring” of manufacture.  Manufacturing activity that was sent to places with low wage rates now being relocated to the United States or Europe because wage rate is no longer the decisive factor it once was.  The workers that remain can be paid a higher wage without significantly increasing product price because there are fewer workers.  Re-shoring of manufacture also will help solve the fragile supply chain problem that has manufacturers concerned today.  Further, the increased productivity should, in the long term, reduce the costs of everything and make more and more goods available to more people at lower and lower prices.

Business managers have to be concerned, however, that job loss will leave many people unable to afford the goods that are being produced, and this forced loss of demand will negatively impact the economy.  Already, we are seeing a “capital biased” shift in economic reward – most of the productivity gain rewards are going to suppliers of capital, rather than providers of labor.  While one solution to this problem will be for government to tax capital providers and redistribute the gains to labor providers (or former labor providers), surely there are more elegant and less heavy-handed solutions.  The challenge is to find them.

This robotics revolution needs, more than anything, smart people thinking about the problem and how to solve it.  As Brynjolfsson concludes: “when we look at the full impact of computers and networks, now and in the future, we are very optimistic indeed. These tools are greatly improving our world and our lives, and will continue to do so. We are strong digital optimists, and we want to convince you to be one, too.”[3]  This is an exciting time, and perhaps, as in 1870, the next revolution is right around the corner, the one that will scoop up the labor pool displaced by the machines and use them to transform the world.

[1] Levinson, Marc “U.S. Manufacturing in International Perspective”, Congressional Research Service, February 11, 2013.

[2] Brynjolfsson, Erik, and Andrew McAfee Race Against the Machine, Digital Frontier Press, 2011.


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