Important people around the world are discussing the idea of Industry 4.0, the coming increase in automation. Or, as we might put it, what the heck do we do when the robots steal all our jobs?
The problem with much of this chin stroking is that near none grasp that there’s only one appropriate response, to celebrate at how much richer we’re all going to be. For there are only two possible outcomes – final outcomes that is. Either humanity is richer in aggregate but things for most of us don’t change very much or we’re all vastly, hugely, richer.
Neither of which really appear to be much of a problem requiring beard pulling to consider.
The basic underlying fact is entirely true – artificial intelligence is advancing at such a pace that the robots, the machines, will be doing some to many of the jobs currently done by humans. People are then asking, well, what will the humans go and do instead?
One answer to this is simply that humans will be richer and isn’t that great?
We can consider this at a very basic level indeed. There was a time when humans had not tamed the animals to act as beasts of burden, paddy was therefore ploughed by hand. The addition of a buffalo is automation of that human labour and we all know absolutely that a farmer with a buffalo is richer than one trying to grow rice without one.
The creation of a machine that goes out and plants the seedlings without the backbreaking labour of today (or, dependent on the part of the world, yesterday) is a similar increase in riches.
However, there’s a more subtle argument. It is a fundamental axiom of economics – that is, a founding belief or truth that is not questioned – that human desires and wants are unlimited. Yet we only have scarce resources with which to satisfy them. That’s what the whole subject of economics is, the study of how to allocate those scarce resources so as to meet human desires and needs.
The robots might make some of us very wealthy indeed or all of us very wealthy indeed but neither result is actually a problem
Human labour is one of those scarce resources. They may indeed be a lot of us but not an infinite amount. If machines go and start producing something formerly done by human labour then humans can move off and make something else.
Think of it this way, in a poor, subsistence level – the level Bangladesh has already left behind – economy we need to have 80 to 90% of the people working on the land just to grow the food for everyone. As technology advances, we get tractors and so on to replace human and animal labour.
In time, we get an economy like the US, where 1% of the people grow the food and the other 99% are in goods or services production. We can even say that the output of the tractor is health care – because only when we’ve not got 90% of the people on farms can we have 15% of the people working in hospitals.
So, as the robots, the machines, take one job then we humans just go off and do something else, satisfy some other human need.
But, we’re told, the robots are going to be better than humans at doing everything. So there just won’t be anything at all left for the humans to do. Woe is all of us and so on. Sadly, this complaint doesn’t make sense.
Firstly, note that we insist that human desires are unlimited. There is always going to be something that people would like to have done. OK, now relax that assumption. The robots really are doing everything, there is nothing left that anyone wants done. Well, so, why do we need jobs then? Everything anyone wants is already being produced, there’s nothing left to be done. And if we’ve all got everything we want then why do we need to go to work?
As you can see, the idea that the robots will make everything is attractive, not a problem.
There is a second version of this argument which states that the people who own the robots will just get everything. This also fails. In one scenario, the robots only make stuff that the robot owners get to consume. The rest of us are left out here with nothing from the machines.
The implication being that we’ll then not have jobs of course. But if the machines are only making for the capitalists then we’ll all still have jobs making for us. That’s all an economy is after all, you make stuff, I do, and we swap it around. That 10% of the people off over here are getting everything from the machines still leaves the other 90% of us making stuff for each other.
Or, in another scenario, the capitalists get all the profits from the machines, we get the production, but still don’t have jobs. Well, yes, but look again – we’re getting the production. We get to consume what the robots are making; why would we care if we’ve a job or not? We get to do the consuming which is the only reason any of us go to work in the first place.
Finally, we’ve got to note just one more thing. We’ve been using ever more machines, automating human labour, for some 250 years now. That’s actually what the Industrial Revolution was and is, killing off jobs by employing not-humans and we then go off and do something else.
The world has got vastly, hugely, richer as a result of that process. There’s simply no reason whatsoever to think that continuing the process won’t continue that wealth creation. Just none at all.
The robots might make some of us very wealthy indeed or all of us very wealthy indeed but neither result is actually a problem.
Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.