Give 'Em Hell, Bernie

[nihilistcat]

francismjenkins



I have no problem with innovation making work easier, it is why we now drive modern cars and don't rely on horse and buggies. But every time you take a job and replace it with a machine, someone loses a job. And the more automated a system is you still are going to have humans who need to pay their bills. You cannot simply keep taking humans out of the picture without thinking long term about how a newer labor force will survive. 

Actually, (Economics degree speaking here) with automation you are freeing up a worker and capital to do another job. We wouldn't have Iphones if everyone was digging their potatoes by hand. If automation makes a product cheaper it usually costs the country more to employ the manual laborer than it is worth.  Let's say $100 widget becomes 10 dollars on the market because a robot displaced 100 workers who made $50,000 a year.  Sales were 1,000,000 units/yr Thus it would cost the country $90,000,000 to employ 100 workers for a year. It would be cheaper for the country to pay the old workers $800,000 a year to play canasta for a living.

The pain to the economy is when automation does not lead to drastically better production and in reality doesn't do as well. When a factory displaces workers with robots that contantly break down and make more scrap costs because of it's high speed then it is a lose-lose situation for the country. Poor management costs way more jobs than automation. Too many bad economic decisions are made by people that got their positions by their skill at the golf course or from family connections.

That's the hypothesis, but does it hold true in real world conditions. Obviously, automation frees up labor, but if there's no other job for that labor to migrate too, or if the other jobs pay less and offer substandard benefits, it only helps the capital side of the equation (not workers). Sure, poor management is obviously a problem that could offset the potential productivity gains of automation. But like biologists have to work around things like unanticipated pathogens, and "real world" conditions are never ideal (there's no smooth curves or perfectly straight lines in nature), shit like poor managers, irrational consumers, overly exuberant investors, panic, etc.,  are things that economists have to factor into their work. Why isn't greater purchasing power translating into more jobs and higher wages? I would love an honest answer to this, but prominent economists keep telling us that rising tides will come (we've been hearing the same shit for the last four decades, while wages continue to stagnate or decline, the quality of our jobs continue to decline, etc.).  

In theory, trade should improve the economic conditions of both sides, but in practice it just hasn't worked out that way. This disconnect between hypothesis and real world outcomes doesn't seem to phase economists in the least (but it really is discrediting the profession in the eyes of many people). 

Likewise, automation has not been a boom for workers. In general, service sector jobs pay less, offer substandard benefits, etc. While automation does translate into good jobs for the people designing and building things like advanced robotics, there are far fewer of those type of jobs compared to the jobs that automation eliminates. 

In reality trade has the potential of "eventually" lifting all boats, but there's a huge time lag involved. The most immediate benefit flows to the developing nation, the developed nation does benefit to some degree with lower consumer prices, but that additional purchasing power has not translated into increased wages or increased employment for workers on the developed nation side of the equation (at least not in the short to medium term). 

That being said, I don't want to see us revert to protectionism or to begin limiting the application of industrial automation technology, but at the same time, economists should stop saying that these things will improve our lives, when everyone can just look around and clearly see that automation and free trade are not improving our lives (at least not the way they're being applied today). What we can say is that protectionism generally leads to instability in the global economy, which in some cases, has led to catastrophic wars. Moreover, the more interconnected our economies are, the less likely we'll be to entertain a war (you don't start fights with economic trading partners). Avoiding wars where millions are killed is obviously a good idea. Automation is necessary. While it may have a net effect of reducing jobs, failing to automate would result in even more job loss (because we have to compete in a global economy where our competitors either have much lower wage scales, or will automate themselves at some point in the future). There's other obvious benefits to automation e.g. it makes our lives easier, our workday less arduous, etc. But again, let's be honest about this, the increased purchasing power resulting from automation and free trade, has not translated into higher wages or more jobs in the broader economy (it has only benefited the capital side of the equation, while actually undermining workers because by reducing the number of high quality jobs in the economy, workers have less leverage).