More Robots, More Jobs

Many people fear robots will take all the jobs. This fear drives a number of policy proposals, from Universal Basic Income to taxing or regulating robots. Today I want to talk about what actually happens in automation, and what we should expect in the future.

In a sense, fearing automation is bizarre. We could understand if we were living in medieval Europe, where generation-to-generation there was almost no innovation. Perhaps an improved wagon axle would be the biggest innovation in a lifetime —  “Imagine, junior, how hard it was for Mom and me growing up with those dodgy axles.”

But, instead, here we sit in the midst of history’s greatest natural experiment on jobs and automation: the Industrial Revolution. Which is very specifically 200 years now of machine replacing man.

We’ve got an almost unique historical advantage of knowing precisely what happens when countries industrialize, when Ethiopia, say, becomes Switzerland — more jobs, better jobs, better standard of living. Indeed, industrialized countries have far less need for handouts than un-industrialized countries, specifically because of automation — replacing human labor with physical capital.

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Not only do we have 200 years of hindsight, but we live in a world full of, again, natural experiments. We are surrounded by both industrialized countries and unindustrialized countries. We can see with our own eyes how many people are jobless in the poorest countries of Sub-Saharan Africa or South Asia. We can see with our own eyes how little misery there is in countries that are full of machines, buildings, and, yes, robots.

So, in a sense, it boggles the mind how people could even be concerned. We’re surrounded by the evidence that automation is quite likely the best thing to ever happen to humanity. And, important to note, these benefits of automation — creating more jobs and better jobs — is long-standing, across hundreds of countries, thousands of industries, and for centuries now.

Perhaps most important, benefits of automation stand whether the change is breakneck fast like China post-1990 or agonizingly slow like India since WWII. I mention this because one claim of the robots-eat-jobs crowd is that “this time is different” because it’ll go fast. Well, empirically, fast is better — just ask China.

So that’s the data: automation is fantastic. Robots, being automation, are fantastic. The faster the better. You end up with more jobs, better jobs. Far less human misery. So if you were selling, say, a Universal Basic Income, you’d have to admit there’s actually less need for it when the robots come. The robots remove the need for a UBI.

The seen vs. the unseen.

Now, as solid as the data is that automation creates more and better jobs, I do understand why people don’t want to believe it. After all, it’s easy to see the jobs lost when a factory switches to robots. Or when a trucking company switches to self-driving trucks.

As 19th century economist Frederic Bastiat called it, this is the “seen” vs the “unseen.” We can see the jobs lost, but we don’t see what happens next.

What does happen next? Metaphorically, the displaced workers take a step down on an escalator. That is, whatever job they have today is replaced by a machine or a robot, so they take a “worse” job. But the automation itself is increasing quality of life around them, so that “worse” job very quickly provides a better quality of living than the old “good” job ever did.

From shoeing horses to assembly line

To take a concrete example, shodding horses in the earth 20th century was a “good” job. Working in an assembly-line, say, was not. The horse-shodder lost his job thanks to cars, and went to work in a factory.

Initially, he took a hit. But the cars themselves were unleashing a massive wave of productivity that made all Americans richer. So the factory job, ultimately, paid better than he ever made shodding horses.

So what should we expect from robots? Why, more of the same: even more jobs than today. And jobs that pay unimaginably higher than today — perhaps 50 times more, going by the Ethiopia-to-America difference.

Where will these jobs come from? After all, in robotland you can neither shod horses nor work in a factory. Easy: services. Today in countries like Luxembourg, Singapore, or the US already 80% of people work in services. While countries like Ethiopia or Uganda are 20% services.

That’s an extra 60% of the entire population simply going from an Ethiopia level of development to an American level of development. If robots give us similar improvements, tacking on another 60% of jobs we’d have something like a 50 million labor shortage — yes labor shortage — in the US alone.

What future jobs will look like

So what would these service jobs look like? Well, just think of the services a millionaire hires today. Personal chef, maid, person to run errands, walk the dog, take the kids to soccer practice, teach you French, give your nails or hair a quick touch-up every morning, personal trainers, personal assistants to schedule your day or do your taxes.

There are literally billions of jobs that don’t exist yet simply because we’re not rich enough for those jobs to be mass-market. And robots make us rich enough. These jobs do exist for millionaires, so we know exactly what kinds of jobs are coming. The robot society becomes, from a jobs perspective, a society of millionaires.

And it’s not just mass-millionaire lifestyle. Many jobs today either didn’t exist in the past, or were so low-status that they weren’t considered real jobs. For example, any job related to a piece of machinery, a computer or the internet, a factory, exist specifically because physical capital replaced labor. Bur moreover, a richer society pays enough to actors, athletes, Youtubers that these hobbies now become jobs.

Todays poor like yesterday’s rich

Finally, keep in mind this jobs bonanza is enjoyed by all, future rich and future poor — we’re not talking some sci-fi scenario where 3 billionaires employ everybody. To see why, today millions of maids or gardeners hire a chef instead of cooking — it’s called a restaurant.

Even the poor hire nail-salons, barbers, nurses. They hire engineers to provide running water instead of carrying buckets from the nearest creek, as poor once did. They hire other engineers to design stoves so they don’t have to go cut wood and tend bonfires to eat.

Just as today’s poor in America act like yesterday’s rich — hiring services instead of doing everything themselves — the poor of tomorrow will consume like the rich do today. Everybody moves up the escalator, even if they periodically take a step down.

I think the main takeaways here is that, yes, automation replaces jobs. And by that very process, because it makes us richer, we end up with more jobs. And certainly much better paying jobs.

It’s nice to want to help out the displaced workers, but we shouldn’t lose sight that automation, and the world it brings, will actually solve the many problems people blame it for.

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