Don’t Fear the Robots

Dec 10, 2012

In his latest column, Paul Krugman fuels the fears of political observers like Mother Jones’ Kevin Drum who worry that automation and technology will squeeze Americans out of jobs. In short, we’ll be replaced by robots:

About the robots: there’s no question that in some high-profile industries, technology is displacing workers of all, or almost all, kinds. For example, one of the reasons some high-technology manufacturing has lately been moving back to the United States is that these days the most valuable piece of a computer, the motherboard, is basically made by robots, so cheap Asian labor is no longer a reason to produce them abroad.

In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.

On technology and worker displacement, Krugman is half right. Yes, technology displaces workers. The wheat thresher displaced workers from having to manually separate the wheat from the chaff, diesel-powered trains displaced coal shovelers, the chainsaw displaced armies of axe-wielding lumbermen, computers displaced telephone operators from connecting calls, and robots have displaced workers doing tasks like repetitive, precision welding.

This isn’t new; economists have known this for centuries. It’s Joseph Schumpeter’s “creative destruction” in action, and as economist Michael Cox and economics writer Richard Alm explain, society benefits:

The saving grace comes from recognizing the good that comes from the turmoil. Over time, societies that allow creative destruction to operate grow more productive and richer; their citizens see the benefits of new and better products, shorter work weeks, better jobs, and higher living standards.

However, an unfortunate downside is painful worker displacement that can’t be ignored. Part of the answer is helping affected workers get new skills. We’re in the midst of a skills gap where companies have millions of job openings but can’t find workers with the right skills. An effective workforce development system focused on businesses’ needs could be beneficial.

What’s also needed is a more-inviting business environment that encourages more innovation and investment, allowing current companies to grow and new firms to be born and for both to hire more workers.  This is where Krugman gets it half wrong. He flippantly mocks reducing corporate tax rates, but since the U.S. is #1 in that department, it creates an incentive for new companies to set up shop, innovate, and create jobs elsewhere.

To sum it all up, the robots aren’t going away, but there are ways to enjoy technology’s benefits while managing its negative effects on workers.

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