Tuesday, May 16, 2017
Why Aren't Robots Boosting Economic Productivity?
Evan Horowitz has succeeded in usurping the spotlight of fame by making it to the front page (the entire page, not shared) of the May 7th 2017 Boston Globe's Business Section. Leslie Becker gets credit for graphics, depicting a conveyor line throwing products and workers to a heap of trash.
Every new industrial robot costs between 3 and 6 human jobs, says the MIT, Yale alum report. I get it. I'd better believe that industrial robots are not good for America, stunting economic growth and stranding six workers per robot in under employment situations. However, there are assumptions, conclusions, and facts. Let's see how they match up.
Contention 1: ...robots are failing to boost output or make the economy more productive.
The author has leapt over the devious chasm of cause and effect. There are hundreds of causes of low and cyclic output, the most basic cause being supply and demand. Manufacturers don't produce widgets they can't sell. The effect of robots on the American economy cannot be measured except by taking millions of factors into account.
Contention 2: ...when an auto manufacturer installs cutting edge robotic arms...the company is supposed to become more efficient allowing consumers everywhere to reap the benefit of less-expensive, robot-welded cars.
Industrial robots almost always make the car making process more efficient. Auto manufacturers serve their shareholders by increasing company value. Manufacturers make a choice whether to (a) reduce prices and sell higher quantities of cars or (b) keep prices the same and sell the same number of cars, reaping more per-unit profit. Company value goes up either way, but consumers benefit from lower prices only if the price of cars goes down (a). Shareholder equity goes up in both (a) and (b).
Contention 3: ...while they might lay off some assembly line workers, in theory those workers could move into high-demand jobs in other fields, like health care.
Without a myriad of other factors, the theory works. But, other factors are dominant, like the cost of re- education and who pays, the temptation to stay at home collecting unemployment benefits, a scarcity of jobs readily available with hourly rates of $45/hour and 12 weeks paid vacation, family leave provisions, retirement contributions, medical insurance, proximity of home to work, sick pay, etc. These factors count as reasons not to scramble to quickly get a new job after being laid off. If high-demand jobs like health care were easy, tempting, and available, workers would have jumped the assembly line ship already.
Contention 4: ...our increasingly robot-driven world isn't living up to the great techno-utopian promise, namely when machines do the work, humans will reap the rewards.
Ask any CEO: would you invest shareholders' equity in robots if someone could not reap the rewards? He'd laugh at you. Of course someone reaps the rewards. Rewards go to the bold and the hard working citizens always trying to do better and be better. Otherwise an enterprise would simply be a charity.
Contention 5: ...recent economic research suggests the harm robots are causing human workers is real...nobody in the local community really gains from the arrival of robots: not managers, not college grads, not even those with advanced degrees.
There's someone who is not being harmed: the shareholder investors and the company maintenance technicians who service the robots.
Hook, line, and sinker: MIT economist Daron Acemoglu and Yale collegue Pascual Restrepo packed chicken and noodle theories and over cooked assumptions into this Boston Globe takedown of corporate America without telling the rest of the story. The rest of the story is that corporate America is not made up of buffoons. Everything affects everything else in a free market economy. Using some survey statistics and stifling others unbalances any conclusions toward the leanings of the authors, who have shown themselves to be agenda driven. So, what can we do? (from Apricot Pie that first bite, 2014) ...listen to every voice and consider how every lesson can increase the quality of your life. Hopefully, your goals will ratchet upward in tune with every need to adapt to the world as it changes (and change is inevitable.)