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Ludd vs. Schumpeter: Fear of Robot Labor is Fear of the Free Market – Article by Wendy McElroy

Ludd vs. Schumpeter: Fear of Robot Labor is Fear of the Free Market – Article by Wendy McElroy

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The New Renaissance Hat
Wendy McElroy
September 18, 2014
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“Report Suggests Nearly Half of U.S. Jobs Are Vulnerable to Computerization,” screams a headline. The cry of “robots are coming to take our jobs!” is ringing across North America. But the concern reveals nothing so much as a fear—and misunderstanding—of the free market.

In the short term, robotics will cause some job dislocation; in the long term, labor patterns will simply shift. The use of robotics to increase productivity while decreasing costs works basically the same way as past technological advances, like the production line, have worked. Those advances improved the quality of life of billions of people and created new forms of employment that were unimaginable at the time.

Given that reality, the cry that should be heard is, “Beware of monopolies controlling technology through restrictive patents or other government-granted privilege.”

The robots are coming!

Actually, they are here already. Technological advance is an inherent aspect of a free market in which innovators seeks to produce more value at a lower cost. Entrepreneurs want a market edge. Computerization, industrial control systems, and robotics have become an integral part of that quest. Many manual jobs, such as factory-line assembly, have been phased out and replaced by others, such jobs related to technology, the Internet, and games. For a number of reasons, however, robots are poised to become villains of unemployment. Two reasons come to mind:

1. Robots are now highly developed and less expensive. Such traits make them an increasingly popular option. The Banque de Luxembourg News offered a snapshot:

The currently-estimated average unit cost of around $50,000 should certainly decrease further with the arrival of “low-cost” robots on the market. This is particularly the case for “Baxter,” the humanoid robot with evolving artificial intelligence from the US company Rethink Robotics, or “Universal 5” from the Danish company Universal Robots, priced at just $22,000 and $34,000 respectively.

Better, faster, and cheaper are the bases of increased productivity.

2. Robots will be interacting more directly with the general public. The fast-food industry is a good example. People may be accustomed to ATMs, but a robotic kiosk that asks, “Do you want fries with that?” will occasion widespread public comment, albeit temporarily.

Comment from displaced fast-food restaurant workers may not be so transient. NBC News recently described a strike by workers in an estimated 150 cities. The workers’ main demand was a $15 minimum wage, but they also called for better working conditions. The protesters, ironically, are speeding up their own unemployment by making themselves expensive and difficult to manage.

Labor costs

Compared to humans, robots are cheaper to employ—partly for natural reasons and partly because of government intervention.

Among the natural costs are training, safety needs, overtime, and personnel problems such as hiring, firing and on-the-job theft. Now, according to Singularity Hub, robots can also be more productive in certain roles. They  “can make a burger in 10 seconds (360/hr). Fast yes, but also superior quality. Because the restaurant is free to spend its savings on better ingredients, it can make gourmet burgers at fast food prices.”

Government-imposed costs include minimum-wage laws and mandated benefits, as well as discrimination, liability, and other employment lawsuits. The employment advisory Workforce explained, “Defending a case through discovery and a ruling on a motion for summary judgment can cost an employer between $75,000 and $125,000. If an employer loses summary judgment—which, much more often than not, is the case—the employer can expect to spend a total of $175,000 to $250,000 to take a case to a jury verdict at trial.”

At some point, human labor will make sense only to restaurants that wish to preserve the “personal touch” or to fill a niche.

The underlying message of robotechnophobia

The tech site Motherboard aptly commented, “The coming age of robot workers chiefly reflects a tension that’s been around since the first common lands were enclosed by landowners who declared them private property: that between labour and the owners of capital. The future of labour in the robot age has everything to do with capitalism.”

Ironically, Motherboard points to one critic of capitalism who defended technological advances in production: none other than Karl Marx. He called machines “fixed capital.” The defense occurs in a segment called “The Fragment on Machines”  in the unfinished but published manuscript Grundrisse der Kritik der Politischen Ökonomie (Outlines of the Critique of Political Economy).

Marx believed the “variable capital” (workers) dislocated by machines would be freed from the exploitation of their “surplus labor,” the difference between their wages and the selling price of a product, which the capitalist pockets as profit. Machines would benefit “emancipated labour” because capitalists would “employ people upon something not directly and immediately productive, e.g. in the erection of machinery.” The relationship change would revolutionize society and hasten the end of capitalism itself.

Never mind that the idea of “surplus labor” is intellectually bankrupt, technology ended up strengthening capitalism. But Marx was right about one thing: Many workers have been emancipated from soul-deadening, repetitive labor. Many who feared technology did so because they viewed society as static. The free market is the opposite. It is a dynamic, quick-response ecosystem of value. Internet pioneer Vint Cerf argues, “Historically, technology has created more jobs than it destroys and there is no reason to think otherwise in this case.”

Forbes pointed out that U.S. unemployment rates have changed little over the past 120 years (1890 to 2014) despite massive advances in workplace technology:

There have been three major spikes in unemployment, all caused by financiers, not by engineers: the railroad and bank failures of the Panic of 1893, the bank failures of the Great Depression, and finally the Great Recession of our era, also stemming from bank failures. And each time, once the bankers and policymakers got their houses in order, businesses, engineers, and entrepreneurs restored growth and employment.

The drive to make society static is powerful obstacle to that restored employment. How does society become static? A key word in the answer is “monopoly.” But we should not equivocate on two forms of monopoly.

A monopoly established by aggressive innovation and excellence will dominate only as long as it produces better or less expensive goods than others can. Monopolies created by crony capitalism are entrenched expressions of privilege that serve elite interests. Crony capitalism is the economic arrangement by which business success depends upon having a close relationship with government, including legal privileges.

Restrictive patents are a basic building block of crony capitalism because they grant a business the “right” to exclude competition. Many libertarians deny the legitimacy of any patents. The nineteenth century classical liberal Eugen von Böhm-Bawerk rejected patents on classically Austrian grounds. He called them “legally compulsive relationships of patronage which are based on a vendor’s exclusive right of sale”: in short, a government-granted privilege that violated every man’s right to compete freely. Modern critics of patents include the Austrian economist Murray Rothbard and intellectual property attorney Stephan Kinsella.

Pharmaceuticals and technology are particularly patent-hungry. The extent of the hunger can be gauged by how much money companies spend to protect their intellectual property rights. In 2011, Apple and Google reportedly spent more on patent lawsuits and purchases than on research and development. A New York Times article addressed the costs imposed on tech companies by “patent trolls”—people who do not produce or supply services based on patents they own but use them only to collect licensing fees and legal settlements. “Litigation costs in the United States related to patent assertion entities [trolls],” the article claimed, “totaled nearly $30 billion in 2011, more than four times the costs in 2005.” These costs and associated ones, like patent infringement insurance, harm a society’s productivity by creating stasis and  preventing competition.

Dean Baker, co-director of the progressive Center for Economic Policy Research, described the difference between robots produced on the marketplace and robots produced by monopoly. Private producers “won’t directly get rich” because “robots will presumably be relatively cheap to make. After all, we can have robots make them. If the owners of robots get really rich it will be because the government has given them patent monopolies so that they can collect lots of money from anyone who wants to buy or build a robot.”  The monopoly “tax” will be passed on to impoverish both consumers and employees.

Conclusion

Ultimately, we should return again to the wisdom of Joseph Schumpeter, who reminds us that technological progress, while it can change the patterns of production, tends to free up resources for new uses, making life better over the long term. In other words, the displacement of workers by robots is just creative destruction in action. Just as the car starter replaced the buggy whip, the robot might replace the burger-flipper. Perhaps the burger-flipper will migrate to a new profession, such as caring for an elderly person or cleaning homes for busy professionals. But there are always new ways to create value.

An increased use of robots will cause labor dislocation, which will be painful for many workers in the near term. But if market forces are allowed to function, the dislocation will be temporary. And if history is a guide, the replacement jobs will require skills that better express what it means to be human: communication, problem-solving, creation, and caregiving.

Wendy McElroy (wendy@wendymcelroy.com) is an author, editor of ifeminists.com, and Research Fellow at The Independent Institute (independent.org).

This article was originally published by The Foundation for Economic Education.

Machines vs. Jobs: This Time, It’s Personal – Article by Bradley Doucet

Machines vs. Jobs: This Time, It’s Personal – Article by Bradley Doucet

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The New Renaissance Hat
Bradley Doucet
February 5, 2014
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For much of human history, the vast majority of people worked in agriculture. Today, thanks to the Industrial Revolution, that has fallen to about 2% of the population in wealthy countries. But all of us whose ancestors used to produce food have not just been joining the ranks of the unemployed for the past couple hundred years. We’ve been working at other jobs, in many cases doing things our grandparents’ grandparents could not imagine. Luddites were wrong to worry back then, but is it different this time?
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MIT professor Erik Brynjolfsson, co-author of The Second Machine Age, thinks it is different this time, but he is qualifiedly optimistic nonetheless. During an hour-long EconTalk with Russ Roberts, he points out that the first wave of machines replaced human muscle, to which we responded by shifting to more cognitive tasks. The second wave, however, is automating cognitive work, which scares people. If machines have both muscles and brains, how can we compete? Are we staring down mass unemployment in the coming decades?
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For Brynjolfsson, the fear itself is a big part of the problem, pushing us to do counter-productive things like “trying to preserve the past at the expense of the future.” He argues that we can’t stop technology, and actually, we shouldn’t try. “What we need to do is embrace the dynamism that helps us adapt to that. The more we do to try to slow down change, I think the more stagnant we become and the worse off we become.”

So how can we best embrace change? Two things Brynjolfsson mentions are education and entrepreneurship. Regarding the former, he argues not only that we need to become more educated, as the future jobs that have yet to be invented will likely require a more educated workforce, but also that education itself needs to be reimagined to take advantage of new technology instead of carrying on lecturing small groups as we have done for millennia. And how exactly we should do that is, like so much else, up to entrepreneurs. We need to make entrepreneurship easier in a number of ways so that millions of new ideas can be constantly battling it out in the marketplace. “A lot of them are going to be really dumb and they are going to fail,” says Brynjolfsson. But some of them are going to be revolutionary, creating jobs we haven’t even dreamed of yet that allow us to work with the machines instead of trying to compete with them.

And yes, we will probably end up working less, just as we now work fewer hours than we did two hundred years ago. But we will work less to produce more, with many goods and services—think Wikipedia—becoming free or almost free. We already get on the order of $300 billion a year in free stuff from the Internet. As long as we embrace the future and focus on being as adaptable as we can, there’s no reason to fear that the increased wealth of tomorrow cannot be widely shared.

Bradley Doucet is Le Québécois Libre‘s English Editor and the author of the blog Spark This: Musings on Reason, Liberty, and Joy. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness. He also writes for The New Individualist, an Objectivist magazine published by The Atlas Society, and sings.
The Minimum Wage Forces Low-Skill Workers to Compete with Higher-Skill Workers – Article by George Reisman

The Minimum Wage Forces Low-Skill Workers to Compete with Higher-Skill Workers – Article by George Reisman

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The New Renaissance Hat
George Reisman
January 4, 2014
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The efforts underway by the Service Employees International Union, and its political and media allies, to raise the minimum wage from $7.25 to $15 per hour would, if successful, cause major unemployment among low-skilled workers, who are the supposed beneficiaries of those efforts.

The reason is not only the fact that higher wages serve to raise costs of production and thus prices, which in turn serves to reduce physical sales volume and thus the number of workers needed. There is also another equally, if not more important reason in this case, and it is a reason which is only very inadequately described by reference to the substitution of machinery or automation for the direct labor of workers when wages are increased.

This is the fact that a low wage constitutes a competitive advantage for less-skilled workers that serves to protect them from competition from more-skilled workers. In other words, a wage of $7.25 per hour for fast-food workers serves to protect those workers from competition from workers able to earn $8 to $15 per hour in other lines of work. The workers able to earn these higher wage rates are not interested in seeking employment at the lower wage rates of the fast-food workers.

But if the wage of the fast-food workers, and all other workers presently earning less than $15 per hour, is raised to $15 per hour, then these more capable workers can now earn as much as fast-food workers as they can in any of the occupations in which they had been working up to now.

Moreover, the widespread rise in wage rates to $15 per hour will cause unemployment in all of the occupations affected. The unemployed clerks, telemarketers, factory workers, and whoever, who otherwise would have earned between $8 and $15 per hour, will have no reason not to apply for work in fast food, which will now pay as much as any other occupation that is open to them. And since those workers are more capable, it is overwhelmingly likely that to the extent that they do seek employment as fast-food workers, they will be preferred over the low-skilled workers who presently work in fast-food establishments. Thus, the rise in the wage of the fast-food workers will serve as an invitation to the competition of large numbers of workers who do not presently think of working as fast-food workers and who, being better qualified, will almost certainly take away their jobs.

Between less employment overall in the least-skilled lines of work such as fast food, and the incentive created for vastly increased competition for employment in those lines coming from more qualified workers, the effect could well be to close those lines altogether to the employment of workers at the low end of skill and ability. That, of course, would deprive these people of the opportunity to acquire skills and abilities from work experience that otherwise would have enabled them to become capable of performing more demanding jobs later on.

What the demand for a $15 an hour minimum wage represents is a case of low-skilled workers being led to reach for a high-wage “bird in the bush,” so to speak. Unfortunately, at the high wage, there are both fewer birds in the bush than are presently in hand and most or all of them will fly away into the hands of others, who possess greater skills and abilities, if the attempt is made to reach for them.

This must ultimately be the result even if somehow the present fast-food workers and the like could be enabled to keep their jobs for a time. Even so, practically every time that it became a question of hiring someone new, the new employees would almost certainly be drawn from the ranks of workers of greater skill and ability than those who had customarily been employed in these jobs. Thus, even if not immediately, in time there would simply be no more room in the economic system for workers at or near the bottom of the skills ladder.

No one can question the desirability of being able to earn $15 an hour rather than $7.25 an hour. Still more desirable would be the ability to earn $50 an hour instead of $15 an hour. However, it is necessary to know considerably more than this about economics before attempting to enact sweeping changes in economic policy, changes to be achieved by attempting to organize a mass movement that is based on nothing but a desire for economic improvement and no real knowledge whatever of how actually to achieve it.

George Reisman, Ph.D., is Pepperdine University Professor Emeritus of Economics and the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996; Kindle Edition, 2012). See his Amazon.com author’s central page for additional titles by him. His website is www.capitalism.net and his blog is www.georgereismansblog.blogspot.com. Follow him on Twitter.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

The Hubris of Neo-Luddism – Article by Franco Cortese

The Hubris of Neo-Luddism – Article by Franco Cortese

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The New Renaissance Hat
Franco Cortese
June 19, 2013
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One of the most common anti-Transhumanist tropes one finds recurring throughout Transhumanist rhetoric is our supposedly rampant hubris. Hubris is an ancient Greek concept meaning excess of pride that carries connotations of reckless vanity and heedless self-absorbment, often to the point of carelessly endangering the welfare of others in the process. It paints us in a selfish and dangerous light, as though we were striving for the technological betterment of ourselves alone and the improvement of the human condition solely as it pertains to ourselves, so as to be enhanced relative to the majority of humanity.
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In no way is this correct or even salient. I, and the majority of Transhumanists, Techno-Progressives, and emerging-tech enthusiasts – I would claim – work toward promoting beneficial outcomes and deliberating the repercussions and most desirable embodiments of radically transformative technologies for the betterment of all mankind first and foremost, and only secondarily for ourselves, if at all.
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The ired irony of this situation is that the very group that most often hails the charge of Hubris against the Transhumanist community is, according to the logic of hubris, more hubristic than those they rail their charge against. Bio-Luddites, and more generally Neo-Luddites, can be clearly seen to be more self-absorbed and recklessly selfish than the Transhumanists they are so quick to raise qualms against.

The logic of this conclusion is simple: Transhumanists seek merely to better determine the controlling circumstances and determining conditions of our own selves, whereas Neo-Luddites seek to determine such circumstances and conditions (even if using a negative definition, i.e., the absence of something) not only for everyone besides themselves alive at the moment, but even for the unquantable multitudes of minds and lives still fetal in the future.

We do not seek to radically transform Humanity against humans’ will; indeed, this is so off the mark as to be antithetical to the true Transhumanist impetus – for we seek to liberate human wills, not leash or lash them. We seek to offer all humans alive the possibility of transforming themselves more effectively according to their own subjective projected objectives; of actualizing and realizing themselves; ultimately of determining themselves for themselves. We seek to offer every member of Humanity the choice to better choose and the option for more optimal options: the self not as final subject but as project-at-last.

Neo-Luddites, on the other hand, wish to deny the whole of humanity that choice. They actively seek the determent, relinquishment, or prohibition of technological self-transformation, and believe in the heat of their idiot-certainty that they have either the intelligence or the right to force their own preference upon everyone else, present and future. Such lumbering, oafish paternalism patronizes the very essence of Man, whose only right is to write his own and whose only will is to will his own – or at least to vow that he will will his own one fateful yet fate-free day.

We seek solely to choose ourselves, and to give everyone alive and yet-to-live the same opportunity: of choice. Neo-Luddites seek not only to choose for themselves but to force this choice upon everyone else as well.

If any of the original Luddites were alive today, perhaps they would loom large to denounce the contemporary caricature of their own movement and rail their tightly spooled rage against the modern Neo-Luddites that use Ludd’s name in so reckless a threadbare fashion. At the heart of it, they were trying to free their working-class fellowship. There would not have been any predominant connotations of extending the distinguishing features of the Luddite revolt into the entire future, no hint of the possibility that they would set a precedent which would effectively forestall or encumber the continuing advancement of technology at the cost of the continuing betterment of humanity.

Who were they to intimate that continuing technological and methodological growth and progress would continually liberate humanity in fits and bounds of expanding freedom to open up the parameters of their possible actions – would free choice from chance and make the general conditions of being continually better and better? If this sentiment were predominant during 1811-1817, perhaps they would have lain their hammers down. They were seeking the liberation of their people, after all; if they knew that their own actions might spawn a future movement seeking to dampen and deter the continual technological liberation of Mankind, perhaps they would have remarked that such future Neo-Luddites missed their point completely.

Perhaps the salient heart of their efforts was not the relinquishment of technology but rather the liberation of their fellow man. Perhaps they would have remarked that while in this particular case technological relinquishment coincided with the liberation of their fellow man, this shouldn’t be heralded as a hard rule. Perhaps the they would have been ashamed of the way in which their name was to be used as the nametag and figurehead for the contemporary fight against liberty and Man’s autonomy. Perhaps Ludd is spinning like a loom in his grave right now.

Does the original Luddites’ enthusiasm for choice and the liberation of their fellow man supersede his revolt against technology? I think it does. The historical continuum of which Transhumanism is but the contemporary leading-tip encompasses not only the technological betterment of self and society, but the non-technological betterment as well. Historical Utopian ventures and visions are valid antecedents of the Transhumanist impetus, just as Techno-Utopian historical antecedents are. While the emphasis on technology predominant in Transhumanist rhetoric isn’t exactly misplaced (simply because technology is our best means of affecting and changing self and society, whorl and world, and thus our best means of improving it according to subjective projected objectives as well), it isn’t a necessary precondition, and its predominance does not preclude the inclusion of non-technological attempts to improve the human condition as well.

The dichotomy between knowledge and device, between technology and methodology, doesn’t have a stable ontological ground in the first place. What is technology but embodied methodology, and methodology but internalized technology? Language is just as unnatural as quantum computers in geological scales of time. To make technology a necessary prerequisite is to miss the end for the means and the mark for a lark. The point is that we are trying to consciously improve the state of self, society, and world; technology has simply superseded methodology as the most optimal means of accomplishing that, and now constitutes our best means of effecting our affectation.

The original Luddite movement was less against advancing technology and more about the particular repercussions that specific advancements in technology (i.e., semi-automated looms) had on their lives and circumstances. To claim that Neo-Luddism has any real continuity of impetus with the original Luddite movement that occurred throughout 1811-1817 may actually be antithetical to the real motivation underlying the original Luddite movement – namely the liberation of the working class. Indeed, Neo-Luddism itself, as a movement, may be antithetical to the real impetus of the initial Luddite movement both for the fact that Neo-Luddites are trying to impose their ideological beliefs upon others (i.e., prohibition is necessarily exclusive, whereas availability of the option to use a given technology is non-exclusive and forces a decision on no one) and because they are trying to prohibit the best mediator of Man’s ever-increasing self-liberation – namely technological growth.

Support for these claims can be found in the secondary literature. For instance, in Luddites and Luddism Kevin Binfield sees the Luddite movement as an expression of worker-class discontent during the Napoleonic Wars than having rather than as an expression of antipathy toward technology in general or toward advancing technology as general trend (Binfield, 2004).

And in terms of base-premises, it is not as though Luddites are categorically against technology in general; rather they are simply against either a specific technology, a specific embodiment of a general class of technology, or a specific degree of technological sophistication. After all, most every Luddite alive wears clothes, takes antibiotics, and uses telephones. Legendary Ludd himself still wanted the return of his manual looms, a technology, when he struck his first blow. I know many Transhumanists and Technoprogressives who still label themselves as such despite being wary of the increasing trend of automation.

This was the Luddites’ own concern: that automation would displace manual work in their industry and thereby severely limit their possible choices and freedoms, such as having enough discretionary income to purchase necessities. If their government were handing out guaranteed basic income garnered from taxes to corporations based on the degree with which they replace previously manual labor with automated labor, I’m sure they would have happily lain their hammers down and laughed all the way home. Even the Amish only prohibit specific levels of technological sophistication, rather than all of technology in general.

In other words no one is against technology in general, only particular technological embodiments, particular classes of technology, or particular gradations of technological sophistication. If you’d like to contest me on this, try communicating your rebuttal without using the advanced technology of cerebral semiotics (i.e., language).

References

Binfield, K. (2004). Luddites and Luddism. Baltimore and London: The Johns Hopkins University Press.

Franco Cortese is an editor for Transhumanity.net, as well as one of its most frequent contributors.  He has also published articles and essays on Immortal Life and The Rational Argumentator. He contributed 4 essays and 7 debate responses to the digital anthology Human Destiny is to Eliminate Death: Essays, Rants and Arguments About Immortality.

Franco is an Advisor for Lifeboat Foundation (on its Futurists Board and its Life Extension Board) and contributes regularly to its blog.

Automation, Jobs, and Human Prosperity – Video by G. Stolyarov II

Automation, Jobs, and Human Prosperity – Video by G. Stolyarov II

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Contrary to popular belief, automation does not lead to the loss of jobs. Automation is humankind’s best friend in terms of raising standards of living and freeing up human efforts to be devoted to truly creative and innovative tasks. Furthermore, Mr. Stolyarov argues that jobs are not in themselves a desirable goal; higher prosperity is – and higher prosperity allows humans to enjoy greater leisure while producing more than their ancestors could with more primitive tools.

Remember to LIKE, FAVORITE, and SHARE this video in order to spread rational discourse on this issue.