{"id":3407,"date":"2014-09-19T01:12:06","date_gmt":"2014-09-19T01:12:06","guid":{"rendered":"http:\/\/www.rationalargumentator.com\/index\/?p=3407"},"modified":"2014-09-19T01:12:06","modified_gmt":"2014-09-19T01:12:06","slug":"ludd-vs-schumpeter","status":"publish","type":"post","link":"https:\/\/www.rationalargumentator.com\/index\/blog\/2014\/09\/ludd-vs-schumpeter\/","title":{"rendered":"Ludd vs. Schumpeter: Fear of Robot Labor is Fear of the Free Market – Article by Wendy McElroy"},"content":{"rendered":"
\n
\"The<\/div>\n<\/div>\n
Wendy McElroy
\n<\/big><\/big><\/strong><\/span><\/div>\n
September 18, 2014<\/big><\/span><\/div>\n
******************************<\/div>\n
\n

\u201cReport Suggests Nearly Half of U.S. Jobs Are Vulnerable to Computerization<\/a>,\u201d screams a headline. The cry of \u201crobots are coming to take our jobs!\u201d is ringing across North America. But the concern reveals nothing so much as a fear\u2014and misunderstanding\u2014of the free market.<\/p>\n

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.<\/p>\n

Given that reality, the cry that should be heard is, \u201cBeware of monopolies controlling technology through restrictive patents or other government-granted privilege.\u201d<\/p>\n

The robots are coming!<\/strong><\/p>\n

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:<\/p>\n

1. Robots are now highly developed and less expensive.<\/em> Such traits make them an increasingly popular option. The Banque de Luxembourg News<\/em> offered a snapshot:<\/p>\n

The currently-estimated<\/a> average unit cost of around $50,000 should certainly decrease further with the arrival of \u201clow-cost\u201d robots on the market. This is particularly the case for \u201cBaxter,\u201d the humanoid robot with evolving artificial intelligence from the US company Rethink Robotics, or \u201cUniversal 5\u201d from the Danish company Universal Robots, priced at just $22,000 and $34,000 respectively.<\/p>\n

Better, faster, and cheaper are the bases of increased productivity.<\/p>\n

2. Robots will be interacting more directly with the general public.<\/em> The fast-food industry is a good example. People may be accustomed to ATMs, but a robotic kiosk that asks, \u201cDo you want fries with that?\u201d will occasion widespread public comment, albeit temporarily.<\/p>\n

Comment from displaced fast-food restaurant workers may not be so transient. NBC News <\/em>recently described<\/a> 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.\u00a0The protesters, ironically, are speeding up their own unemployment by making themselves expensive and difficult to manage.<\/p>\n

Labor costs<\/strong><\/p>\n

Compared to humans, robots are cheaper to employ\u2014partly for natural reasons and partly because of government intervention.<\/p>\n

Among the natural costs are training, safety needs, overtime, and personnel problems such as hiring, firing and on-the-job theft. Now, according<\/a> to Singularity Hub<\/em>, robots can also be more productive in certain roles. They\u00a0 \u201ccan 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.\u201d<\/p>\n

Government-imposed costs include minimum-wage laws and mandated benefits, as well as discrimination, liability, and other employment lawsuits. The employment advisory Workforce<\/em> explained<\/a>, \u201cDefending 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\u2014which, much more often than not, is the case\u2014the employer can expect to spend a total of $175,000 to $250,000 to take a case to a jury verdict at trial.\u201d<\/p>\n

At some point, human labor will make sense only to restaurants that wish to preserve the \u201cpersonal touch\u201d or to fill a niche.<\/p>\n

The underlying message of robotechnophobia<\/strong><\/p>\n

The tech site Motherboard<\/em> aptly commented<\/a>, \u201cThe coming age of robot workers chiefly reflects a tension that\u2019s 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.\u201d<\/p>\n

Ironically, Motherboard<\/em> points to one critic of capitalism who defended technological advances in production: none other than Karl Marx. He called machines \u201cfixed capital.\u201d The defense occurs in a segment<\/a> called \u201cThe Fragment on Machines\u201d \u00a0in the unfinished but published manuscript Grundrisse der Kritik der Politischen \u00d6konomie<\/em> (Outlines of the Critique of Political Economy).<\/em><\/p>\n

Marx believed the \u201cvariable capital\u201d (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 \u201cemancipated labour\u201d because capitalists would \u201cemploy people upon something not directly and immediately productive, e.g. in the erection of machinery.\u201d The relationship change would revolutionize society and hasten the end of capitalism itself.<\/p>\n

Never mind that the idea of \u201csurplus labor\u201d 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, \u201cHistorically, technology has created more jobs than it destroys and there is no reason to think otherwise in this case.\u201d<\/p>\n

Forbes<\/em> pointed out<\/a> that U.S. unemployment rates have changed little over the past 120 years (1890 to 2014) despite massive advances in workplace technology:<\/p>\n

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.<\/p>\n

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 \u201cmonopoly.\u201d But we should not equivocate on two forms of monopoly.<\/p>\n

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.<\/p>\n

Restrictive patents are a basic building block of crony capitalism because they grant a business the \u201cright\u201d to exclude competition. Many libertarians deny the legitimacy of any<\/em> patents. The nineteenth century classical liberal Eugen von B\u00f6hm-Bawerk rejected patents<\/a> on classically Austrian grounds. He called them \u201clegally compulsive relationships of patronage which are based on a vendor\u2019s exclusive right of sale\u201d: 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.<\/p>\n

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<\/em> article<\/a> addressed the costs imposed on tech companies by \u201cpatent trolls\u201d\u2014people who do not produce or supply services based on patents they own but use them only to collect licensing fees and legal settlements. \u201cLitigation costs in the United States related to patent assertion entities [trolls],\u201d the article claimed, \u201ctotaled nearly $30 billion in 2011, more than four times the costs in 2005.\u201d\u00a0These costs and associated ones, like patent infringement insurance, harm a society’s productivity by creating stasis and\u00a0 preventing competition.<\/p>\n

Dean Baker, co-director of the progressive Center for Economic Policy Research, described<\/a> the difference between robots produced on the marketplace and robots produced by monopoly. Private producers \u201cwon’t directly get rich\u201d because \u201crobots 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.\u201d \u00a0The monopoly \u201ctax\u201d will be passed on to impoverish both consumers and employees.<\/p>\n

Conclusion<\/strong><\/p>\n

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.<\/p>\n

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.<\/p>\n

Wendy McElroy (<\/span>wendy@wendymcelroy.com<\/a>) is an author, editor of\u00a0<\/span>ifeminists.com<\/a>, and Research Fellow at The Independent Institute (<\/span>independent.org<\/a>).<\/span><\/strong><\/p>\n

This article was originally published by The Foundation for Economic Education<\/a>.<\/strong><\/p>\n

\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Wendy McElroy September 18, 2014 ****************************** \u201cReport Suggests Nearly Half of U.S. Jobs Are Vulnerable to Computerization,\u201d screams a headline. The cry of \u201crobots are coming to take our jobs!\u201d is ringing across North America. But the concern reveals nothing so much as a fear\u2014and misunderstanding\u2014of 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…<\/p>\n

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