Increased Automation Won’t Eliminate Employment, But Bad Policy May Kill The Middle Class

Kevin Drum, though conceding that this worry has never been validated in the past, worries that increasing automation will leave poor humans with no jobs to do. I see no reason to worry about this in the short-term.

One key is that people like other people. When I was in San Antonio recently, I went on a boat tour of the Riverwalk. It came with a human guide who both piloted the boat and told us about the history of the city and the area. I’m fairly certain the driving of the boat could be automated with existing technology, and at a minimum the guide could have been replaced with a recording. But he wasn’t, because the human guide was funny and warm and because tourists prefer to interact with a human guide. By the same token, people like to go to group classes at gyms rather than watch instructional videos on the Internet. In really fancy buildings in Manhattan, they use old-fashioned human operated elevators. It’s not that you particularly need human beings to conduct face-to-face interaction with other human beings. Rather, it happens to be the case that most human beings prefer to interact face-to-face with other people and as long as that’s the case there will be demand for human labor. The thrilling world of personal services — restaurants, massages, trainers, interior designers, etc. — could employ many, many, many more people. If less human labor is required to manufacture and transport mass-produced physical goods, then everyone will have more custom-built cabinets, more labor-intensive restaurant meals, we’ll go back to wearing handmade suits, etc.

The right questions to ask about this are still the basic questions of skills/education and the distribution of consumption possibilities. The exciting world of personal services, just like the exciting world of goods production, admits of a variety of different occupations and the occupations pay different amounts. Chefs make more than busboys. And social and technological shocks influence the distribution of income. Economic improvements in the developing world over the past 20 years seem to have acted as a large negative shock to the value of labor in rich countries. In principle, this could have made everyone better off through taxes and redistribution, but in practice, we did the reverse. That’s terrible. We’re now talking about raising the retirement age, even when rising productivity suggests we should if anything be doing the reverse. That’s terrible. Our failure to upgrade our infrastructure is terrible. Our failure to invest in early childhood education is terrible. But none of these things are particularly terrible because of technological change. They’re terrible because terrible public policy is terrible.