“…robots now poses the central economic dilemma of the Obama era”
…In their book, Brynjolfsson and McAfee cite a meeting between Henry Ford and Walter Reuther, the union leader. Pointing at his new robots, Mr Ford says, “How will you get union dues from them?” Mr Reuther replied: “How will you get them to buy your cars?”
– Edward Luce, FT, Feb. 4, 2013
Run, don’t walk to Edward Luce’s latest piece in today’s FT. He makes the case, which we have been pounding since the birth of this blog, that robots are having a structural and deleterious impact on long-term employment.
With each month, the US economy becomes steadily more automated. In January the US economy added just 4,000 manufacturing jobs, and the net increase since July is zero. Yet last month, manufacturing activity rose by its fastest rate since April, according to the Institute for Supply Management. The difference boils down to robots, which pose an increasingly nagging paradox: the more there are, the better for overall growth (since they boost productivity); yet the worse things become for the middle class. US median income has fallen in each of the last five years.
He also notes that the effects of technology are only just beginning to be felt in education and healthcare – the two most labour-intensive areas of the US economy that both suffer from productivity stagnation:
Online education is beginning to spread. It is also meeting resistance. “The reactionaries in the faculties will eventually be grandfathered out,” says Tyler Cowen, co-founder of the Marginal Revolution University, which has pioneered free online learning in economics and other subjects. “We’ll still need Harvard as a dating service,” he jokes. “But the mid-level private universities do not know what is about to hit them.”
Even in healthcare, which reliably added jobs when every other sector was shedding them, technology is starting to look labour-saving. Last week, the Food and Drug Administration issued a patent to RP-Vita, the first “human interacting autonomous robot” for hospitals. Forget downloading diagnostic apps. At some point we will be boring Watson with our symptoms. For many of us there will be big gains. The most innovative teachers will be able to outsource lessons to the internet and focus on each child’s specific problems. The best doctors will be freed from basic diagnostics to do the same.
We hope the Fed incorporates the impact of technology on employment in their macro models lest another major policy mistake is in the making. Click here to read the full FT article.
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