Martin Ford is at the forefront of writers describing a pessimistic view of the future when all jobs can be automated. His book, “Lights in the Tunnel” was published in 2009. I reviewed it and a blog post and also did a video essay on the subject.
He recently took economist Paul Krugman to task in a recent blog post.
“Paul Krugman has recently taken a keen interest in the rise of robots and automation — an issue that I have been focusing on since the publication of my book on this subject back in 2009. In a recent post, Krugman says the following:
Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.
Ford continues: “I think there is a fundamental problem with this way of thinking: as jobs and incomes are relentlessly automated away, the bulk of consumers will lack the income necessary to drive the demand that is critical to economic growth.
“Every product and service produced by the economy ultimately gets purchased (consumed) by someone. In economic terms, “demand” means a desire or need for something – backed by the ability and willingness to pay for it. There are only two entities that create final demand for products and services: individual people and governments. (And we know that government can’t be the demand solution in the long run). Individual consumer spending is typically around 70% of GDP in the United States.”
Ford does get directly to the crux of the matter. If there are no jobs, then there is no income, then there are no consumers, then there is no need to make anything, so we don’t have jobs anyway.
I have been thinking about a radical rethinking of this idea. These ideas presume an economy based on cash. We really haven’t had an economy that required so much cash for that many years. Granted I’m from a rural area, but most folks I knew when I was a child knew how to get by with a lot less cash. They had big gardens and knew how to preserve foods. They raised chickens and other animals. They did a lot of hunting and fishing.
None of this works in a city necessarily, but those are skills that we’ve left behind. Speaking of skills. Humans want to be creative and productive. Ever heard of a barter economy? There was some of that when I was a kid, too. My dad was an accountant. Sometimes he was paid with a ham or something like that. The IRS may not like a barter economy, but if indeed jobs disappear and no one has cash, I bet that you’ll see a strong barter economy spring up.
Automation creates jobs
Meanwhile a trade association representing companies that manufacture robotics, vision systems and motion control systems maintained automation actually adds jobs. It offered no foundation for the premise. I think mostly it was just marketing its trade show. But an interesting point.
By the way, I am fascinated when all the non-manufacturing people–even Nobel-prize winning economists–discuss manufacturing. They don’t have a clue, do they? And they always equate automation and robots.
I never thought I’d highlight the American Enterprise Institute, but Confronting the U.S. Advanced Manufacturing Skills Gap By Thomas A. Hemphill, Waheeda Lillevik, and Mark J. Perry published last Monday is an excellent look at manufacturing and jobs.
Here are some excerpts, We have a skills gap and it’s going to get worse. Here’s what we can do about it.
In its report, the BCG concludes that U.S. manufacturers are trying to hire high-skilled workers at “rock-bottom” wage rates, and that is not what it would characterize as a “skills gap.” As Adam Davidson asks in his recent New York Times Magazine article “Skills Don’t Pay the Bills”: Who wants to operate a highly sophisticated machine for $10 per hour? Answer: not a lot of people. As a result, says Davidson, there really isn’t a skills gap. Rather, it’s the unwillingness of manufacturers to pay higher wages that is causing the skilled worker shortage, which is a view that is consistent with the BCG report.
How do we reconcile the fact that NAM is reporting a skilled worker shortage of 600,000, while the BCG’s estimate of the gap is only 80,000–100,000 workers, and Adam Davidson dismissively refers to the current situation as a “so-called skills gap” and a “fake skills gap”?
To start, just because workers may not want to train for a job that has a low rate of pay does not necessarily mean that a real skills gap does not exist. The discussion should not focus so much on whether the worker shortage is 80,000 or 600,000, but rather on identifying the root cause of the skills gap, large or small, and how to address it.
Although there are some differences in estimates of the magnitude of the current skilled worker shortage in manufacturing, there is general consensus that a skills gap exists and that it will likely worsen in the near future. Fortunately, the issue of the skills gap is generating a fair amount of national media and industry attention, which is bringing some well-deserved debate to an important topic that is crucial to a key sector of the U.S. economy.
The future of America’s advanced manufacturing sector looks very promising overall, especially if the reshoring/insourcing trend continues and manufacturers can find skilled workers for the factory floor of the 21st century. Now that the manufacturing sector and the education establishment are working together to confront the advanced manufacturing skills gap and train skilled workers for advanced manufacturing, we are hopefully on a path toward resolving the current skilled worker shortage.
In “Race Against the Machine”, Erik Brynjolfsson and Andrew McAfee also argue for the necessity of educating the workforce.
The New York Times guy misses one point. At least in western Ohio, skilled machine operators and technicians who keep them running make more than $10/hr. But then, we don’t need New York City incomes to live well out here, either.