>> As human needs and wants are essentially unlimited (most of us want to go to the moon if it was possible) then, for each good that falls in price, demand will shift to other goods. As automation lowers the cost of each additional good, a person is able to consume more of that good or more additional goods.
I'm well aware of the Luddite Fallacy :)
While it is true that the economy has thus far been able to re-absorb a workforce displaced by automation, we should not take as a given this will be the case forever.
Certainly not based on the premise of "infinite human wants".
Frankly, I am not convinced our desires are in fact infinite. Our demands do adjust with opportunity, but only to a point. For instance, many people are satisfied after achieving a certain relative level of security and comfort.
However, more important than demand is how many workers are required to meet the supply. If innovations in automation continue at even a linear pace (and, frankly, we're probably talking quadratic), then we will eventually reach a point where staggeringly few actual workers are required for the production of a given good.
On a slightly less speculative note, a documented phenomenon of workplace automation in developed nations in recent years is the increase in income & labor polarization (or, inequality) [1]. Essentially, while total employment is somewhat maintained, skill (and, to a large extent) income become polarized at the ends.
From the MIT study [1] :
In net, employment changes in the U.S. during this
period were strongly U-shaped in skill level, with
relative employment declines in the middle of the
distribution and relative gains at the tails
...
Technological progress in our model takes the form of an
ongoing decline in the cost of computerizing routine
tasks, which can be performed both by computer capital
and low skill (‘non-college’) workers in the production
of goods. The adoption of computers substitutes for low
skill workers performing routine tasks–such as
bookkeeping, clerical work, and repetitive production
and monitoring activities–which are readily computerized
because they follow precise, well-defined procedures.
Importantly, occupations intensive in these tasks are
most commonplace in the middle of the occupational skill
and wage distribution
The same paper does mention that some low skilled workers are able to shift (and even see some relative wages rise) towards service economy jobs. However, that certainly doesn't change the macro picture.
Lastly, in the near-mid term the greatest challenge is most likely not the absolute out-and-out displacement of work, but rather that displacement vastly outpaces the ability of the economy to re-generate employment.
>> This has been going on for a millenia, and there is no tipping-point or transition point, as it is a very smooth curve.
A very smooth J-curve perhaps. Implying that historical trends over the past millenia are a guaranteed predictor of future events is a highly dubious claim. We are living in a relatively unprecedented age of advancement and growth by just about every possible measure, and it's hardly a given that what has held true in the past (e.g. "Luddite's fallacy") will always hold true.
1) Income inequality isn't something that worries me personally, as long as all income levels are rising in quality of life. It's absolute, not relative poverty that concerns me - definitely it's fashionable to hate on billionaires at the moment and I understand that, but don't subscribe to it. It's true that the inventor/owner/beneficiary of newly-automated industries accrues a large amount of wealth, but generally this wealth is either put back through into new ventures through investment, higher purchases or even philanthropy. This is self-evident in Silicon Valley, which has been operating a virtuous cycle of the beneficiaries of breakthrough technologies both spending it on themselves, re-investing in new businesses and giving it away to charities.
2) I don't really put any credence in Malthusian scenarios where the long-term ability of humans to improve their lives suffers a sudden and irreversible decline, so I can't agree on that type of point. The reason I don't put any credence in these is because they've always been popular, but never have been true. Of course, there is the possibility that someday automation completely eliminates all workers leading to a destitute class, or overpopulation overtaxes the food supply, but all evidence points to supreme adaptability of people to overcome these problems, so on the balance of probabilities I take it as a given that the same progress will continue. Optimism, arrogance or idiocy - people would accuse this view of all three, depending on their viewpoint.
3) It often gets missed that when automation occurs, even the people who lose their jobs often get access to the product of that automation at a cheaper price than before, and in the long run are better off once re-employment is found. The classic case is the buggy whip maker, who, despite losing their livelihood, is eventually able to afford the Model T that put them out of business.
>> 1) Income inequality isn't something that worries me personally, as long as all income levels are rising in quality of life.
We disagree, in that relative inequality is IMHO a concern. The consequences of high societal inequality are reasonably well documented. Negative effects of high inequality include but are not limited to higher rates of obesity, incarceration & drug use, and lower rates of life expectancy, social mobility and educational performance.[1][4]
In addition to affecting levels of trust and civic
engagement, inequality in society has also shown to be
highly correlated with crime rates. Most studies looking
into the relationship between crime and inequality have
concentrated on homicides—since homicides are almost
identically defined across all nations and
jurisdictions. There have been over fifty studies
showing tendencies for violence to be more common in
societies where income differences are larger.[1][3]
Furthermore, lower levels if inequality are correlated to an increase in sustained periods of economic growth, both among developing as well as developed nations [2].
>> 2)Of course, there is the possibility that someday automation completely eliminates all workers leading to a destitute class, or overpopulation overtaxes the food supply, but all evidence points to supreme adaptability of people to overcome these problems, so on the balance of probabilities I take it as a given that the same progress will continue. Optimism, arrogance or idiocy - people would accuse this view of all three, depending on their viewpoint.
Reasonable people can agree to disagree on this point.
>>3) It often gets missed that when automation occurs, even the people who lose their jobs often get access to the product of that automation at a cheaper price than before, and in the long run are better off once re-employment is found. The classic case is the buggy whip maker, who, despite losing their livelihood, is eventually able to afford the Model T that put them out of business.
You will find no argument from me that the economy has thus far been able to re-allocate labor assets reasonably efficiently. The key to the above is not the availability of new goods (the Model T), but the ability of the laborer (buggy maker) to secure re-employment having been made obsolete. You mention it as a given, however this is not necessarily the case.
Since this ultimately ties back to point #2 above, we can agree to disagree. I personally view current trends as being volatile enough to make direct comparisons with the past highly unreliable as markers for future prediction.
Comments
>> As human needs and wants are essentially unlimited (most of us want to go to the moon if it was possible) then, for each good that falls in price, demand will shift to other goods. As automation lowers the cost of each additional good, a person is able to consume more of that good or more additional goods.
I'm well aware of the Luddite Fallacy :)
While it is true that the economy has thus far been able to re-absorb a workforce displaced by automation, we should not take as a given this will be the case forever. Certainly not based on the premise of "infinite human wants".
Frankly, I am not convinced our desires are in fact infinite. Our demands do adjust with opportunity, but only to a point. For instance, many people are satisfied after achieving a certain relative level of security and comfort.
However, more important than demand is how many workers are required to meet the supply. If innovations in automation continue at even a linear pace (and, frankly, we're probably talking quadratic), then we will eventually reach a point where staggeringly few actual workers are required for the production of a given good.
On a slightly less speculative note, a documented phenomenon of workplace automation in developed nations in recent years is the increase in income & labor polarization (or, inequality) [1]. Essentially, while total employment is somewhat maintained, skill (and, to a large extent) income become polarized at the ends.
From the MIT study [1] :
The same paper does mention that some low skilled workers are able to shift (and even see some relative wages rise) towards service economy jobs. However, that certainly doesn't change the macro picture.Lastly, in the near-mid term the greatest challenge is most likely not the absolute out-and-out displacement of work, but rather that displacement vastly outpaces the ability of the economy to re-generate employment.
>> This has been going on for a millenia, and there is no tipping-point or transition point, as it is a very smooth curve.
A very smooth J-curve perhaps. Implying that historical trends over the past millenia are a guaranteed predictor of future events is a highly dubious claim. We are living in a relatively unprecedented age of advancement and growth by just about every possible measure, and it's hardly a given that what has held true in the past (e.g. "Luddite's fallacy") will always hold true.
[1] http://economics.mit.edu/files/1474
[2] http://www.economist.com/blogs/babbage/2011/11/artificial-in...
I'll keep my response brief, running out of time:
1) Income inequality isn't something that worries me personally, as long as all income levels are rising in quality of life. It's absolute, not relative poverty that concerns me - definitely it's fashionable to hate on billionaires at the moment and I understand that, but don't subscribe to it. It's true that the inventor/owner/beneficiary of newly-automated industries accrues a large amount of wealth, but generally this wealth is either put back through into new ventures through investment, higher purchases or even philanthropy. This is self-evident in Silicon Valley, which has been operating a virtuous cycle of the beneficiaries of breakthrough technologies both spending it on themselves, re-investing in new businesses and giving it away to charities.
2) I don't really put any credence in Malthusian scenarios where the long-term ability of humans to improve their lives suffers a sudden and irreversible decline, so I can't agree on that type of point. The reason I don't put any credence in these is because they've always been popular, but never have been true. Of course, there is the possibility that someday automation completely eliminates all workers leading to a destitute class, or overpopulation overtaxes the food supply, but all evidence points to supreme adaptability of people to overcome these problems, so on the balance of probabilities I take it as a given that the same progress will continue. Optimism, arrogance or idiocy - people would accuse this view of all three, depending on their viewpoint.
3) It often gets missed that when automation occurs, even the people who lose their jobs often get access to the product of that automation at a cheaper price than before, and in the long run are better off once re-employment is found. The classic case is the buggy whip maker, who, despite losing their livelihood, is eventually able to afford the Model T that put them out of business.
>> 1) Income inequality isn't something that worries me personally, as long as all income levels are rising in quality of life.
We disagree, in that relative inequality is IMHO a concern. The consequences of high societal inequality are reasonably well documented. Negative effects of high inequality include but are not limited to higher rates of obesity, incarceration & drug use, and lower rates of life expectancy, social mobility and educational performance.[1][4]
Furthermore, lower levels if inequality are correlated to an increase in sustained periods of economic growth, both among developing as well as developed nations [2].>> 2)Of course, there is the possibility that someday automation completely eliminates all workers leading to a destitute class, or overpopulation overtaxes the food supply, but all evidence points to supreme adaptability of people to overcome these problems, so on the balance of probabilities I take it as a given that the same progress will continue. Optimism, arrogance or idiocy - people would accuse this view of all three, depending on their viewpoint.
Reasonable people can agree to disagree on this point.
>>3) It often gets missed that when automation occurs, even the people who lose their jobs often get access to the product of that automation at a cheaper price than before, and in the long run are better off once re-employment is found. The classic case is the buggy whip maker, who, despite losing their livelihood, is eventually able to afford the Model T that put them out of business.
You will find no argument from me that the economy has thus far been able to re-allocate labor assets reasonably efficiently. The key to the above is not the availability of new goods (the Model T), but the ability of the laborer (buggy maker) to secure re-employment having been made obsolete. You mention it as a given, however this is not necessarily the case.
Since this ultimately ties back to point #2 above, we can agree to disagree. I personally view current trends as being volatile enough to make direct comparisons with the past highly unreliable as markers for future prediction.
[1]http://en.wikipedia.org/wiki/Income_inequality#Effects_of_in...
[2]http://www.imf.org/external/pubs/ft/sdn/2011/sdn1108.pdf
[3]http://psych.mcmaster.ca/dalywilson/iiahr2001.pdf
[4]http://en.wikipedia.org/wiki/The_Spirit_Level:_Why_More_Equa...