The Nuts and Bots of Automation: Is There A Case For Automation Anxiety?

Justin Ong

Justin Ong

Justin Ong is an active contributor to the Adam Smith Center. His latest work is a series of introductory-level articles spanning various topics of politics, economics and philosophy. He is also an incoming student of philosophy with Nanyang Technological University.

The Myth of Machines Stealing Jobs Is Not Yet Dead

Elevator operators, lamplighters and chimney sweepers – many of these dangerous, mundane and laborious professions have vanished from our modern world today. Work has never been more meaningful, safe and productive. However, fear that human labour could soon become obsolete have cultivated much pessimism about automation.

Work today has become safer due to the improvement in machines. At the dawn of the Industrial Revolution, child labour was common in factories as their small bodies were optimal for squeezing into dangerous tight spaces to clear blockages.

Automation anxiety is not a new phenomenon. In the 19th Century, Englishmen staged a protest, known as the Luddite Movement, and destroyed textile machinery that displaced human labour. The US Secretary of Labour in 1927 expressed concerns that machines in steel mills would inflict massive unemployment. In more recent times, longshoremen (dock workers tasked to manually load goods onto cargo ships) staged a 134-day strike in 1971 after increased mechanisation in ports.

Nonetheless, automation opponents still claim that automation this time is different. They claim that exponential improvements in computing power and artificial intelligence now threaten to displace white-collar work, previously supposed as untouchable, such as lawyers and accountants. In addition, movies such as the Terminator forward the dystopian narrative of malicious robots enslaving men, fearmongering the public about automation. Even tech industry leaders such as Elon Musk and Bill Gates have vocally advocated for more tax and regulation on automation.

 

Man and machines

Contrary to concerns, workforce participation rate has actually gradually increased over the years. Ironically, automation has contributed to the net growth of jobs.

Since 1980, the Workforce participation rate, according to the US Bureau of Labour Statistics have either stabilised or increased gradually, casting doubt that automation has displaced more jobs overall.

The first reason is that in many cases, automation expands the value of human labour by exponentially boosting work productivity. Over the past 20 years, American manufacturing output increased by 40% while the number of Americans working in manufacturing dropped from 17.3 to 12.3 million workers between 1997 and 2017. Technologies such as forklifts and air conditioning have radically improved safety and comfort of our workplaces, creating more conducive environments to sharpen our productivity.

Economist David Autor developed a theory, which he calls the ‘O-Ring’, to explain why jobs still exist today. He observed that jobs often do not operate in a vacuum so improvements in one work process derived from automation also increase the value of other interlinked processes.

Robots lags behind in the performance of non-routine tasks as they lack the tacit knowledge humans have developed subconsciously through culture and evolution – also known as the Polanyi’s Paradox. Machines emphasise human creativity and complex decision making, rewarding and incentivising workers that are committed to upgrading their skills. Even in fields of routine work, machines still count on human oversight to perform. In warehouses, with the assistance of automation, ‘pickers’ are hired to locate, collect and box inventory as there is no cost-effective robot at present that has sufficiently developed physical exteriority and object recognition capabilities.

 

Bottomless wants

The second reason is that technological advancements spawn new industries to meet new consumer demands. Motivated to expand their consumer base, companies are perpetually innovating products and services so that even luxuries could be affordable for the common man.

Amazon fulfillment centres employs robots that work alongside human ‘pickers’ to sort inventory efficiently.

Just a century ago, our grandparents did not have television sets, commercial airline services or even the internet. More recently, taxi booking services are no longer luxuries exclusive to the rich as companies such as Grab and Uber have made them accessible to all of us. To support technological advancements, professions involving cyber security, data management and interface design have witnessed tremendous demand.

The slashing of operating costs of businesses expands their capacity to expand their consumer base by lowering prices. Amazon has cultivated the growth of many businesses through its Amazon Fulfillment program. Essentially, once products are delivered to an Amazon warehouse, Amazon efficiently takes charge of packaging, shipping and delivery as well as customer service, easing business logistics and customer management concerns. It is better for Amazon workers too as it has been reported that fulfillment centres pay on average 31% better than brick and mortar stores.

One might presume that sectors that do not face disruptions in technology would shrink but numerous examples suggest otherwise. Roadsides motel and fast food chains have increased rapidly to serve the ‘motoring public’ when cars replaced carriages. Certain traditional industries have also made a comeback as well. Tailors have received more customers in the age of online shopping as many frequently make purchases without verifying if the fitting of clothes are compatible.

 

A case study of bank tellers

The case study of the banking industry produced by economist James Bessen illustrates succinctly the mechanisms that stimulate job growth.

Instead of wiping out the employment of bank tellers, more bank tellers have been employed. Bank tellers today focus more on relationship banking instead of mundane cash handling tasks.

In the 1970, ATMs were introduced and soon quadrupled between 1995 and 2010 and surprisingly, the number of bank tellers did not dwindle. While the number of tellers per branch fell by a third, the reduction in operating costs of bank branches increased the number of bank branches nationwide. Information technology also enriched the opportunities for bank tellers to provide ‘relationship banking’. Bank tellers were no longer restricted to mundane cash handling services but were valued for their role as customer relationship personnel who advised customers on banking services such as investments and credit cards.

 

What about those jobs lost?

Economist Bryan Caplan argues that we should ‘make progress, not work’. As we usually frown upon unemployment, we pin ourselves to the fallacy that a healthy economy is one that has perfect employment regardless of the quality of work. The movement of labour produced by automation facilitates workers in moving to more valuable and productive jobs. Otherwise, we incur huge opportunity costs and our economies would stagnate.

Consider the massive improvements of our standard of living despite multiple waves displacing many workers. While our agricultural labour has shrunk from 40% in the 20th Century to less than 2% today, farms can still feed a much larger populace due to advancements in resources such as tractors and irrigation systems. Many of the unemployed young farm labour moved into schools to improve their literacy, which paved the way for a high school revolution that have contributed to our high literacy rates today. Unemployment inflicted by machines was and never will be a death sentence but a stage for society to cultivate and value human progress.

If we could teleport back in time, none of us would recommend farmers to stay as farmers and destroy tractors, or would you?

 

Resources

Caplan, Bryan. Make Progress, Not Work – Econ Chronicles – Learn Liberty. YouTube, 6 May 2014, http://www.youtube.com/watch?v=fEbdgpIQ7n4

Autor, David. Why Are There Still So Many Jobs? The History and Future of Workplace Automation. Journal of Economic Perspectives, 2015

 

Featured image credit from Robotics.org

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Justin Ong

Justin Ong

Justin Ong is an active contributor to the Adam Smith Center. His latest work is a series of introductory-level articles spanning various topics of politics, economics and philosophy. He is also an incoming student of philosophy with Nanyang Technological University.