As many of you know from reading my posts, my big issues are world population, USA population and illegal immigration. I see these as enormous issues that are the root cause of many problems and make many other problems almost impossible to solve. But population is not the only problem. Another big problem, both for the world and the USA is lack of wealth. The USA is the wealthiest country the world has yet seen. But somehow there is not enough money to solve our problems. We can't seem to invest enough in our schools or enforce our borders or maintain our infrastructure. The rest of the world is in worse or much worse shape and is desperately in need of more wealth and less population. Wealth is created with labor. It is either mined, grown, manufactured or invented. Businesses claim that we need more labor to grow our economy and they are ever pushing for a larger population. But the other way to grow the economy is to increase productivity. With innovation and the investment of capital, the existing workforce can produce more wealth. This innovation is normally spurred by scarcity and necessity. Countries with abundant cheap labor seldom make investments that boost productivity. All First World countries enjoy tight labor markets and consequently laborers are well paid and consume accordingly. Economic growth that is driven by increased productivity is preferable to economic growth caused by increased population because it raises GDP per capita. Instead of a bigger pie being eaten by more people you have a bigger pie being eaten by the same number of people. Individuals are wealthier.
So now you know my basic economic philosophy and world view. Welcome to the brave new world of robots!
I'm talking about later models of this guy which are not too far in the future: http://asimo.honda.com/
It is easy for me to imagine that in the not too distant future, within our lifetimes, we are going to have robots that can do every task performed by an unskilled worker. They will be able to dig ditches, pick fruit and vegetables, bus tables and wash dishes, pound nails, hang drywall, change beds and vacuum hotel rooms, assemble hamburgers, run cash registers, etc. And given that they are just a mechanical device with a computer in them I see no reason why, once they come down the cost curve and are spurred by competition, that they should cost more than perhaps a Toyota Corolla. $20,000 would be a fair price and you might also have a couple thousand dollars annually of maintenance and a substantial electricity bill as costs of ownership. I picture them working at least 16 hours per day with 8 hours per day of charge time. They could work 24 hours per day in environments where they could stay plugged in. They would never complain, slack-off, strike, quit at inopportune minutes, sue their employer, steal from their employers or any other problems that are common to labor. If business was slow, there would be no unneeded employee to either pay or layoff. You would just turn them off. They could speak and understand English (and Spanish if you loaded that program). They would not require an expensive K-12 education and could start working the day they were turned on. You could load all the knowledge and reasoning capability they need in 5 minutes from a thumb drive. They would never require welfare and when they were worn out you would scrap them rather than providing them social security. They would require maintenance but mechanics and computer technicians are cheaper than doctors and if they are horribly broken you scrap them. They would not need to commute from home to work so they would not clog the highways or consume energy for transportation. You could produce as many of these as you want. We would get all economic growth advantages of a larger population without the costs. It would essentially be the perfect convergence of the economic growth driven by both increasing population and increasing productivity models I described in my introduction.
These things are going to be great! I will definitely own a few of them when they become available at a reasonable price and I will exploit the hell out of their labor but of course protect my investment by providing good maintenance. I'll keep mine in "blue collar, enthusiastic mode". I appreciate some good natured grumbling before they willingly jump into the septic tank to muck it out. When I can't think of work for them to do around my home and office, I'll rent out their services. I might even start some businesses that utilize their labors. I can't see how these things won't increase my own and anybody who can afford to buy one's wealth.
This technology will also finally fix the illegal immigration problem by addressing both supply and demand. Employers will no longer demand illegals to do unskilled labor and because there will be no jobs for them, the illegals will no longer come. The illegals that are already here along with the native born unskilled workforce will be a problem; they will be very challenged to find work. They may become charity cases for the taxpayer.
This technology has some profound implications. Most of the world's 6 billion people fall in the category of unskilled labor. Technology has always posed challenges for workers which it displaces. Generally the economy creates new jobs about as fast as it destroys the old ones. But I don't believe there has ever been a general purpose worker replacement technology that threatened all the jobs of all unskilled workers at the same time. They will essentially be obsolete as factors of production in the economy. If they can't contribute to the economy how will they survive?
Welcome to the brave new world. It is probably good to think about these issues before the future becomes the present. Any thoughts?
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What about the people who are losing their jobs to robots? Do they just die, should we kill them to make it easier for robots to transition into jobs? What happens when all those people not working at mcdonalds, burger king, kohls, macy's, best buy, don't have a job. They need some kind of income right. If things happen exactly as you said, and there is suddenley a way to mass produce cheap, effective robots then my prediction is that crime will skyrocket, suddenley everyone will become a common theif just trying to get by. Of course the more likely scenario is that it happens slowly, first only the outstandingly rich can afford them, ten years later big companies start using them, ten years later and they are in every department store in the country, ten years later and they are everywhere. Taking over a billion jobs b4 we know anything is wrong. Yep, future looks bright.
Nothing is True, Everything is Permitted
When I started my internet business in Wyoming in 1992 I was the 4th ISP to open a portal to Algore's Information Superhighway in Wyoming. (That was before he even knew he had invented it.) All of us were tiny with about 50 customers each. I was charging $45 month for unlimited dial-up access. It seems like I was dropping my price by about $5 every two months and In two years I grew my company to about 7000 customers and after about 5 years I merged with two of the other companies and between us we were the largest ISP in the state with about 30,000 customers. I sold out at the top of the Tech Bubble but in 15 years the internet technology has become nearly ubiquitous. Technology can be adapted very rapidly. But it will take a while to manufacture a billion robots.
It will take a few years for robots to come down the cost curve. They will probably rapidly evolve with many independent people improving their programming and their mechanics. Somebody will write a lawnmowing program and somebody else will teach them how to was dishes. Competition and mass production always makes things cheaper. Look at big screen TVs. 2 years ago a 42" LCD HDTV cost about $4000. Now you can get a better and bigger one starting at about $800. That is an amzing percentage drop in a very short time.
I think robots will really happen. I'm not sure how it will turnout. Anything that can save that much human labor has potential to generate enormous wealth and must be good but anything that threatens that many jobs and job categories has the potential to upset the entire economic balance and must be bad. It is an enigma.
I imagine that we will adapt. Currently we tax labor (FICA, Medicare). I'm not sure that it is the right answer, but it would not surprise me to see the labor of robots taxed as a means of redressing some of the inbalances and redistributing the wealth particularly in the USA. Maybe everybody will more or less be pensioned and living in leisure with robots doing almost all the work.
Across the poverty stricken third world, it is easy to imagine a lot of hatred for robots. About the only competitive advantage they have is cheap labor. If you negate that advantage I can imagine some very real problems. Robot wars?
I think the first step towards increasing the wealth of this country, and subsequently any other country, would be to decrease imports and try to increase exports. Mainly, however, we need to, once again, bring back the ability to be a self sufficient nation. That is the first step.
Nicholas Aden
Self-Promotion
The wealthiest nations have always been those that were well positioned to engage in trade. It was no accident that the civilization at the time of Mohamed was more advanced in the Middle East then it was in Europe. They occupied a position along the silk road and benefited greatly from trade but also from the exchange of ideas that comes with trade.
Later, the Portuguese, the Spanish and the Brittish built empires in succession based on their ability to control trade by sea.
Trade, by definition, increases wealth because it is voluntary. If you possessed something, you would not voluntarily trade it away unless in exchange you thought you were going to get something which you valued more in return which means you are wealthier. The opposite party in the trade feels the same way. Both parties are richer after the exchange.
But you are right, we do need to do something about the balance of trade. Other countries have cheap labor and are bringing the quality of their educated workforce up to par with ours. We are losing some of our advantages. Our biggest trade problem is our dependence on imported oil. Our leaders are inept and can't figure out what needs to be done there. (Hint: ask engkatiemarie). Robots would fix the cheap labor problem.
I'm at a loss for words. I've been staring at this article for a day and really unsure what I wanted to say in response.
Essentially, I think you are right. I see a Darwinian evolution coming as a result. The blue-collar workforce will be no longer, and they'll either flee to poorer areas, or cease to exist. My prediction is that the world will become bi-polar; there will be very rich areas with robots, where the intelligent people live who are capable of designing and maintaining the designs.
Then there will be the ghettos, who can't afford the robots and/or their maintenance. In these areas, people will continue as they always have.
It's almost like a caste system. The uber-rich robot owners, the rich robot designers and maintainers, and the poor who just look on and hope for the best. It could be the end of the American dream if people cease to interbreed and produce intelligence within all three castes.
Hmmm....
I definate want a few robots who respond at my beck and call. That would be great.
But it does have some scary implications.
Normally advances in productivty enhancing technology have floated all boats. Jobs have been destroyed by technology but the resulting new wealth has created new demands for more goods and services. As a result new jobs were created and everybody benefitted to some degree from the new technology.
But in this case, if the resulting new wealth creates a new demand for a service, the wealthy person may very well decide to buy another robot to meet that demand. There might never be another job for the displaced unskilled worker.
I am not a very compassionate person. I feel for people who are born disabled or who are injured and therefore are unable to enjoy a good life. But most poor people are poor because of the choices they have made. They chose to screw off in school or start having children when they were 15. I find little symathy for them in my heart and generally believe they are reaping the harvest they deserve.
But that is not to say that I am not concerned. It is a matter of enlightened self-interest. If we have too many desperately poor people life is going to get very unpleasant even for those who are enjoying prosperity. The least of the problem is that they might vote themselves a bunch of wealth destroying social handouts. In the scenario of this blog class violence seems like a real possibility.
The good news for us is that a wealthy society has lots of options. (The rest of the world will have bigger problems.) Money can go quite a ways towards solving problems. It is of course important that the solutions be well thought out because they will undoubtedly give rise to a whole new set of uninteneded consequences. I have not really given much thought to how we might address those problems. Maybe every American child is given a robot on graduation from highschool to act as their proxy in the workplace and to yield them rents so that they could participate in the wealth. Just a thought and I have not really considered if it is a good one or not.
Katie the good news for you is that you will have great job security! A billion robots will consume a LOT of electricity and that kind of demand could only be met with nukes.
What about when the robots turn on us?! What then?!
Just kidding, great blog again man. I have been completely dumbfounded by our country's appreciation almost for the unskilled workforce. I have a blue-collar Uncle who got paid near $100,000 last year for factory work (because of overtime and a high salary). I am planning on going to school for 4 more years and then join the skilled workforce, and I will be happy with a $60,000/year salary. Once we get rid of these workers, everyone will appreciate schooling and our country (and the world) will get smarter everyday and become a world dominator again.
http://www.progressiveu.org/blog/nharris1032
Thankyou! I was proud of this blog although as I re-read it I think it needs to be broken into more paragraphs.
The treatment of workers is almost completely an economics issue driven by supply and demand. As you look around the world almost every rich country enjoys labor scarcity and almost every poor country is cursed with abundant labor. There was a time when America had an overabundance of cheap labor. It was called the Guilded Age near the end of the 19th Century because it looked like we were evolving into a two-tiered society with the uber-rich (Rockefellars, Carnegies, Vanderbuilts, Mellons) and practically everybody else was the poor. It was created largely by excessive immigration. The modern American middleclass that we cherish today did not evolve until the 1950s when we had practically shut-off immigration for nearly 30 years and a real scarcity of labor developed that gave labor a lot of power in our booming post-war economy.
Where labor is scarce, workers are treated well and employers invest in capital equipment that makes them more productive. Increased productivity is the key to a high standard of living. A high standard of living allows taxes that lead to education and a beneficial cycle of growing accumulation of wealth.
Where labor is abundant, workers are treated as disposable chattel. They are used, abused and disgarded. With labor being dirt cheap, employers have no reason to invest in productivity enhancing capital and the standard of living is low. People live hand to mouth and what little wealth is created is concentrated in the hands of a few employers.
This is one (but not the only) of the reasons why I am so opposed to illegal immigration. Cheap labor is a cutting our poorest people off at the knees and is a curse for our entire country. There are actually industries that are devolving towards less capital intensive lower productivty production methods to take advantage of the cheap but extremely ignorant and unskilled illegal labor. Less productivity means a lower standard of living.
Robots are essentially the synthesis of human labor and capital equipment. There will be winners and losers when they become widely available and numerous. I think that the losers, as usual, will be the poor and the uneducated and unskilled which for the most part are just three different labels for the same group of people. I think we should prepare for the coming age of robots by having as few poor people as possible. Another good reason to limit immigration at the bottom end of our economy. If we are going to import people, lets import educated people. That way there will be less losers in our economy and we can make the otherwise excellent transition to robots all the quicker.