Will Robots Take Your Job?

There was a piece published on LewRockwell.com by Paul Craig Roberts regarding the “dying institutions of Western civilization”.

Paul Craig Roberts has been a great opponent of the surveillance state and the U.S. empire.  Considering he once worked for the Reagan administration, it is quite amazing how outspoken he is against U.S. government intervention.  We could probably say the same about David Stockman.

While Paul Craig Roberts is frequently read by libertarians, I do feel the need to warn libertarians that his economics are not sound.  In his most recent article, there is one particular part I want to address.

Roberts writes a section called “A Robot Will Take Your Job”.  He first attacks the notion of moving jobs overseas as being beneficial.  I don’t know what government schemes Roberts advocates to prevent this from happening, but it would be nice to know his “solution”.

Some jobs do get shifted out of the country due to government policies of regulation and taxation.  The answer to this of course is to dramatically reduce government regulation and taxation, including corporate taxes.  But these jobs going overseas is a result of big government, not because of a lack of government.  Unfortunately, I don’t think this is what Roberts has in mind.

A lot of jobs going overseas would still happen in a relatively free market though.  It makes sense in many circumstances for a company to hire people out of the country if the job can be done more efficiently or at a reduced cost.  But this is beneficial for most people, especially consumers, which is really everyone.

Roberts then specifically addresses the “problem” of having robots perform labor.  Roberts states:

The unaddressed problem is: what happens to consumer demand, on which the economy depends, when humans are replaced by robots? Robots don’t need a paycheck in order to purchase food, clothes, shoes, entertainment, health care, go on vacations, or to make car, utility, credit card, rent or mortgage payments. The consumer economy has suffered from incomes lost to jobs offshoring. If robots replace yet more Americans, where does the income come from to purchase the products of the robots’ work? Any one firm’s owners and managers can benefit from lowering costs by replacing a human workforce with robots, but all firms cannot. If all firms replace their work forces with robots, the rate of unemployment becomes astronomical, and consumer demand collapses pulling down the economy.”

He is essentially answering his own question, yet he doesn’t even realize it.  This is a complete lack of understanding of free market economics.

In a free market, you would never get to the point of consumers not being able to afford the products being made by robots.  Some products may go out of fashion, as has always happened in modern history.  But companies aren’t going to continually make products and sell them for a price that most consumers can’t afford.

This is why we have prices.  Prices basically regulate the whole process and ensure clearance.  If a product isn’t selling, then the price will fall, or else the product will stop being sold.  Companies are only going to use robots if it is more cost-effective to use them.  Overall, this should mean reduced consumer prices, all else being equal.

There is another major fallacy that Roberts is falling for.  He is assuming a limited number of jobs in this world.  But just because robots replace people in some jobs, it doesn’t mean there aren’t other things to do.  We live in a world of scarcity where people continually demand goods and services.  If they were all available without requiring any work, then jobs wouldn’t be needed because everyone could just consume everything for free.

Human beings are quite versatile.  People can work in many different areas.  They can learn new skills.  If robots start doing the work of fast food restaurant workers, then these workers can do something else.

Again, prices – in this case wages – regulate everything.  I use the term “regulate” in a good way here.  There is very little unemployment in a true free market because someone is almost always willing to hire at some wage.  It may not be the wage that some workers want, but there is a clearing price at some level.

I would be willing to hire a personal assistant for $10 per day.  This sounds ridiculous, but it is true, as long as I can find someone who is honest and somewhat capable.  But probably nobody will work for that wage unless they deemed some other value in working for me, such as learning new skills.

The key is that there are richer people out there who have more of a need for a personal assistant who would be willing to pay a lot more than $10 per day to someone.  In a free society, there is always work to be done.

Will robots take jobs away?  In a sense, yes.  They will replace workers in particular jobs, but there will still be plenty of work to do.  Meanwhile, the presence of robots will make goods and services less expensive for consumers, which is beneficial to everyone.

If you have a job that could potentially be taken over by a robot, it is a good idea to have a backup plan.  You should seek other marketable skills.  But this isn’t just good advice because of robots.  This is good advice for anyone at any time.  You could be vulnerable in your job for any number of reasons.

Don’t worry about robots.  In the long run, they will make our lives better.  You should worry about your own marketable skills though.

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