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  • Jeffrey Goldfarb

Automation

Automation | Robots | Buffalo, NY | Certified B Corp | Wealth Management

Should we be fighting automation?

It’s an honest question, one I’m sure many people have thought about. The debate usually stems from whether or not progress is good. Usually when using hindsight, we are thankful for developments that, at the time they were being pitched, were cause for concern. One of the funny stories mentioned in my family is when cell phones were gaining popularity my parents bought my older brother his first phone to which he replied “why would I need this? I have quarters.” Obviously now the thought of someone existing without a cellphone (or even a smartphone) takes the casual onlooker by surprise. So, is this direction automation is going? A horrible mistake for the present, only to be lauded as a milestone achievement by the next generation. Let’s take a look.

Expansion in automation is nothing new. For over half a century automation has taken on more dominant roles in agriculture, manufacturing, warehouses, and even retail (those self-checkout lines used to be jobs).

While some argue trade is the biggest job killer, the reality of displaced jobs is far more domestic than one might assume. During the first decade of the twenty-first century 87% of all displaced manufacturing jobs were lost due to developments in robotics, leaving only 13% lost to trade deals.[1] In 2015 over a quarter million (253,748) robot units were sold to various manufacturing industries worldwide.[2] This number is not slowing down either with annual accelerated growth: “Already, 40 percent more robots were sold last year in the U.S., compared with four years prior.”[3]

How has this effected the country? Productivity in this sector actually approached an all-time high. In Obama’s final years in office one of his widely cited achievements was the revival of the automobile industry, a comeback that could not have occurred without the help of a robotic workforce.

Recently, the Wall Street Journal posted an article on the future of self-driving cars. The article states there are currently 3.8 million people currently driving for a living (e.g. taxis and trucks), with an additional 11.7 million people who drive as part of their job.[4] The article then says this 15+ million figure could see some drastic changes in the near future as automated technology continues to advance. The major changes being the people in the first category (driving for a living) could lose their jobs. That’s the bad news. What’s interesting though is the 11.7 million in the second category could “benefit from greater productivity and better working conditions.”[5] So again we ask the question, is this progress overall beneficial? Strictly looking at the numbers of those who benefit vs those who do not it makes a compelling argument in favor of the developments. But what of the people who are displaced? Do they have no alternative employment opportunities, or is the landscape shifted and they find new jobs previously unavailable before the technological advances?

The consumer outcome for automation differs based on who a person asks. When looking into research conducted by the Brookings Institution, one will most likely find articles focusing on the loss of job security stemming from the affordability of robotic technology.[6]

The counter to the job security argument is usually a decrease in consumer prices, thus increasing the overall utility for consumers; an increase in net profits, thus increasing expenses by the employer (in future capital and labor); and new jobs previously non-existent/unavailable due to technological restraints.[7]

While these two sides are only opinions, depending entirely on the person’s view of automation, what makes them so effective is how easily one can find evidence defending their side. To make it an even more complicated debate, one can find evidence defending both arguments from neutral third parties like PEW.[8]

With evidence defending both sides, the next best thing to do is look at the trends and decide how to make it beneficial rather than a detriment. Based on the growth trends listed above, one may see that fighting robotic development may be a losing battle. Most Americans see fighting automation as a lost cause with over two-thirds believing their jobs will be replaced by robots within 50 years.[9] So why sit back and accept the displacement? This should not be used as an opportunity to dig our feet into the ground and fight the progress. Developments capable of upping output productivity should be seen more as an opportunity. Rather than looking to the past, we have to objectively survey the landscape of the markets in the future and see how they change, because jobs are never lost without replacements. We are adaptable in nature, and though the short term inelasticity may create an issue, over the long term we will adjust and most likely have a higher standard of living.


Opinions expressed are not necessarily those of Raymond James Financial Services. Information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature, is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. The companies engaged in the communications and technology industries are subject to fierce competition and their products and services may be subject to rapid obsolescence.

[1] http://money.cnn.com/2017/01/30/news/economy/jobs-china-mexico-automation/?iid=EL

[2] https://ifr.org/img/uploads/Executive_Summary_WR_Industrial_Robots_20161.pdf

[3] https://www.recode.net/2017/4/3/15123006/robots-sold-america-growth-300-percent-jobs-automation

[4] https://blogs.wsj.com/economics/2017/08/14/self-driving-cars-could-transform-jobs-held-by-1-in-9-u-s-workers/

[5] https://blogs.wsj.com/economics/2017/08/14/self-driving-cars-could-transform-jobs-held-by-1-in-9-u-s-workers/

[6] https://www.brookings.edu/blog/techtank/2015/10/26/how-robots-artificial-intelligence-and-machine-learning-will-affect-employment-and-public-policy/

[7] https://qz.com/904285/the-optimists-guide-to-the-robot-apocalypse/

[8] http://www.pewinternet.org/2017/05/03/the-future-of-jobs-and-jobs-training/

[9] http://www.pewinternet.org/2016/03/10/public-predictions-for-the-future-of-workforce-automation/

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