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Why Robots and Software Will Not Take Over the World

Written by Gary North on October 27, 2014

There is fear that computerization will produce mass unemployment over the next 30 years. The computers will do the work of hundreds of millions of workers, leaving no jobs for these displaced workers.

One implication is this, we are told: the federal government will have to put them on welfare. Otherwise, they will starve. They will not be able to compete with robots and software.

I am curious. Who will pay the taxes to do this? Robots?

No, no, no: we must tax the rich.

I am curious. How will they be rich if there is no one able to afford to buy their products?

REUTHER’S QUIP

It was well over 60 years ago that a friend of mine told me about the following exchange.

CIO President Walter Reuther was being shown through the Ford Motor plant in Cleveland recently.A company official proudly pointed to some new automatically controlled machines and asked Reuther: “How are you going to collect union dues from these guys?”

Reuther replied: “How are you going to get them to buy Fords?”

Reuther said it really did take place.

http://quoteinvestigator.com/2011/11/16/robots-buy-cars/
My friend was a Democrat and a liberal. His father was a lifetime member of a trade union. His father worked on the assembly line to produce tires.

At the time, I thought Reuther’s remark was pretty good as a quick response. I didn’t think it was applicable to the situation at hand. I still don’t. There is nothing that says that a worker should be able to afford to buy the output of a particular factory. There are highly skilled craftsmen who know how to cut fine diamonds, but they cannot afford to buy them.

THE VALUE OF YOUR OUTPUT

Free market economics teaches that the value of a worker’s contribution to the overall production process will be paid according to this value. The reason is clear: competition. Employers do not want a competitor to be able to profit from the output of his employees, if they can offer a little more money and attract these employees. A competitive bidding process, comparable to an auction, is constantly in operation. Businessmen do not want to let their competitors retain permanent advantages, if these advantages can be taken away from them simply by offering to pay a little more for the resource that is giving the competitor his advantage. This is what competition is all about.

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7 thoughts on “Why Robots and Software Will Not Take Over the World

  1. Phillip the Bruce says:

    "Bleeding heart" liberals don't have a clue how a truly free market would work. But then neither do most conservatives. In one sense, supply does create its own demand, because how can consumers demand a product that they do not know exists? But the 'potential' demand is there, or at least some entrepreneur believes it is there, to the extent of risking capital to produce the good.

  2. People either forget history or never study it I guess. Back at the start of the nineteenth century we had an industrial revolution. Machines took over the manual labor work. The same chicken little mindset that sponsors "global warming" declared people would be starving in the streets. Of course, that never happened. The economy grew and the burden on labor was eased.More people made more money than ever. And by the way machine automation and robots have been a standard part of industry for forty years. See my blog at http://cranky-conservative.blogspot.com

  3. When Henry Ford started his company, his workers earned excellent wages because he knew if they could afford to buy the cars they produced, they would be his best advertising. Now the manufacturing that made America the 20th century powerhouse is gone, and Americans are doing each others’ laundry. Anyone who thinks America will win WWIII with a service economy….can board that military transport to the war zone ahead of me.

  4. The explanation by the author of why robots and computers won't displace human labor involves a bunch of flawed and circular logic.
    Robots, automation, and ever more complex computer controlled machines WILL continue to displace unskilled manual labor jobs. WHY? Because competition within the market demands it!

    Automation and robotics are simply TOOLS. They reduce or replace human labor, but they DO NOT replace the mind of the engineers and scientists that created them. We are still very far from that kind of AI.

    The problem today is that we have an aging population of workers who refuse to adapt to the advancements of technology. These people are becoming an increasing useless, and valueless asset.
    You adapt, or you starve. This is how nature works. This is how free-markets are supposed to work.

    The future belongs to innovators, engineers, and scientists. It belongs to the "robot makers". Anyone who is not willing to embrace the advantages of technology is going to left behind – most likely whimpering about how technology stole their jobs and then demanding that the guberment take care of their lazy-arses by re-distributing more wealth.

    There have have been revolutionary solutions proposed in other areas of our economy, not just manufacturing. They are also typically resisted vigorously. A good example is the authors attitude towards crypto-currency. He is an example of an old fogie who can't truly understand, and hence can't appreciate an incredibly brilliant technological solution to an age-old problem.

    The creativity of the intelligent human mind is our path to the future. Remaining stagnant because you fear change is going to take us nowhere.

  5. How does Mr North know what sort of employment displacement that occurs when technology takes over human labour? When the automobile took over the horse and carriage the horse population nosedived. Mass unemployment for horses didn't see horses change the career rather fewer horse were needed. Likewise not everyone gets unemployed but pockets of workers do get unemployed. If workers have been replaced by machines that means their work skills are now worthless and they're effectively unskilled.

  6. they can replace the fast food employees and at least get the order right

  7. It looks like that those who oppose the idea of too much robotic concentration are struck in an infinite loop, The only way to service with robots is that we will have reduce the amount of kids we are producing these days. World will be more adoptive towards robots are there is so much do but no one is left to do it. Anyways our ancestors dreamed of a bright future and they gave us a bright future and we are considering future to be doomed and that is something we should all reconsider about.