What Even Is Automation?
Even before hearing the word “automation,” there is a good chance one has at least been exposed to the concept. Essentially, automation is the process of turning jobs performed by human laborers over to machines, which can work tirelessly and without break. This process, though still relatively new, has been occurring for a couple decades now. But despite this, many people are still unaware of how exactly it works, and many are starting to grow apprehensive about it.
Fear Mongering About the Robots
Since the introduction of technology into the workplace, humans have consistently been frightened about technology taking their jobs. In fact, this fright occurs so frequently that economists managed to come up with a term to describe it. The “lump of labor fallacy” is the idea that there are only a certain number of jobs within an economy and that once immigrants or robots are thrown into the mix, this will mean that native laborers will become unemployed due to rising immigrant labor and automation. However, this sentiment has proven to be erroneous. As immigrants come into a country, and as new technologies are introduced, this actually helps to create more jobs, not less. With increased immigrant labor comes increased demand, and from increased use of technology and robots comes increased productivity. Up until this point, any change in technology has never destroyed the net amount of jobs within the economy. Still, many remain scared because the economy is not continuing to grow quickly.
“The fear is that if jobs are destroyed, people will not be able to find jobs that pay them as well as the jobs they lost,” said Aaron Benanav, postdoctoral researcher of economic history at Humboldt-Universität zu Berlin. “The fear that people are losing good jobs and ending up in bad jobs, or that young people are unable to find good jobs in the first place, is entirely reasonable. It is happening right now. But that doesn’t really have to do automation. It has to do with a stagnating economy.”
As Benanav notes, the only reason that people are actually afraid of automation is because they are concerned about what it could mean for their economic future. The economy offers very little protection for those who are suffering from economic precarity; thus, millions of people are in a state of constant worry about the rising abilities of technology. Automation is not scary in and of itself—it is only frightening because of the contemporary conditions of the American economy.
Is Automation Even Occurring?
Many people are associating the current shortcomings of the American economy with the supposed pernicious effects of automation, and this kind of situation has created an environment where people are erroneously assuming that automation is expanding, quite rapidly, throughout the economy. However, this basic intuitive thought is actually the furthest from the truth. As businesses and manufacturers implement new technologies which help to automate certain jobs, this process increases productivity and helps to save partially or fully on labor costs (which can be converted into investments later on). But when one delves into the productivity numbers in American manufacturing, something quite remarkable comes up.
Productivity, instead of rising precipitously since 2000, has actually fallen. According to the Conference Board of the International Comparisons of Productivity and Labor Costs, from 1974-2000, manufacturing productivity rose by 3.3%; from 2000-2017, this percentage declined to 3.2%; and while this was taking place, overall manufacturing output fell from 3.1% to 1.2%. Benanav believes what is currently transpiring has very little to do with automation and is instead mainly attributable to “a stagnating economy” and globalization.
“Globalization has made for an intensely competitive international environment where it is difficult for companies to grow very quickly,” Benanav said. “That means that whatever technological changes they implement tend to be job destroying, for the simple reason that companies can meet small increases in the demand for their products while employing fewer workers.”
Globalization, instead of delivering an economy which is able to achieve robust growth, has delivered an economy which is continuing to slow down. And as the economy slows down, and as people lose their jobs because of falling productivity and output, many people throughout the country associate this occurrence with the implementation of automation. But in reality, this is just simply not the case.
It’s Not The Robots You Should Worry About… It’s Stagnation
Due to globalization, the world now has far more producers of goods than it did 30 years ago, and because of this, the supply of these goods has increased quite dramatically. But as this supply has increased, demand has either stagnated or fallen because of lower growth and increased inequality. As demand fails to grow and as supply continues to climb, this means that output continues to fall. In fact, according to the Conference Board of the International Comparisons of Productivity and Labor Costs, manufacturing output has actually fallen from a high 4.4% from 1950-1973 to a rather low 1.2% from 2001-2017. This decline in output also happens to align quite well with average GDP growth, which fell from 4.0% to 1.9% during the same respective period. Globalization has essentially created a recurring effect which continues to compound the country’s economic health and overall sustainability.
But on top of the macroeconomic effects, stagnation has created microeconomic effects where “a lot of people are very insecure in their jobs, or have trouble finding work that is satisfying,” according to Benanav. And to make matters worse, “All of these things affect young people most of all. They can’t start living on their own or get a foothold in any one place if they have to keep changing jobs, or if the jobs they get pay them very little.”
Because of globalization, the world has become far more competitive for both companies and working people. And as these effects continue to increase, the results are increasingly bleak and morbid. The biggest threat, as pointed out by Benanav, is not automation but is instead a stagnant economy which is falling to deliver real growth to both its manufacturers and its workers.
What’s Next?
For decades, automation has been used as a scare word meant to frighten people about the future of the economy. What makes this fear mongering even more pernicious is the fact that it has been successful. From academics to politicians, truck drivers to teachers, more and more people today believe that automation is an impending economic apocalypse which is going to leave millions of people behind.
The biggest threat facing the economy is not automation or robots but is instead stagnation. Out of stagnation will come increased inequality, personal disillusionment, and heightened political tensions. The future, however, though seemingly negative right now, is not set in stone. Stagnation is not inextricably linked to the economic system, but it is not going to change unless Americans collectively fight for policies which will allow for the economy to start growing effectively and equitably again. So rather than fretting about automation or driverless trucks, efforts may be better spent focusing on the real issue impacting the economic future. The ball is in America’s court now, and it cannot afford to let this opportunity slip.
