Yeah, that’s a very good question. It could depend on the type of automation we’re talking about; that is, there may be a difference between technologies that make workers more efficient and technologies that actually make workers less necessary.
An industrial-revolution era textile factory was a far more efficient way to produce cloth and then clothing then people spinning and sewing by hand, but it was still very labor intensive. In the cities where the factories sprang up, it actually created a huge demand for labor in those cities (especially since the few countries at the time that had them could then export to the rest of the world), and that huge demand for labor then drives up wages in that specific city; this was the period where there was such great demand for jobs in cities that vast numbers of people moved to the cities. This is also what’s going on in places that are adopting industrial-revolution era technologies of labor-intensive mass production now, like China and India, a massive urbanization movement away from the countryside and to the better-paying factory jobs.
The kind of automation we’re doing in the first world now, though, doesn’t seem to create that same local demand for significant amounts of labor that pulled urban wages up in the industrial revolution. The car companies are producing more cars then ever, but they just don’t need nearly as many workers to do so as they used to. To an extreme, you get “lights-out factories” that can produce things without needing workers at all; there is a robot-producing factory in Japan now that is almost totally automated and can literally run for weeks producing industrial robots without human intervention. That kind of automation doesn’t produce local demand for labor anywhere, it just lowers demand for workers across the board, while increasing the pay-off involved from capital investments into automation.
Perhaps. Not necessarily, though. If you originally have job 1, job 2, and job 3 in your factory, and then you replace job 2 and job 3 with robots but keep people around to do job 1, the people doing job 1 haven’t really gotten any more efficient at it. The factory owner can continue to pay the people who do job 1 the same, and just pocket the difference between the capital investment of the robots and the wages he used to pay for job 2 and job 3.
(Now, technically, the way productivity is calculated by economists you would be correct, since it’s just based on “total production divided by number of workers”. That doesn’t actually mean that person A is more efficient at doing job 1, though, not in the sense that we usually mean.)
Yeah, that’s a very good question. It could depend on the type of automation we’re talking about; that is, there may be a difference between technologies that make workers more efficient and technologies that actually make workers less necessary.
An industrial-revolution era textile factory was a far more efficient way to produce cloth and then clothing then people spinning and sewing by hand, but it was still very labor intensive. In the cities where the factories sprang up, it actually created a huge demand for labor in those cities (especially since the few countries at the time that had them could then export to the rest of the world), and that huge demand for labor then drives up wages in that specific city; this was the period where there was such great demand for jobs in cities that vast numbers of people moved to the cities. This is also what’s going on in places that are adopting industrial-revolution era technologies of labor-intensive mass production now, like China and India, a massive urbanization movement away from the countryside and to the better-paying factory jobs.
The kind of automation we’re doing in the first world now, though, doesn’t seem to create that same local demand for significant amounts of labor that pulled urban wages up in the industrial revolution. The car companies are producing more cars then ever, but they just don’t need nearly as many workers to do so as they used to. To an extreme, you get “lights-out factories” that can produce things without needing workers at all; there is a robot-producing factory in Japan now that is almost totally automated and can literally run for weeks producing industrial robots without human intervention. That kind of automation doesn’t produce local demand for labor anywhere, it just lowers demand for workers across the board, while increasing the pay-off involved from capital investments into automation.
Whoever remains after you fire all those made redundant has been made more efficient.
Perhaps. Not necessarily, though. If you originally have job 1, job 2, and job 3 in your factory, and then you replace job 2 and job 3 with robots but keep people around to do job 1, the people doing job 1 haven’t really gotten any more efficient at it. The factory owner can continue to pay the people who do job 1 the same, and just pocket the difference between the capital investment of the robots and the wages he used to pay for job 2 and job 3.
(Now, technically, the way productivity is calculated by economists you would be correct, since it’s just based on “total production divided by number of workers”. That doesn’t actually mean that person A is more efficient at doing job 1, though, not in the sense that we usually mean.)