Jobs lost from automation?

[Mister Mister]

 http://www.huffingtonpost.com/2013/01/23/middle-class-jobs-machines_n_2532639.html?utm_hp_ref=business

My gut tells me this is wrong.  There seems to be no way they could really calculate the negative/positive effects of automation.  Also, if the middle class is losing jobs, who is buying the products these robots make?  Seems like a distraction to take attention away from the failure of central planning.  Is there someone with a better background in econ who can explain this to me?

[Arius]

Automation displaces labor, that will always be true.  I can tell you, there are cute little financial analysis techniques for determining if a position should be automated.  The primary deciding factors are the cost of capital (availability and cost of credit), the marginal productivity of labor (the value generated by each additional unit of labor added), the cost per unit of labor (usually measured in total compensation), and the revenue generated by machinery.  If, for example, money can be borrowed at nearly nothing, replacing workers with automation becomes very attractive (as the cost of, and interest on, the debt-financed machinery is tax deductible).  Alternatively, if the cost of labor is artificially increased (say by increasing the cost of living in an area through manipulation of the housing market), then retaining workers over the long-term becomes less attractive.  If the quality of workers is gradually declining (as No Child Left Behind's first generation of graduates begin to saturate the job market) then each of those workers is less attractive.  In fact, if labor is made-up of a bunch of dummies, automation is significantly more attractive.  On a high note, the productive value of machinery increases exponentially over time.  Today's computers are significantly more productive than any of their predecessors.  Put it all together and you get a situation where machinery is cheap and powerful while labor is expensive and unproductive.

If the cost of capital were an accurate reflection of saving and consuming habits of people, then the cost of machinery would be an accurate reflection of the current employment level.  That is, the interest rate on debt financing does not accurately reflect the real scarcity of wages (which it would if left to float).  Basically, as more people become unemployed, the interest rate should begin to rise as these people stop saving.  The increase in the interest rate should then make capital purchases less attractive than hiring workers (as long-term debt financing costs exceeded the cost of labor).  The result would be a continuous balance between the cost of capital and the cost of labor, resulting in automation only replacing truly inefficient occupations.  As it is now, the fixed interest rate keeps the cost of capital from reflecting the actual impact of joblessness.   The end effect is falling demand for labor, reduced costs of capital, and overproduction (which is evidenced through over-automation).

[David L]

 

 http://www.huffingtonpost.com/2013/01/23/middle-class-jobs-machines_n_2532639.html?utm_hp_ref=business

My gut tells me this is wrong.  There seems to be no way they could really calculate the negative/positive effects of automation.  Also, if the middle class is losing jobs, who is buying the products these robots make?  Seems like a distraction to take attention away from the failure of central planning.  Is there someone with a better background in econ who can explain this to me?

 

Not sure why you're cynical regarding the general point of the article. Do you doubt that the dizzying advance in robotic technology is replacing human labor? That's its very purpose, no?  

Regarding who will buy the products these robots make, they won't be NEED to be bought by the ruling class that owns them. The products will simply be used and consumed by this rulng class itself, that is, by the owners of the robots.  (This is a major reason why "gun control" is now on their agenda, as I see it).

 

 

[TheRobin]

 

Not sure why you're cynical regarding the general point of the article. Do you doubt that the dizzying advance in robotic technology is replacing human labor? That's its very purpose, no?  

Regarding who will buy the products these robots make, they won't be NEED to be bought by the ruling class that owns them. The products will simply be used and consumed by this rulng class itself, that is, by the owners of the robots.  (This is a major reason why "gun control" is now on their agenda, as I see it).

 

Well, that's not really different as if those same people still paid other indiviuals to make a product (They wouldn't "need" to buy it (or rather, "only" pay 95% of its cost (which is about the cost of production in general relativ to the profit made afaik))

So how's that relevant?

[David L]

The robotic revolution isn't self-contained yet. Human workers are still required to get it to that point. In the meantime they have to "buy" things in order to enable them generally to keep working toward that end. Once the system of robotized production becomes self-contained, humans become irrelevant along with their purchasing activities. Those who own the robots (or cyborgs for that matter) don't need to pay them to work. The labor market---and all markets---become irrelevant.

[empyblessing]

 

The robotic revolution isn't self-contained yet. Human workers are still required to get it to that point. In the meantime they have to "buy" things in order to enable them generally to keep working toward that end. Once the system of robotized production becomes self-contained, humans become irrelevant along with their purchasing activities. Those who own the robots (or cyborgs for that matter) don't need to pay them to work. The labor market---and all markets---become irrelevant.

 

What do you mean by self-contained? Do you mean robots that repair robots, deliver robot parts, etc? What's halting progress on it becoming self-contained? How long till it's likely to happen? 

What I worry about is the transition into this new way of living. I believe that's where we are now where production increases but purchasing power decreases. My brother was talking about saving money to send his kids to private school and then to college. The boy's only a few years old and I wondered if it would be worth it. Consider how less valuable a college degree is now than it was ten years ago. The problem only becomes worse as more people get more degrees and less jobs are available. 

http://marshallbrain.com/manna1.html 

What's really going to shake things up is when the automation starts hitting the service sector. There's no way that the displacement can be absorbed. Where are they going to go? 

[David L]

 

What do you mean by self-contained? Do you mean robots that repair
robots, deliver robot parts, etc?

Right. We're probably talking about cyborgs at this level though, but who knows.

What's halting progress on it becoming
self-contained?

Apparently the ruling class right now thinks its people owning guns. It's pretty obvious what their general intent is if they manage to take them away from the people.

 

How long till it's likely to happen?

If we don't wake up I'd say a few decades, but I'm no expert on this.  But the waking up has to happen much faster than this to avoid a fait accompli.  

 

What's really going to shake things up is when the automation starts
hitting the service sector. There's no way that the displacement can be
absorbed. Where are they going to go?

Yes, I believe the intent is to minimize the shake up by eliminating people's ability to rebel against this technocracy. We can see this in "gun control" legislation now.  The control freaks have always wanted robots, they just needed us to bulid them for them, then they could eliminate us, or give us the option of becomng cyborgs ourselves under their total control (which is euphemistically called "Transhumanism"). 

Think of all the promises we've been beguiled by:  The Green Revolution would end hunger. Computers and automation would bring us increasing leisure. Those were just lies to lure us into the trap we're in now. And "Transhumanism" is the new lie, that we will all be better off and stronger and more intelligent if we submit to turning ourselves into cyborgs. One lie after another into the realm of total enslavement and the final extinction of our humanity.   

[TheRobin]

 

The robotic revolution isn't self-contained yet. Human workers are still required to get it to that point. In the meantime they have to "buy" things in order to enable them generally to keep working toward that end. Once the system of robotized production becomes self-contained, humans become irrelevant along with their purchasing activities. Those who own the robots (or cyborgs for that matter) don't need to pay them to work. The labor market---and all markets---become irrelevant.

 

Have you seen the short (~6min iirc) movie "I, Pencil"?
Maybe that will give you some perspective on how erm, impossible the scenario is that you're talking about.

[Arius]

Yes, I believe the intent is to minimize the shake up by eliminating people's ability to rebel against this technocracy. We can see this in "gun control" legislation now.  The control freaks have always wanted robots, they just needed us to bulid them for them, then they could eliminate us, or give us the option of becomng cyborgs ourselves under their total control (which is euphemistically called "Transhumanism"). 

Do you know how crazy that sounds?

[empyblessing]

 

 

The robotic revolution isn't self-contained yet. Human workers are still required to get it to that point. In the meantime they have to "buy" things in order to enable them generally to keep working toward that end. Once the system of robotized production becomes self-contained, humans become irrelevant along with their purchasing activities. Those who own the robots (or cyborgs for that matter) don't need to pay them to work. The labor market---and all markets---become irrelevant.

 

Have you seen the short (~6min iirc) movie "I, Pencil"?
Maybe that will give you some perspective on how erm, impossible the scenario is that you're talking about.

 

I pencil was beautiful. Just watched it. Thanks. 

I do not see anything in it though that would prevent automation from taking all of those jobs. Labor becomes increasingly more productive due to technology. The chain saw cuts more wood than a hand saw. But what happens when we have chainsaws that don't need a lumberjack? Or restaurants that don't need servers, cooks, or busboys? All of the displaced workers of techology have been filtered through into the service sector. It is the last bastion of labor but it will disappear as well due to market demands of increased productivity.

There are eight automatic checkouts at my local walmart. They were put in around two years ago. They began with only four machines. When I saw them I was instantly drawn to try it out. They were easy to use and effective. There was only one teller who oversaw the whole thing. But there was a problem. Not enough people used them. Not be superficial here but when they were first put in place what I saw was only young people would go near them. So they stayed at four for a year or so. Recently, that changed. The numbers doubled in less than a year and where there were few older people using them, I saw some of the more daring ones trying it out. Now I use nothing but those automated checkers. They're faster. They have shorter lines. Once you learn how to scan and package your items it's much more time saving and productive and we all strive for maximum efficency with our time, right? Well I talked to the manager about them and he confirmed my observations. At first people were a little reluctant to use them but as they gained confidence with the machines the word spread that they were superior. He told me that they'll probably install more machines in a year or so but they need to pay for the ones they have now. As people slowly adjust to these new machines they're just going to spread to other areas. But that's the thing about some of these automated services. The human consumers have to adapt to the new environment and for some that takes time or is impossible altogether. 

The real panic will start when it hits the food industry. Oh the humanity.

 

 http://www.youtube.com/watch?v=VCpPPVvGqTY 

 

googles new self-driving car. imagine the possibilties. 

 

[TheRobin]

I didn't mention the movie to deny the argument that jobs would dissapear, but to counter David's idea that the rich would create some sort of self-sufficient robot-run society, in which they basically got all their stuff for free and wouldn't need any human labour.The point would be that, to even make only one of those machines, one requires about a thousand (or most likely more) different skillsets, connections, procedures and tons of specialized knowledge etc. so the idea the a select rich few, had a) all that knowledge and b) somehow had the time to oversee the procedure at all ends is really quite impossible (or at least as I see it).(and of course the more robots you require the more you need to know, as you need to be able to maintain and produce each of those robots, this problem also doesn't disappear even when you have more robots maintaining these robots)The real problem of automatiion, as I see it, is that, the people which are being replaced usually don't have any skillsets and no knowledge how to require a better skillset, which would enable them to create something else of value in another (maybe more specialized) field. Seeing as most people who end up making burgers (to take that as an example), do so only, because they lack any good eduction (thanks to public schooling) or opportunities in entrepreneuRship (thanks to regulation and high taxation).Else the whole automation would just be an easy to see benefit (= less costs for consumers, more efficiency, meaning more leftover time/money to buy other goods and services from other people). Or so my amateurish understanding of the economy in broad terms.

[empyblessing]

 

I didn't mention the movie to deny the argument that jobs would dissapear, but to counter David's idea that the rich would create some sort of self-sufficient robot-run society, in which they basically got all their stuff for free and wouldn't need any human labour.

The point would be that, to even make only one of those machines, one requires about a thousand (or most likely more) different skillsets, connections, procedures and tons of specialized knowledge etc. so the idea the a select rich few, had a) all that knowledge and b) somehow had the time to oversee the procedure at all ends is really quite impossible (or at least as I see it).
(and of course the more robots you require the more you need to know, as you need to be able to maintain and produce each of those robots, this problem also doesn't disappear even when you have more robots maintaining these robots)


The real problem of automatiion, as I see it, is that, the people which are being replaced usually don't have any skillsets and no knowledge how to require a better skillset, which would enable them to create something else of value in another (maybe more specialized) field. Seeing as most people who end up making burgers (to take that as an example), do so only, because they lack any good eduction (thanks to public schooling) or opportunities in entrepreneuRship (thanks to regulation and high taxation).

Else the whole automation would just be an easy to see benefit (= less costs for consumers, more efficiency, meaning more leftover time/money to buy other goods and services from other people). Or so my amateurish understanding of the economy in broad terms.

 

I understand the logic behind it. From that knowledge it will be impossible for a select group to dominate totally. 

An advanced civilization doesn't keep slaves, it builds them. 

No one really wants to do manual, repetitive tasks so the faster we can build dishwashing computers the better. There's just no way that labor is going to be a requirement for life like it is now. A reasonable subsistence will be guaranteed based on simply being born human. Basic human needs will be provided for everyone.There will be no living wages so employment will be voluntary and not compulsory for survival. If you want to elevate above the basic level then you'll have "free education" through the internet.

When I think back to my childhood, I remember my parents telling me that there was no money in painting. They were right, of course. Artists today generally live terrible lives of poverty. Most quit. But I imagine jobs like artist and film maker will become much more popular when human need is seen as a given and not something as a reward for production. 

With production costs very low, next to zero. And productivity so high but purchasing power so low, there will have to be a great transition into a new way of thinking about work. 

As I wrote in my previous post, I don't think our technological growth is the biggest factor preventing this new standard of living from occuring but I believe it's the inability for the people operating the machines to adapt fast enough. While machines grow quickly, the users do not learn quick enough, particularly with older people. I don't mean to belittle anyone with that statement and I'm sure it's just a stereotype and not completely true but children are known for this flexiblity, just look at how a baby can move their legs around. They adapt. Older people don't change quite as fast as the young -- more set in their ways -- more like an oak tree with its roots firmly planted. 

While I do think it's important for Stefan to continue his work, I don't believe it's the impetus in itself. The change comes about because of technology which allows for more freedom and greater productivity. The philosophical framework must be there but it also must align with technology. Stefan's given examples before of this with abolition, women's rights, etc. and he's spot on. 

[PatrickC]

One simple way to look at this is via history.. Since the industrial revolution (let's say 1800) we have had automation breakthrough after automation breakthrough. This has been followed by a massive population growth and yet more jobs were created. Of course we now have a huge unemployment situation which kind of started in the mid to late 1970's, but this has been far more about government intervention than anything else. We actually had a decline in unemployment due to the advent of more powerful computing and software from 1993/94.

Of course it's entirely correct that jobs are lost, but since technology replaces labour by a minimum of 3-1 and often a whole lot more it frees up the available labour to work in different markets. Take the Iphone for instance, which has created a whole new application market that never existed before this technology was created.

[David L]

One simple way to look at this is via history.. Since the industrial
revolution (let's say 1800) we have had automation breakthrough after automation
breakthrough. This has been followed by a massive population growth and yet more
jobs were created.

Yes, exactly the opposite of what we were promised would occur from automation. Remember back in the sixties we were promised this technology would bring us increased leisure in the near future, not increased work. That's one of my points. Both market and statist based societies are about increasing work, not increasing freedom. No doubt we'll keep working until we work ourselves right into becoming robots themselves. (Indeed, how else can you compete with the other robots for "jobs"?)

 Of course it's entirely correct that jobs are lost, but since technology
replaces labour by a minimum of 3-1 and often a whole lot more it frees up the
available labour to work in different markets.

How about freeing up PEOPLE instead of freeing up labor? Now there's a totally outrageous idea. :-)

 

[Dirt McGirt]

 

One simple way to look at this is via history.. Since the industrial
revolution (let's say 1800) we have had automation breakthrough after automation
breakthrough. This has been followed by a massive population growth and yet more
jobs were created.

Yes, exactly the opposite of what we were promised would occur from automation. Remember back in the sixties we were promised this technology would bring us increased leisure in the near future, not increased work. That's one of my points. Both market and statist based societies are about increasing work, not increasing freedom. No doubt we'll keep working until we work ourselves right into becoming robots themselves. (Indeed, how else can you compete with the other robots for "jobs"?)

 Of course it's entirely correct that jobs are lost, but since technology
replaces labour by a minimum of 3-1 and often a whole lot more it frees up the
available labour to work in different markets.

How about freeing up PEOPLE instead of freeing up labor? Now there's a totally outrageous idea. :-)

 

 

Perhaps we should also account for the impact of taxes and inflation in this discussion..

[TheRobin]

 

How about freeing up PEOPLE instead of freeing up labor? Now there's a totally outrageous idea. :-)

 

Sure, feel free to free up somebody else by doing his job for free, so he gets more freedom

We didn't get increased work, we got it decreased heavily. just because we still work about the same hours doesn't mean we don't have more free time now compared to 50 years ago (just think of all the things you almost spend no time doing outside the working hours, that used to take you hours to days to complete, like laundry, communication, transportation (to see friends for instance), just to name a few. Now mentally go back 150 years and think about how much time was freed up thanks to technology for us now.)

 

[David L]

We didn't get increased work, we got it decreased heavily.

From what starting time period are you speaking from? 50 years ago?

Just
because we still work about the same hours doesn't mean we don't have
more free time now compared to 50 years ago

First off, evidence suggests that 50 years ago we worked significantly less hours than we do today (I'm speaking in particular for America here). Secondly, what do you mean by free time? To most people, it means time free from work, which doesn't seem to be what you mean. Please clarify on your definition if you will.

(just think of all the
things you almost spend no time doing outside the working hours, that
used to take you hours to days to complete, like laundry,
communication, transportation (to see friends for instance), just to
name a few. Now mentally go back 150 years and think about how much time
was freed up thanks to technology for us now.)

If the time freed up doesn't give us free time, but only a new set of labors to perform, I don't see any progress made in terms of free time. Please clarify further your argument. Thanks.

 

[TheRobin]

Maybe you should clarify what you mean with "work" first.Do you mean work in the sense of going to work (at a company, be that someone elses or your own)? Or do you mean "doing stuff" be that either leisure (and end in itself) or the stuff ones "has" to do but isn't an end in and of itself like preparing food, laundry, travel?

[David L]

Hmmm. Just wondering if we might be wandering too far from the focus of this thread...

[Seneca]

Luddites were wrong about the industrial revolution but with the advent of diminishing resources and baby booming demographic pressures I suspect that it isn't wrong when it comes to this next generational loss come 3D printing revolution.

[PatrickC]

Luddites were wrong about the industrial revolution but with the advent of diminishing resources and baby booming demographic pressures I suspect that it isn't wrong when it comes to this next generational loss come 3D printing revolution.

Give me a time and place when resources were ever in abundunce?

What pressure will 3D printing put on the job market that the Spinning Jenny failed to do?

I am in agreement that pressures from govt entitlements, market regulations and favoritism wont help the job market, but this has little to do with technological automated innovations.

This thread is starting to sound like a doomsday thread. There is simply no evidence that more faster cheaper automation means people becoming more impoverished. Quite the contrary, not only does the new technology often create new markets, but it drives the costs down on previously existing expensive labour intensive productions.

[Waster]

Automation means more spare time. Which means more freedom. Thats what we want right?

[tasmlab]

Peter Schiff jokes that if anyone ever invented a machine that could produce whatever anyone wanted instantly, hence making everybody wealthy beyond their dreams, the government would make it illegal since it would destroy jobs.

[empyblessing]

Self-driving cars are being produced now. Toyota has one. BMW has one. Google has one. Insurance companies are behind, I'm told. I find it all difficult to process. If what a lot of the experts say is true the auto car will eliminate most of the traffic accidents on the road since they are caused by driver error and not malfunction. But at that point would you even have a need insurance? 

WIthout state interference they could make them widespread in less than a decade. The biggest hurdle is regulation by the state.

However, the technology is going to eliminate a lot of jobs. While people think the workers will just be displaced, they won't. Truck drivers. Taxi drivers. Bus drivers. Then there's the fact that this technology is not going to stop at just cars. It will be on trains, plains, boats etc because the variables in controlling a boat are as much if not less than a car. I've read that some people predict that the state will support the automatic car but I'm doubtful. If auto cars become widespread speeding tickets will drop and the need for all the visible police will be diminished. 

I cannot see this technology even coming close to creating more jobs than it destroys. Police will be able to decrease the number of employees if there's less of a need to write citations and less money is generated. 

The question that I keep having is how evil is the government. Is there a financial incentive for the state? Hell no there's not. And when I look at the garbage that gets fed to children in the form of mind altering medicines I can't help but wonder if some regulation will prevent this from happening. A group that would suppress medicine and finding genuine cures for cancer and major diseases can do anything. When I start to think of the unintended consquences of auto-cars and 3d printers everything becomes so confusing. Basically, what markets won't be effected by those two new technologies? Less accidents mean less need for mechanics, police, wreckers, road workers. On and on. And how many jobs are created by this technology? We already have automated factories. We already have mechanics but they'll be doing less business. There might be a few jobs created around the tools that are needed to repair these cars but there's no way it will offset the number of jobs it destroys. 

 

[empyblessing]

 

Automation displaces labor, that will always be true.  I can tell you, there are cute little financial analysis techniques for determining if a position should be automated.  The primary deciding factors are the cost of capital (availability and cost of credit), the marginal productivity of labor (the value generated by each additional unit of labor added), the cost per unit of labor (usually measured in total compensation), and the revenue generated by machinery.  If, for example, money can be borrowed at nearly nothing, replacing workers with automation becomes very attractive (as the cost of, and interest on, the debt-financed machinery is tax deductible).  Alternatively, if the cost of labor is artificially increased (say by increasing the cost of living in an area through manipulation of the housing market), then retaining workers over the long-term becomes less attractive.  If the quality of workers is gradually declining (as No Child Left Behind's first generation of graduates begin to saturate the job market) then each of those workers is less attractive.  In fact, if labor is made-up of a bunch of dummies, automation is significantly more attractive.  On a high note, the productive value of machinery increases exponentially over time.  Today's computers are significantly more productive than any of their predecessors.  Put it all together and you get a situation where machinery is cheap and powerful while labor is expensive and unproductive.

If the cost of capital were an accurate reflection of saving and consuming habits of people, then the cost of machinery would be an accurate reflection of the current employment level.  That is, the interest rate on debt financing does not accurately reflect the real scarcity of wages (which it would if left to float).  Basically, as more people become unemployed, the interest rate should begin to rise as these people stop saving.  The increase in the interest rate should then make capital purchases less attractive than hiring workers (as long-term debt financing costs exceeded the cost of labor).  The result would be a continuous balance between the cost of capital and the cost of labor, resulting in automation only replacing truly inefficient occupations.  As it is now, the fixed interest rate keeps the cost of capital from reflecting the actual impact of joblessness.   The end effect is falling demand for labor, reduced costs of capital, and overproduction (which is evidenced through over-automation).

 

Have you taken into consideration Mcdonal's not automating their restaurants when they're capable of doing so in order to prop up the dying economy? If we removed 90% of mcdonald's employees and replaced them with machines the purchasing power of everyone would decrease and thus less hamburgers and other goods that the big corporations produce would not be consumed. The reason why automation hasn't happened yet is because they (statists and corporations) don't want automation on the principal that it destroys purchasing power and thus the markets themselves. On the other hand automation increases productivity and thus profits overall. The whole system is total insanity and needs scrapped. One idea is to have a smaller work week so that increases in productivity are always met with a decrease in labor to better stabilize the transition in a voluntary labor force. 

More information on the four hour work day is found here. http://blog.thezeitgeistmovement.com/blog/alex-hartley/planned-obsolescence-monetary-system-4-hour-workday

[Alan C.]

If we removed 90% of mcdonald's employees and replaced them with machines the purchasing power of everyone would decrease...

. . .

...don't want automation on the principal that it destroys purchasing power...

Automation doesn't destroy purchasing power. Purchasing power exudes directly from productivity.

Automation liberates people from rote, tedious, and repetitive labor which permits them to specialize. This is how the aggregate standard of living increases. This is a good thing.

Society is far wealthier today because of automobiles, planes, refrigeration, home appliances, mobile phones, and personal computers.

[empyblessing]

 

If we removed 90% of mcdonald's employees and replaced them with machines the purchasing power of everyone would decrease...

. . .

...don't want automation on the principal that it destroys purchasing power...

Automation doesn't destroy purchasing power. Purchasing power exudes directly from productivity.

Automation liberates people from rote, tedious, and repetitive labor which permits them to specialize. This is how the aggregate standard of living increases. This is a good thing.

Society is far wealthier today because of automobiles, planes, refrigeration, home appliances, mobile phones, and personal computers.

 

 

How do you figure that unemployed workers have the same purchasing power as people earning a wage?

Also, I completely agree that automation is a good thing. The prevention of it is importance to greater happiness of humankind because I've never met a child who dreamed of being a burger flipper. 

[Alan C.]

How do you figure that unemployed workers have the same purchasing power as people earning a wage?

I don't figure that, but their purchasing power is dependent upon their productivity.

[Arius]

Have you taken into consideration Mcdonal's not automating their restaurants when they're capable of doing so in order to prop up the dying economy?

I guess we're using "automate" in a different way.  There are two elements which I would consider automation.  First, any piece of capital which performs a task previously performed by a person.  Second, any process which reduces the total required number of people.  Both have the same effect of reducing labor costs and are largely identical from a financial perspective.  Mickey D's just introduced the double-queue drive-through.  It allows two cars to order simultaneously, without adding any delay to the food processing time.  McDonald's now has the lowest per-vehicle queue time of any drive-thru restaurant.  As a result, the productivity of each employe is dramatically increased, yet labor costs remain unchanged.

Now, if you mean McDonald's hasn't installed burger-flipping machines, I don't think the long-term costs are quite as low as you suggest.  I know the franchise owners have no interest in a huge capital investment like that.  The cost savings of implementing a mechanical burger-flipper would need to be dramatic when compared with the compensation of a minimum-wage employee.  Remember, automating a process is only cost-efficient if there is an economy of scale in mechanical maintenance.  For example, Honda has significant degrees of automation in their factories.  All their machinery uses similar operating systems, software, and interchangeable parts.  As a result, Honda doesn't need but a few technicians to keep the whole factory running.  A single burger-flipping machine, in a kitchen of people, will require a maintenance technician with higher compensation costs than a human burger-flipper.

Now, if you can automate the entire kitchen, maybe there's some cost savings to be made.  Though, if you look at some of the modern examples of total automation, they look nothing like their human counterparts.  As an example, Redbox (completely automated) looks nothing like Blockbuster Video (human operated).  A fully-automated McDonald's will more likely just be a kiosk or a vending machine.

The reason why automation hasn't happened yet is because they (statists and corporations) don't want automation on the principal that it destroys purchasing power and thus the markets themselves. On the other hand automation increases productivity and thus profits overall.

It's strange you offer that argument.  All the Blockbuster Videos are closed down.  The brand was sold, but there are no remaining long-term employees of the company.  In fact, my wife worked at a Blockbuster in her youth.  Redbox and Netflix have completely replaced Blockbuster, through the use of technology and automation.  Yet, most of those Blockbuster employees found gainful employment elsewhere.  Redbox has a larger market than Blockbuster did.  It's very rare that eliminating employees reduces the total size of a market.

Equally, automation isn't a guaranteed ticket to high profits.  Look at Bitcoin manufacturing.  The entire industry is 100% automated.  The margins are so tight that a one cent increase per kilowatt hour can put a producer out of business.  In fact, most Bitcoin producers do so at a financial loss. 

I'm afraid the balance between labor and capital is not so one-sided as you imagine.

[empyblessing]

 

I'm afraid the balance between labor and capital is not so one-sided as you imagine.

 

 

You're right. I have the most rudimentary understanding. 

Oddly enough, I was just thinking about how blockbuster has been shrunk down to a redbox just before I read your post. But Mcdonald's is automating very slowly. 

http://news.cnet.com/mcdonalds-hires-7000-touch-screen-cashiers/8301-17938_105-20063732-1.html

 

[empyblessing]

Arius, do you believe that corporations are only opposed to automation based on financial reasons? Is it possible there is a fear of collaspe asociated with automating the service sector jobs?

I don't believe fast food customers are concerned with service with a smile. I think that's a farce. If that were true than why have a driver through. If diners want good service they to go a restaurant, not mcdonalds. Besides, people quickly adjust to less automated checkouts.

My thinking on automation is not keeping the same mcdonalds and putting in robot cooks but more along the lines of shrinking mcdonald'd kitchen down to the size of a vending machine that produces made to order food. They could keep the dining room or just have the vending machine accessible by car. I used mcdonalds as an example but I think a new fast food chain would be able to do this better than an existing one. 

[Arius]

I was in a Jack-in-the-Box about 6 months ago (I don't eat out much) and the store had one of those automated check-out do-dads.  Those have been a mainstay in Japan for several decades.  I'm glad the US is finally catching-up.  Which is actually my point.  If you look at the difference between what is possible and what businesses actually do, you'll see that large corporations are incredibly reluctant to adopt new technologies.  Most of the innovation and adaptation comes from start-ups.  Blockbuster never migrated to kiosks, but the trip was easy for Redbox.  For Redbox, every kiosk was a new section of the market.  Blockbuster would have cannibalized its own sales with kiosks. 

McDonald's is way behind the "what's possible" curve.  The reasons are entirely financial.  The newer a technology is, the more it costs.  I have no doubt that, if you really wanted to, it would be possible to build a completely automated McDonald's.  But, how much would such a thing cost?  Has anyone invented a device which ferries cooked food around a kitchen between stations?  Is there a means for determining if the customer has changed their mind and left the store?  What is the automated solution to "I want to see the manager"?  Inventing and building solutions to these problems represents an investment in the technology.  An investment which McDonald's would rather not pay.  That's why American restaurants are only now adopting a technology which reached maturity in Asia several decades ago.

[empyblessing]

 

I was in a Jack-in-the-Box about 6 months ago (I don't eat out much) and the store had one of those automated check-out do-dads.  Those have been a mainstay in Japan for several decades.  I'm glad the US is finally catching-up.  Which is actually my point.  If you look at the difference between what is possible and what businesses actually do, you'll see that large corporations are incredibly reluctant to adopt new technologies.  Most of the innovation and adaptation comes from start-ups.  Blockbuster never migrated to kiosks, but the trip was easy for Redbox.  For Redbox, every kiosk was a new section of the market.  Blockbuster would have cannibalized its own sales with kiosks. 

McDonald's is way behind the "what's possible" curve.  The reasons are entirely financial.  The newer a technology is, the more it costs.  I have no doubt that, if you really wanted to, it would be possible to build a completely automated McDonald's.  But, how much would such a thing cost?  Has anyone invented a device which ferries cooked food around a kitchen between stations?  Is there a means for determining if the customer has changed their mind and left the store?  What is the automated solution to "I want to see the manager"?  Inventing and building solutions to these problems represents an investment in the technology.  An investment which McDonald's would rather not pay.  That's why American restaurants are only now adopting a technology which reached maturity in Asia several decades ago.

 

I would love to watch some upstart fast food chain derail mcdonalds but innovating and making a totally new approach to flipping burgers especially if it advanced technology and ended a bunch of jobs that no one wants to work anyway. 

[empyblessing]

 

 

I was in a Jack-in-the-Box about 6 months ago (I don't eat out much) and the store had one of those automated check-out do-dads.  Those have been a mainstay in Japan for several decades.  I'm glad the US is finally catching-up.  Which is actually my point.  If you look at the difference between what is possible and what businesses actually do, you'll see that large corporations are incredibly reluctant to adopt new technologies.  Most of the innovation and adaptation comes from start-ups.  Blockbuster never migrated to kiosks, but the trip was easy for Redbox.  For Redbox, every kiosk was a new section of the market.  Blockbuster would have cannibalized its own sales with kiosks. 

McDonald's is way behind the "what's possible" curve.  The reasons are entirely financial.  The newer a technology is, the more it costs.  I have no doubt that, if you really wanted to, it would be possible to build a completely automated McDonald's.  But, how much would such a thing cost?  Has anyone invented a device which ferries cooked food around a kitchen between stations?  Is there a means for determining if the customer has changed their mind and left the store?  What is the automated solution to "I want to see the manager"?  Inventing and building solutions to these problems represents an investment in the technology.  An investment which McDonald's would rather not pay.  That's why American restaurants are only now adopting a technology which reached maturity in Asia several decades ago.

 

I would love to watch some upstart fast food chain derail mcdonalds by innovating and making a totally new approach to flipping burgers especially if it advanced technology and ended a bunch of jobs that no one wants to work anyway. 

 

[PatrickC]

I cannot see this technology even coming close to creating more jobs than it destroys. Police will be able to decrease the number of employees if there's less of a need to write citations and less money is generated.

Well less state funded jobs would no doubt be a better thing for the economy in the long run.

The trouble is with this negative opinion of technology, is that 'historically' it has been proved to be wrong each and every time it has been suggested. You are effectively viewing the future in the same way the Luddites did. It's frankly impossible to know exactly what will happen, but historically it's always been a net gain each time. You would have to provide some significant counter arguments rather than just pointing out the lost jobs themselves.