photo credit: Mark Strozier - cc

photo credit: Mark Stroziercc

The necessary consequence of “robots eat all the jobs” is “everything gets really cheap.” The main reason to use robots instead of people to make something is when the robot can make it less expensively. When people can make something that costs less than what robots can make, then it makes economic sense to use people instead of robots. This is basic economic arbitrage at work.

It sounds like it must be a controversial claim but it’s simply following the economic logic. So “robots eat jobs in field X” = “products get cheaper in field X” = “consumer standard of living increase in field X” — necessarily. So arguing against “robots eat jobs” is equivalent to arguing “punish consumers with unnecessarily higher prices.”

Indeed, had robots/machines not eaten many jobs in agriculture and industry already, we would have a far lower standard of living today. Just as increases in consumer goods prices disproportionately hurt the poor, holding back on robots eating jobs would more hurt the poor.

The same logic applies to trade barriers (import tariffs): disproportionately hurt poor consumers by inflicting higher consumer goods prices. Here’s the arbitrage logic: Suppose humans make widget X profitably at $10 price to consumer. Robots can make X at $5 price to consumer. Economics drive X to be made entirely by robots; consumers win.

But then imagine the owner of the robots cranks X price to consumer to $20. Suddenly it’s profitable for humans to make X again; entrepreneurs immediately start companies to make X with humans for price $10 again. Therefore, with rare exceptions, there won’t be states where “robots eat jobs” and “products get more expensive.” They will almost always be cheaper.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12,13

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Category:
Economics

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