...Starting with first principles
America First Trust services
Education, analysis, and advice for uncertain times

 

 

 

"Robot Star" Made Good... In 1984 Arnold Schwarzenegger became a cyborg-assassin in The Terminator. In Oct 2003 "The Governator" terminated the tenure of California Governor Gray Davis in a recall election.

 

 

Entrepreneur by Bill Fox

 

Part 5

ROBO POLITICAL ECONOMY



First posted Feb 2005

xxn

"Frankenstein and the Awakening" (1831 engraving by T. Holst). Victor Frankenstein creates an "autonomous artificial being" with body parts and zaps of electricity. He then abandons responsibility for his "monster," which encourages its destructive behavior towards humans.

 
Captain Nemo punches out one of his three involuntary"guests" who tries to signal an approaching warship. Under fire, Nemo orders the Nautilus to dive and then wreaks terrible vengeance as part of his "war against war." (From Chapter 21, "A Mass Execution")

Old wine in new bottles. As the Industrial Revolution gained full steam in the 1800's, popular fiction gave us basic themes about man's technology turning on himself in such works as Mary Shelley's 1818 classic Frankenstein: or the Modern Prometheus and Jules Verne's 1870 masterpiece 20,000 Leagues under the Seas. These themes have continually returned ever since, more recently with socially alienated replicants that turn on their creators in the 1982 film Blade Runner or the robo-rebellion to save man from himself in the 2004 movie I, Robot (discussed in more detail later in Part Six). As a variation on the theme of using technology to counter possible abuse of technology and enforce social change, in Verne's novel Captain Nemo uses his advanced technology submarine Nautilus to destroy armored naval steamships around the world in an effort to prromote international disarmament and end war.

 

A basic theme that never fails to hit a nerve

This is the fear that machines will replace human workers. During his luncheon talk at a March 2004 robotics conference in Cambridge, iRobot CEO Colin Angle talked about how his firm teamed up with a consumer products company in the late 1990's in hopes of developing floor cleaning robot concepts for corporate users. He discovered that mobile robot projects have to sell themselves on the new revenues that they can bring in for corporate users, rather than on simply the labor costs that they can save. He mentioned that often "labor will find a way" to avoid being replaced. While studying potential floor cleaning applications, he discovered that the particular people who perform clean-up jobs, and the amount of time that it actually takes for each job, is often quite different than what is officially reported. Trying to select worthy robotic projects based on replacing human jobs as a main criteria ended up being too simplistic.

In Part Four of this series I described how entrepreneurial calculation should start first with an estimate of what a buyer will pay for a brand new "value proposition." This is much better approach than focusing on replacing the human labor that goes into existing products. The new product concept should impress the buyer with its ability to perform myriad tasks and functions, which may or not have a human counterpart. Many of the modular frontiers that I outline in Part Three can be combined in ways that are impossible for any human or even groups of humans to match, which is where we get into the real power of robotics. To reinvoke my example of the robot that tends vineyards, it is not about replacing one agricultural worker with one robot. It is really about putting a robot in the vineyard that not only picks grapes, but is also part of a database system that monitors, analyzes, responds to, manages, and optimizes everything about the agricultural process (soil, rain, sunshine, planting, harvesting, etc). It may have sensing, manipulation, database, reconfiguration, or exotic mobility characteristics totally beyond the capabilities of hundreds of human workers. It may have artificial intelligence capabilities almost beyond human imagination. The new process may be more important than the machine. This is what the "robolution" is really all about.

Despite this more comprehensive view, human social issues inevitably get entangled with robot issues and create political obstacles. They can unnecessarily complicate them and give rise to economic fallacies and misperceptions. A major purpose of this last part of my series is to discuss public anxiety and ways to sort out the issues and better understand their underlying nature.

MAN VS. MACHINE?

Automation-related anxiety has been around a long time, and never seems to go away. In fact, robots may intensify it. One of the most famous historical examples involved the Luddites who smashed over a thousand looms in early 19th century England in an effort to save their jobs from the new devices.

In his famous book Economics In One Lesson, Henry Hazlitt wrote, "In the depression of 1932, the game of blaming unemployment on the machines started all over again. Within a few months the doctrines of a group calling themselves the Technocrats had spread through the country like a forest fire...The Technocrats were finally laughed out of existence; but their doctrine, which preceded them, lingers on. It is reflected in hundreds of make-work rules and featherbed practices by labor unions; and these rules and practices are tolerated and even approved because of the confusion on this point in the public mind."

Even though the Technocrats were laughed away, Hazlitt pointed out how in 1946 the same viewpoint resurfaced in an article by FDR's wife Eleanor Roosevelt which stated,: "We have reached a point today where labor-saving devices are good only when they do not throw the worker out of his job." According to Hazlitt, in a 1978 revision of Economics In One Lesson, this sentiment remained widespread and continued to resurface decade after decade among political and labor leaders no matter how many times it was discredited.

Robots may be viewed as"automation on steroids," and as such they elicit much stronger emotional reactions than factory machinery per se. In the book Robo Sapiens, some roboticists suggest that American robot makers have tended to refrain from making humanoid robots and have focused more on animal models because of the perception in America that humanoid robots may evolve in sinister ways This may have very serious social ramifications to the extent that it increases the reluctance of US firms to keep pace with their Japanese counterparts in making certain far-sighted robotics-related investments that could have vital strategic importance later on.

I discussed in Part One how the Japanese openly embrace humanoid robot research, hoping for the day when robots can better assist their aging population, and how major Japanese firms are spending hundreds of millions of dollars on visionary robotic projects that are cute and commercially useful. Paradoxically, because of the relative lack of investment by large American firms, DoD has become the largest de facto long term investor. The military's emphasis on war-related applications helps create a self-fulfilling prophecy that risks reinforcing Americans' image of robots as potentially sinister devices.

ROBO-GHOST STORIES?

To aggravate and complicate this situation even further, a number of influential individuals with computer science backgrounds have weighed in with trepidation. Three good examples are as follows:

Marshall Brain, a computer science college teacher and web site entrepreneur who created the very popular site www.howstuffworks.com, has also created the site Robot Nation, which includes excellent updates on robotic developments at his robot blogspot. He envisions 50% unemployment by year 2050, stating, "The rise of the robotic nation will not create new jobs for people -- it will create jobs for robots." . He has written an online novel Manna in which an unemployed protagonist migrates to a new robo-zone in Australia. There he finds a society that has abolished private property and freely distributes goods produced by robots at ever lower prices to happy people.

The book Robo Sapiens discusses the robot research of Dr. Kevin Warwick of the University of Reading, UK. According to Sapiens, "In Warwick's view of the future, the world will be populated by hybrid creatures --part living flesh, part electronic device. Linking humans to machines, he said, involves `creating cyborgs--there is no way around it--people that are part human, part machine.' Such entities, he admitted, will have `values that are very different from human values. But that is the way that we are going. I know that is a bit sci-fi-ish, but that is the direction. That is clear.' He adds, `The destruction of the human race as we know it seems inevitable.'"

Oh well, so much for "Pretty Baby." Peter Menzel's cut-away photo of a My Real Baby Doll

photo: © Robo Sapiens: Evolution of a New Species ..(Peter Menzel and Faith D'Alusio/The MIT Press)

As a last example, the book Robo Sapiens also shows a cutaway picture of My Real Baby Doll, that I have already discussed at some length in Part Four. The Sapiens author Peter Menzel asked the good folks at iRobot to cut away half the doll's face to show the machinery underneath. He said that when he showed the photo to roboticist Matsuo Hirose in Tokyo, the chief engineer of the Honda humanoid project. "He shuddered, `I don't like this picture,' he said, `I feel like this baby might do something to me...'"

MY INITIAL REACTION

The Wonderful Wizard needs to figure out what kind of heart is suitable for Tin Man

These comments have so many underlying social and technological issues entangled within them that they remind me of huge Rorschach blots. I believe that the technological issues are fairly straightforward. However, the social issues entail political, cultural, economic, and ethno-racial dimensions that are very tricky to deal with. America today is a multi-racial, multi-cultural society riddled with disparate special interests and value conflicts. Culturally and demographically it is a very different country today than in the 1800's, which adds to value confusion. Honest discussions of America's many conflicts are often repressed and distorted in our national media in the name of preserving unifying ideology. To borrow some imagery from the Wizard of Oz, our society finds it extraordinarily hard to honestly sort out the real issues and define the heart we need for Tin Man and the courage we need for Cowardly Lion. We are no longer even on a yellow brick road.

I mean "yellow brick road" both figuratively and literally, since the yellow brick road in the children's novel by Frank Baum meant the gold standard. The Tin Man symbolized the industrial worker, and more generally industrialization, and the Cowardly Lion symbolized "populist" politician William Jennings Bryan, and more generally "politics" and perverted remnants of Jacksonian and Jeffersonian democracy. In this paper the Tin Man symbolizes the robot, and more generally advanced automation and its human programmers.

I can invoke pro-robot arguments to counter every negative one. For example libertarian commentator Lew Rockwell has written about how "Every bad thing you can name [about the Internet] is matched by a more powerful good thing." The Internet gives people more access to new ideas, skirts old information monopolists, and helps evolve more sane social policy.

I would ask why we can not extend Mr. Rockwell's comments about the Internet to robots, and hope that the eventual dispersion of cheap robot power might help to make people more economically self-sufficient on a grass roots level. Perhaps with the advent of mobile robots, the continuing industrial revolution is going through a disaggregation phase that will mean more dispersed, flexible work throughout industry and society. Perhaps this will ultimately mean more decentralized economic and political power throughout the world, compared to the highly centralized governments of the 20th century that coincided with consolidated factory complexes and the big city centers. The latter pulled most Americans off the self-sufficient homesteads that coincided with 19th century Jeffersonian and Jacksonian democracy. All of this might on balance also end up being a good thing towards the advancement of both human liberty and more accountable government.

In regard to Mr. Brain's concern that a robot invasion could bring 50% unemployment by the year 2050, I am more concerned that America could experience an Argentina-style meltdown and massive unemployment beginning some time over the next five to ten years because of America's failure to fully embrace automation over the last several decades as well as going forward from here.

In one long paragraph, I would like to touch upon some of the serious social issues typically ignored by people who attack robots.

America has less than half as many engineers and more than 40 times as many lawyers per capita as Japan. (Please note the Grandfather economic report chart showing how lawyers per capita is now inversely correlated with balance of trade health. This may suggest a society quietly warring within). America's extreme "free trade" policies are based on a self-destructive principal that "charity" (technology reinvestment preference and trade secret giveaways) begins with alien peoples rather than ones own kind, who are further penalized with heavy taxation, regulation, and affirmative action and quota hiring requirements that undermine meritocracy. Forbes editor Rich Karlgaard commented in the Sept 6, 2004 issue, "America's immigration policy is also tilted in the wrong direction -towards uneducated workers and against educated ones," a point also made in Alien Nation by Peter Brimelow. The priority in America since the LBJ "Great Society" administration has involved Big Government growth and intervention, social reengineering, massive pork barrel and social transfer payment spending, overseas bailouts of NY City-based big money center banks, and increasing foreign entanglements. Foreign alliances have included expansion of NATO up to Russia's borders, a special relationship with Israel, and "New World Order" global cop interventionist schemes that have ranged from Africa and Asia to Europe and Latin America. The U.S. has divorced itself from focusing upon real automation engineering or economic progress within its own borders. Ten of America's largest Wall Street firms paid $1.4 billion in fines in 2003 for defrauding investors (not a good sign regarding honest, rational entrepreneurial calculation, but instead spotlighting rising greed, alienation, and immediate gratification). America has lost over half its manufacturing capacity as a percentage of GDP in the last fifty years, contributing to its chronic trade deficits and out of control indebtedness. In fact, the noteworthy Grandfather Economic Report shows alarming deterioration in "vital signs" that include education quality performance, international indebtedness, savings, and productivity. Dr. Laurence Kotlikoff of Boston University points out that with $51 trillion in un-funded liabilities the U.S. is de facto bankrupt. According to some recent estimates, America's financial system might now have as much as $170 trillion in unregulated derivatives (Warren Buffett's "Weapons of Mass Financial Destruction"), perhaps seventeen times America's GDP and more than double the amount that existed during the Long Term Capital Management crisis in 1998. A "Perfect Storm" scenario could trigger a financial meltdown far too big for the Fed to contain. The Fed has been pumping up the money supply at a rate of roughly 10% a year for the last decade, and will likely kick into a hyperinflationary mode in the near future. The Fed will be forced to create even more money to buy into growing debt and trade deficits that foreigners are increasingly walking away from. Given all of the aforementioned rising problems, we are beginning to see more public criticism, ranging from Gore Vidal's 1994 National Press Club address on the Left, to Thomas Chittum's Civil War II on the Right, that question America's ability to hold together in the 21st Century.

All of the aforementioned ultimately involve serious human social problems, not robot problems. The Roman Empire had similar problems during its decadent phases, when robots were not an issue. Scapegoating robots is not the answer.

COMRADE ROBOT?

The notion in Manna that robots will produce so many goods that private property owners will comprise a stingy impediment to the distribution of the new abundance is nothing new. Similar sentiments existed towards factory owners in the early phases of the Industrial Revolution prior to the publication of the Communist Manifesto in 1848.

Private property is commonly abolished by the state and redistributed during national emergencies and to feed starving armies. This really means "relief" or "welfare" for people in extreme circumstances incapable of earning a living and engaging in entrepreneurial calculation.

In terms of sustaining a viable and competitive economic system, under normal circumstances radical socialism, which entails the elimination of most private property and the "public," "government," or "collective" control of most industries, has always been a disaster compared to a free enterprise private property system. Socialist intervention destroys the free market pricing system an economy requires to efficiently coordinate and balance its myriad activities on a decentralized level. It is impossible to engage in rational entrepreneurial calculation if the factors of production or profit incentives can be expropriated away. Socialist "central planning" has always been relatively clumsy and inefficient.

From a sociobiological viewpoint, radical socialism is frequently based on misdirected instinctive envy and misguided instinctive altruism and affiliativeness. It usually penalizes the productive while rewarding the nonproductive. In addition man, like all other mammals, has strong territorial instincts that will never be eliminated by modern liberal propaganda. Eliminating private property demarcation lines can create huge territorial ambiguities that can lead to much greater conflicts later on. Radical socialism can cause de facto property control to gravitate to the leaders of what effectively becomes a plantation society. In other words, radical socialism can be the ideological pheromone that parasites (or in human terms, criminals or alien exploiters) propagate to invade and strip away territorial defenses within a host society and rule it by brutal dictatorship.

The bottom line is that if a society has the overall intellectual capacity and level of honesty and social efficiency necessary to sustain technological advancement, it should stay with a private property free enterprise system.

Dr. Murray Rothbard restated many key ideas voiced by this man

Let us briefly look at an example of an economic disaster that got blamed on automation when the real underlying causes involved special interests and human social policy problems. The late Dr. Murray N. Rothbard argued in his classic work America's Great Depression that a major underlying cause of the Great Depression involved the aggressive expansion of America's credit system and money supply. All of this started with the Federal Reserve System created in 1913, and proceeded with World War I mobilization and accelerated through the 1920's. The Fed also promoted increasingly aggressive fractional reserve bank lending policies. This made a lot of insiders richer, to include banking interests with private ownership shares in the Federal Reserve System. It also created a huge bubble that eventually imploded. Incidentally, the Federal Reserve System has never delivered on its original promises or been audited. Its negative impact was predicted by Thomas Jefferson and other founding fathers who vehemently and explicitly opposed the creation of a national central bank in order to preserve individual and regional liberty.

In the post-bubble mess of the early 1930's, the U.S. Government implemented price controls. This bought votes for pork barrel politicians and served certain special interests, but it also undermined free market clearance and the redeployment of mal-invested assets. Both the Hoover and FDR Administrations were highly interventionist. FDR hiked certain tax rates over 90%, which the super rich could work around with loopholes. This undermined straightforward entrepreneurial capital formation and the creation of new jobs, plant, and equipment. FDR promoted the bailout of reckless and dysfunctional banks, particularly those tied in with the Fed. Today this has led to bigger and vastly more reckless banks who have spawned today's unregulated derivatives growth. According to Dr. Rothbard, these and other interventionist policies of the FDR Administration actually helped to prolong and deepen the Depression.

The historian Dr. Jeffrey Hummel compares the interventionist, socialistic FDR administration to the vastly superior performance of the noninterventionist Martin Van Buren administration (1837-1841) in his lecture: "Martin Van Buren: What Greatness Really Means." The Van Buren administration stood back and allowed the free market to sort out a stock market crash and a very serious business recession. America was on the gold standard and had no highly leveraged fractional reserve banking system or Fed-like central bank that could pump out fiat "paper money" and credit like a Sorcerer's Apprentice. The free market cleansed and sorted out the system in only two years, which then proceeded on a strong steady growth track. Martin Van Buren, incidentally, steered certain Americans away from waging aggressive war on Canada, which according Dr. Hummel is another reason why he should be considered one of America's greatest presidents.

Getting back to computers and robots, they may actually serve to enhance private property and free enterprise, and increase rather than decrease forms of scarcity. Computers will make it easier to track and record equity ownership in greater detail and precision, a process that has already accelerated with online stock purchases. Rather than reduce scarcity, which would be reflected in falling prices, robots may create a demand for complex products that consume basic materials faster than they can be extracted, refined, or transported from the earth or other places in our galaxy, putting upward pressure on certain commodity prices. We have seen an aspect of this paradox with the entrance of China into the world economy, whose low cost manufacturing and assembly labor initially helped reduce prices for consumer electronics items, yet whose burgeoning economy has put long term upward pressure on the prices of basic commodities.

As I address these and other abstract social issues, I begin to get ahead of myself. Obviously it is hard to address automation economic issues without addressing broader economic issues. However, we need to start by reviewing the history of automation to see what kinds of legitimate inferences we can make regarding its probable impact on human societies, while trying to keep constant "noise" related to other factors such as geopolitical events, cultural values, and types of government.

AUTOMATION ECONOMICS 101

The first question we need to ask is as follows: All other things being equal, what does automation tend to do for a society?

In Economics in One Lesson, Henry Hazlitt pointed out that while it is true that machines obsolete certain jobs, it is also true that they simultaneously create new jobs elsewhere. They create new jobs designing and tending to the new machinery. They create new jobs distributing the additional goods that are produced. The lower cost of the goods leaves more money in the pocket of the consumer, whose spending creates new jobs elsewhere. The increased profits of the manufacturer creates a greater pool of savings for him to reinvest, either in new plant and equipment, or as general investment capital. The greater number of goods produced at lower costs add more to the physical infrastructure of the society, which in turn helps it to create even better machinery to create even more higher quality goods at even lower costs.

If simply creating human jobs is the only goal, it is true that you can always create or protect more jobs by eliminating machinery and returning society to a more primitive level. The problem is that the jobs are of lower productive quality. The society that has too many of them may eventually be overpowered by more efficient outside predators.

Hazlitt points out that we can create tens of thousands of jobs overnight if we pass a law that requires that all goods carried between Chicago to New York have to be done in Neolithic style --on people's backs. This kind of "make work" would seem ludicrous to most Americans today. Looking back at the 19th century, we can see how it would have been ludicrous to have thwarted automobile-related automation to protect wagon teamster jobs. People fifty years from now will probably think the same thing about any "make work" or "keep job" decisions today to not install robots.

Hazlitt points out how certain emerging industries grew in jobs as they added automation. For example, the auto industry grew from 140,000 people in 1910 to 941,000 people in 1973. Aviation and aircraft parts went from zero in 1900 to 514,000 by 1973. (Hazlitt, page 58). My guess is that the robot industry will also be adding tons of jobs in the decades ahead.

In many ways the whole human "job" concept currently used as an intellectual construct is grossly inadequate. We need to ask deeper questions about the tasks accomplished and the overall "work smarter" quality of the jobs that we are creating. This even became clear to savvy economists well before the 20th century. According to Hazlitt (page 51) "The power capacity already being exerted by the steam engines of the world in existence and working in the year 1887 has been estimated by the Bureau of Statistics in Berlin as equivalent to that of the 200,000,000 horses, representing approximately 1,000,000,000 men; or at least three times the working population of the earth..."

So in other words the machinery of the Industrial Revolution up until 1887 had added job-equivalents of three times the earth's working population compared to an earlier period of, say, the 17th century, and yet in 1887 we continued to see something close to full human employment in both the United States and England. This was despite the fact that the populations of both England and the US more than doubled in the mid-19th century compared to the 18th century.

If the impact of machinery is to eliminate human jobs, there should have been increasingly massive unemployment towards the latter part of the 19th century coinciding with the progression of the Industrial Revolution. Instead, the addition of automation was part of an entrepreneurial environment that continuously added more job-equivalents compared to an earlier era for both machines and for humans.

Perhaps the real job we should focus on in society involves a process of continually innovating and creating better and more effective machines that get more productive work accomplished per worker, as opposed to trying to cocoon ourselves inside a repetitive work routine for fixed wages. Until we build star ships that take us to far galaxies, there will always be plenty of jobs that need to be performed, and even then I would expect the human innovative imagination to reach even further. According to some economic theorists, human needs are insatiable, therefore there may be no limit to the extent that each human worker can be empowered with robot production.

The achievements of workers and industrialists during the 1800's are remarkable given the lack of resources we take for granted today. It is very important for our social issues analysis that we take a closer look at these societies.

America and Britain were the world industrial leaders during the 19th century. They were both on a gold standard during most of this period. Despite economic set-backs of the Napoleonic Wars for Britain, and the Civil War and War of 1812 for the US, there were long stretches in both countries where economic growth rates averaged 5% a year, an amazing feat by late 20th century American and British standards. In Great Britain money actually doubled in value within a century. (I discuss this in more detail in Part One and Part Two of my series of articles about gold.) Average living standards more than doubled by the end of the century. There was no significant government stimulus or intervention in the economies. Except for times of war, there was no central bank or personal or corporate income tax. Total government prior to the War Between the States comprised less than 5% of GDP, compared to over 40% today. The US government raised its revenues from tariffs and land sales. Private industry was able to make massive and continual reinvestments in itself.

These were relatively laissez faire economies with stable monetary conditions that favored competent entrepreneurial calculation. These societies promoted personal savings, a strong work ethic, and a deep sense of personal honor. Most non-black Americans in the early 1800's were of Northern European descent or anthropologically of a Nordic background. The same was true of the elite that controlled the levers of power in banking, media, and industry. Their sense of shared ethnic history, racial pride, and traditions of innovation and individual liberty provided a strong incentive to work honestly and harmoneously with their neighbors without requiring top-down governmental oversight.

Honesty aided rational long term entrepreneurial calculation and teamwork. Private charities, family and community ties, and concern by industrialists for their workers, later denounced by Marxists as "paternalism," provided economic shock absorbers. An emphasis on foresight, delayed gratification, and individual responsibility and initiative helped workers adapt to changing industrial conditions.

According to Dr. Ralph Raico in his lecture "Classical Liberal Historians," the French observer Alexis de Tocqueville noted in the mid-1800's that a distinguishing feature of American society compared to their European counterparts was the ability of Americans to organize themselves on a local level without hardly any government. De Tocqueville noted that France, with a population roughly the same size as America, had thirty times as many governmental bureaucrats. Dr. Raico added that when the Russian anarchist Mikhail Bakunin visited America in the mid-1800's after fleeing Czarist police, he said that Americans had little need for his anarchism because they had so little government to begin with. Finally, Dr. Raico observed that classical American liberalism should not be confused with modern liberalism, which takes opposite positions on many key issues, to include government size and intervention.

In his lecture, "The Industrial Revolution," Dr. Raico points out that a report to the English Parliament in the early 1800's that helped give rise to the "Dark Satanic Mills" and other "exploitation" propaganda used by Marxists was extremely biased and was based on selective anecdotal evidence. Apparently the Tory party, which had slave-holders, was looking for ways to discredit their political opponents, who consisted of budding industrialists. These industrialists tended to be anti-slavery, so this was the Tory way of saying, "Who are you to criticize us?"

Although serious abuses did in fact take place, as is true in virtually any political and economic system, the Industrial Revolution did a lot for people, particularly those who had lived out in the British countryside. According to some studies, many of these rural people previously had to spend 60% of their income on food just to stay alive, and could rarely afford new clothes. Dr. Raico pointed out that if you do not like the Industrial Revolution, look at places which at that time never had one, such as Ireland during the potato famine of the 1840's (or Calcutta India, for that matter). The same potato blight that hit Ireland also impacted on Scotland, Holland, and Northern Germany, but did not create anywhere near the same economic catastrophe in large part because the people in these other areas had industry to fall back on, whereas constant civil conflict with absentee landholders for centuries in Ireland had discouraged local investment.

To summarize this section, we see that automation helps to increase the quantity and quality of goods while driving down their costs. If managed properly, it can rapidly expand what could be considered "job-equivalents" and productive output per worker relative to what existed prior to the advent of new automation. It adds new jobs or productive output per human worker at a faster rate than the jobs it obsoletes. A corollary of this is that it also expands the division of labor, increases specialization, and increases the demand for technological devices and services. The best driver of this whole process is private entrepreneurial calculation, not government bureaucracy, which tends to be inefficient and wasteful.

By increasing the physical stock of goods and services in a society, automation clearly increases its overall wealth. This gives people more options regarding how they deal with life. The average citizen in the US and Britain who was involved in the Industrial Revolution had far more personal freedom than the average Irishman who got caught in the potato famine of the 1840'. Automation, if managed wisely, can help increase political liberty.

Automation also helps to create a shift in the average character of jobs in an economy. For starters, automation causes people to have many more machines in their lives both at home and at work. Their lives become more oriented towards operating, maintaining, and fixing mechanical and technical things. We can expect that trend to continue when people begin to supervise more robots. They already manage quasi-robots in their homes with washing machines and dish washers, and more recently with Roombas and robo-mowers.

Automation tends to increase the average intellectual content of productive human jobs. It also increases the number of service jobs in an economy related to managing and enjoying the additional wealth created by machines. Some of the most important job creation in this area involve financial services, government, the legal profession, and luxury goods and leisure industries.

There is an interesting long term historical correlation between the existence of competitive manufacturing capacity within a country and the number of service jobs that it supports and its overall standard of living. When societies lose their ability to manufacture tradable goods within their own territory, as in the case of Argentina during much of the 20th century, or as in the case of the United States in the past few decades, they tend to lose meaningful service jobs and suffer a relative decline in their standard of living. Conversely, a country such as Ireland that lured in competitive physical industry with tax incentives in the 1970's and 1980's, or China which has steadily grown its low cost manufacturing and assembly operations in the past two decades, tend to see a steady rise in service jobs and economic growth. Even in regard to within the U.S., the book The Southern Advantage by Joseph Hollingsworth argues that the South has had the fastest job growth rate in America in recent decades because it has been more successful in luring manufacturing than any other region of the country.

The next important question we need to ask is what does automation NOT do for us?

While automation can create more wealth, and provide people with more time and resources to evolve better policies to manage, consume, or reinvest that wealth, it still does not prevent incompetent people from wasting their wealth or prevent alien or criminal interests from seizing control and plundering a society. Technology is simply a form of leverage that allows people to do more. Period.

The way in which technology is used often reflects the underlying character of the human society. So when things go wrong with technology, that really means that we are dealing with social issues regarding the people who control or create the technology, and not the technology itself. Technology itself does not solve a very ancient problem, namely how the people in society who are productive can defend themselves against the elements in society that live by fraud and plunder.

In this sense, the part of the robot debate that involves its most advanced technology becomes very similar to the nuclear proliferation debate. The degree of leverage in robot technology is beginning to progress to the point that people may begin to worry about whose hands it might fall into. Obviously societies that appear relatively stable, prosperous, and non aggressive such as Japan and the Scandinavian countries may make us feel more comfortable about who will take robotics to a higher level compared to various Third World countries whose instability, aggressiveness, irresponsibility, or overtly criminal leadership make us feel much less uncomfortable. Paradoxically, the strategic nature of this technology should also create an analogy with the nuclear arms race of the Cold War, where those nations that have leadership will feel compelled to pour ever more resources into robotic development to avoid falling behind.

How do societies go about advancing automation?

We already know what the values, talent, and social organization should look like because America and Britain had enough of all of these things back in the 1800's to make incredible progress.

We need to save more, delay gratification, and focus on the production of real and useful things rather than engage in gambling and "devil take the hindmost" financial speculation. We need more technically-savvy, smart people. We need a meritocracy so the most capable people rise to the top. We need individual flexibility so that people can more easily shift into new jobs if their current jobs become obsolete. We need shared cultural values so that tech companies can develop teamwork and long term trust. We need personal honor so that investors can trust entrepreneurs with their capital and trust their progress reports. We also need honesty so that entrepreneurs can receive more accurate information from other members of society on which to base entrepreneurial calculation. . Rather than relying solely on government, we need foresight and savings on a local level. We need to recognize the importance of family support and frankly a good measure of corporate ethics and paternalism to help workers grow in their jobs and handle the hard knocks of capitalism. We need government that works with rather than against business, and does not lie to us about the economy and its policies. We need allow communities in America to organize themselves along lines that are natural to them, rather than according to government social re-engineering criteria. We need to live in a society with enough heart-felt commonality so that people can work productively together through common sense rather than massive government regulation.

This is the yellow brick road. I know that what I am writing is beginning to sound like a sermon. You have no doubt heard these views expressed many times before, particularly from populist politicians who stump this line to win votes. Unfortunately once they get settled in their new offices in Washington, D.C., they have this amazing way of turning into Cowardly Lions with totally different decision criteria. We also get tantalized with this rhetoric by America's national media, which also have this amazing way of tantalizing us with tidbits of early American rhetoric while simultaneously spin-doctoring us in the direction of modern liberal values that encourage society to go in the exact opposite direction.


Link to
...... Part VI of series

Jump back to.......Part One ......Part Two ..... Part Three .. ...Part Four


Disclaimer:
This report is for research/informational purposes only, and should not be construed as a recommendation of any security. Information contained herein has been compiled from sources believed to be reliable. There is however, no guarantee of its accuracy or completeness.

Bill Fox is VP/Investment Strategist, America First Trust. Bill welcomes phone calls and email responses to this article. His most current contact information is at his web site: www.amfir.com.

 

 

Short URL for this web page: http://tinyurl.com/2a7ewx4

 

Flag carried by the 3rd Maryland Regiment at the Battle of Cowpens, S. Carolina, 1781

© William Fox. Sometimes William Fox offers viewpoints that are not necessarily his own to provide additional perspectives.