Amazon Economics Debunked

“Navy building autonomous sub-hunting submarine””Robots deliver food to your door””China’s use of robots set to surge””Amazon uses 30,000 robots in warehouses””AMBER lab robot jogs like human””Japanese farming robots” “Burger-flipping robot””China’s robot cop” And of course, the sex-robot. Do robots have genders?

These machines either work well or come very close, and impinge on manufacturing, delivery, war, policing, the restaurant industry, journalism, and service industries perhaps soon to include prostitution. We ought to think forethoughtedly about what to do with these machines, but, we won’t.

Amazon Robot 

These orange devils carry heavy racks to humans who pick ordered goods from them for shipment. Amazon is working on robots that can do the picking.

Who will be left? In principle, 30,000 robots can work 90,000 shifts, plus weekends. With a predictability that makes sunrise look like a long shot, the company says that the robots do not replace but “help” humans. If you believe this, I’d like to sell you stock in my venture to make radioactive dog-food on Mars.

Automation of course means more than robots. As newspaper after newspaper goes all-digital, less pulpwood will be needed to make less newsprint, pressmen will be fired, delivery trucks will no longer needed, and so on. Such ripple effects get little attention.

The capitalist paradigm in which companies think only about themselves, seeking to increase productivity and reduce costs, is going to work decreasingly well. Replacing well-paid workers with robots means replacing customers with a lot of money with customers with little money. People who are not paid much do not buy much. Robots buy even less.

The first crucial question of coming decades: Who is going to buy the stuff pouring from robotic factories?

The current notion is that when a yoyo factory automates and lays off most of its workers, they will find other well-paid jobs and continue to buy yoyos. But as well-paid jobs everywhere go automated, where will the money come from to buy yoyos? Today participation in the work force is at all-time lows and we have a large and growing number of young who, unable to find good jobs, live with their parents. They are not buying houses or renting apartments.

Enthusiasts of the free market say that I do not understand economics, that there will always be work for people who want to work. But there isn’t. There won’t be. There is less all the time. Again, look at the falling participation in the work force, the growing numbers in part-time badly paid jobs. Short of governmentally imposed minimums, wages are determined by the market, meaning that if a robot works for a dollar an hour, a human will have to work for ninety-five cents an hour to compete , or find a job a robot can’t do–and these get scarcer.

From a businessman’s point of view, robots are superb employees. They don’t strike, demand raises, call in sick, get disgruntled and do a sloppy job, or require benefits. Building factories that are robotic from the gitgo means not having to lay workers off, which is politically easier than firing existing workers. Using robots obviates the Chinese advantage in wages, especially if America can make better robots–good for companies, but not for workers in either country. That is, production may return to the US, but jobs will not.

A second crucial question: What will we do with people who have nothing to do? This has been a hidden problem for a long time, solved to date by child-labor laws, compulsory attendance in high school, the growth of universities as holding tanks, welfare populations, and vast bureaucracies of people who pretend to be employed. Few of these do anything productive, but are supported and kept off the job market by the rest of us. But there are limits to the capacity of Starbuck’s to soak up college graduates. (The economic fate of America may depend on our consumption of overpriced coffee.)

As time goes on and fewer and fewer people can find work, and particularly the less intelligent, something will have to give. We won’t see it coming. We never see anything coming. Businessmen will observe productivity going up and labor costs going down. What could be wrong with that? Businessmen do not concern themselves with social questions. Methinks, however, that social questions are about to concern themselves with businessmen.

As standards of living decrease, unrest will come. I will guess that much of Donald Trump’s popularity arises from the sending of factories to China by the corporations that rule America. Now the robots are going to take the remaining jobs. Economists will chatter of this principle and that curve and what Aristotle said about Veblen, but in a free market for labor, robots will win. If we have a high minimum wage, business will automate. If we have a low minimum wage, they will automate, but a few years later.

Economics has become a tedious form of Left-Right metaphysics, Keynes versus the Austrian School, capitalism versus socialism, all unconnected to onrushing reality.

Amazon economics debunked. People who are not paid much do not buy much. Robots buy even less

H/t Fred Reed