Reply To: Will technology kill low IQ jobs?


I don’t think there is a consensus assumption among economists about the old nurture-nature debate. And the issue of whether or not robot production could create mass unemployment does not depend on which side you take in that debate. To get that conclusion, one must make dubious assumptions about the specificity of labor and the creativity of the human mind.

First, labor is relatively non-specific, Compared to capital goods and natural resources, labor does not lose much of its productivity if shifted into tasks from areas in which it is better suited. Of course, an assembly-line worker put out of a job by further capitalization of an auto factory won’t shift into academia as an economics professor. But there are many other tasks into which his labor can be shifted.

Moreover, if demand for their use in one line of production declines, workers can still be “employed” even without shifting into a different line of production as long as their prices are free to decline. This process even occurs for capital goods, which are relatively more specific than labor. Once demand for a capital good declines and its price falls, then investors will not invest to reproduce it. In similar fashion, if labor is in a shrinking line of production, it can still be employed in the same line as long as its wage is free to decline. The number of employable persons depends on wages. And, then, overtime people would shift their training away from areas being taken over by robots and into others areas.

Second, as long as robot production does not eliminate scarcity, everyone who wants to work can find employment in the market economy at some wage. Entrepreneurs will discover new tasks for human labor over time. Smarter persons create job opportunities for duller persons. It is precisely the incentive of the monetary profit to be earned by creating new productive activities for others that directs entrepreneurial effort into such endeavors.

Moreover, even if nominal wages are low in these newly-created employment areas, real wages are rising all around in society because of robot production.

Finally, if robot production eliminates scarcity altogether, then no one needs to work. Everyone could spend 24-hours a day in leisure activities and still have all their consumptive ends met.