Automation isn’t the job killer it’s made out to be.
American workers should look forward to working with robots as it will increase economic productivity and open up a wealth of future job opportunities.
Automation, or the idea of workers being replaced by robots, has dystopian connotations. Certain sections of the American workforce are concerned that technological innovations in robotics will put workers out of work.
In fact, even economists like the respected Darron Acemoglu have published papers showing that there is a correlation between the introduction of robots in industry and the decline in wages and the number of jobs in the industry.
But as anyone who has taken an introductory statistics class knows, correlation is not the same as causation.
Recent empirical work has shown that there is no causal relationship between automation and industrial decline. Instead, automation within an industry is more likely to lead to increases in job opportunities and wages in industries that are more likely to adopt them.
In short, automation leads to long-term economic growth, which means workers benefit more job opportunities and wage growth.
This maxim and the results of the evidence are best explained by economic theory. Especially by the Solow Swan model.
The Solow-Swan model posits that in order for a country’s economy to achieve long-term economic growth, it must constantly increase its savings and investment rates. This would lead to a country’s capital stock increasing and thus increasing economic growth.
To break down this definition, savings and investment rates refer to how much disposable income households save or invest. Capital stock refers to the equipment and assets needed to manufacture a product.
The second and more important aspect of what the Solow-Swan model tries to answer is how an increase in saving and investment rates would increase the capital stock.
From this, the model concludes that an increase in savings and investments would allow firms to make technological innovations. These technological innovations cause more capital stock to be produced and are more efficient than the previous capital stock.
To bring this back to robots, the Solow-Swan model explains that an increase in automation would have a positive impact on capital stock growth. This leads to more job opportunities and higher wages for the workforce.
When grocery stores and supermarkets began introducing self-service checkouts, many union activists were outraged, arguing that these kiosks would eliminate the need for cashiers and, with it, millions of jobs.
The story told by the labor activists did not materialize. After years of self-checkout, it was found that the kiosks actually complemented the work of human workers, allowing them to get involved in other tasks.
In addition, this led to companies paying their workers more wages as they could increase their productivity.
This effect can also be observed in other countries like South Korea and Germany. These countries have higher automation rates compared to the US, and their economies are humming along nicely.
The real world is not science fiction. Robots are not going to take away all our jobs and force people into misery. Rather, automation, like most cases of technological advancement, will improve the quality of life for most people by facilitating the next wave of long-term economic growth.
The columns represent the opinions of the authors and are not necessarily those of the editorial board, The Daily Iowan, or other organizations with which the author may be a part.
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