Today, a single farmer can produce as much goods as 100 farmers a half-century or less ago. That freed up labor for manufacturing and the service economy.
However, droids are now replacing humans in both manufacturing and services.
When does it stop?
Every time I go into a grocery store, I see more self-service checkout lanes and fewer manned ones. When RFID checkout comes into vogue, and it will quickly, an entire grocery basket will be scanned at once, and even fewer checkout clerks will be needed.
For a discussion of RFID, please see JCPenney to Eliminate All Checkout Clerks, Instead Using RFID Chips and Self-Checkout.
With each technological advance more and more goods and services are produced by fewer and fewer people. In isolation, that drives down costs, and in the process, standards-of-living have soared.
Because of ever-increasing productivity, it’s easy to show that deflation is the natural state of affairs.
But what does that mean looking ahead? Will there be any jobs left? If so where? And what happens to the Fed’s effort to prevent falling prices?
Riveting Video: Droids Taking Our Jobs
Let’s start off with an entertaining, yet scary video by Andrew McAfee who asks Are droids taking our jobs?
Working Age Population vs. Projected Jobs
Notice the widening gap. Moreover McAfee states “If these predictions are accurate, that gap is not going to close. The problem is I do not think these predictions are accurate. In particular, I think my projection is way too optimistic. … Because when I look around I think we ain’t seen nothing yet when it comes to technology.“
Video Discussion Points
- Free Language Translation
- Apple’s SIRI
- An article on Forbes about Apple, written by an algorithm (It’s not decent it’s perfect says McAfee). I tracked down the article: Forbes Earnings Preview: Apple, written by “Narrative Science“.
- Jeopardy: IBM Watson computer vs. Human who won 74 times in a row
- If SIRI functionality increase according to Moore’s Law (which it will) it will be sixteen times better than today, six years from now
- Google Autonomous Car
Google Autonomous Toyota Prius Car
Managing the Transition to a Workerless Society
“There are 3 and a half million truck drivers and they will be impacted by this technology. …. We are going to transition into an economy that is very productive and just does not need a lot of human workers. Managing that transition is going to be the greatest challenge that our society faces” says McAfee.
In spite of that gloom for 13 minutes, McAfee concludes on a positive note, quoting Freeman Dyson: “Technology is a gift of God. After the gift of life, it is perhaps the greatest of God’s gifts. It is the mother of civilizations, of arts, and of sciences.”
Play the 14 minute video. It is riveting.
Can the Fed Fight Droids and Win?
The Fed wants to increase jobs and wages. It is fighting a battle it cannot possibly win. Forcing down interest rates while hoping to force up labor costs simply increases desire of companies to replace humans with droids.
We would get there anyway, as technology always improves. However, the Fed, by attempting to do the impossible, is actually speeding up the loss of jobs.
Who (besides the Fed and seriously misguided economists) does not like falling prices?
The problem with the “living wage” concept is not that wages are too low, but rather excess money from the Fed has driven up costs of goods and services.
People have been conditioned (by the Fed) to believe they need higher wages. What they really need is lower prices.
Technology, demographics, attitudes, and increasing lifespans, all mandate a need for lower, not higher prices.
If the Fed “succeeds” in further driving up prices, it will destroy the middle class because the technological rampage is sure to increase job losses for skilled labor, at least for the foreseeable future.
The Fed cannot defeat droids. Unfortunately, the Fed does not understand it is exacerbating the problem. Sadly, the Fed does not even understand the nature of the forces it is fighting.
It never fails. Someone misses obvious implications of what I said. One person ranted and raved that increased productivity is a good thing. Of course it is.
I specifically stated “standards-of-living have soared” as a result of technology. And of course that is a good thing.
My problem clearly is not technology and the deflationary effect that has on wages and prices (both good things), my problem is the Fed’s attempt to counteract those forces. The result has been an increase in the wealth effect of those with first access to money, namely banks, the already wealthy, and government bureaucrats.
If you are looking for a reason the 1% have done so well lately, simply look at the policies of the Fed coupled with technology that is going to reduce the need for human labor “for the foreseeable future”.
I have stated many times there will be another wave of job creation based on new technologies (most likely energy) at some point in the future but I do not know when that may be.
Mike “Mish” Shedlock
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