August 21, 2015      


Robots as the solution

Productivity in the U.S. has been plummeting since 2000, and the Financial Times sees no improvement on the horizon, reporting “productivity growth across the economy is at a near standstill. A similar picture is being played out across the globe, exposing the most pressing problem in the world economy today.”

“Economists are increasingly alarmed because slower improvements in efficiency will lead to a decline in living standards and less-solid public finances. In the medium term, productivity growth is the most important driver of prosperity.”

Lack of prosperity, of course, is bad for jobs; and what there are of jobs many feel will end up in the steely mitts of robots.

Not a pretty picture.

However, a small body of real data is slowly emerging? — actually, the first rigorous macroeconomic study to date¬†— finding “that industrial robots have been a substantial driver of labor productivity and economic growth.”

Furthermore, the same study also shows that while robots in the economy increase labor productivity and total factor productivity, they are far from the wholesale exterminators of jobs presently owned by humans that most everyone has been fearfully made to think.

Yes, they will cull some low-end jobs, which is logical given the entrance of any new technology — especially as the newest general purpose technology or GPT (e.g. steam engine, electricity, information technology) into the workflow of an economy. However, certainly not on the order of the depressing 47 percent called for in the Oxford study of 2013.

In fact, robots and humans working together are looking more and more as the key combination to the productivity conundrum that has dogged world economies.

The recent Harvard Business Review piece, “Robots Seem to Be Improving Productivity, Not Costing Jobs,” seems to differ with the general scaremongering of robots grabbing off human jobs.

“If robots are a substitute for human workers, then one would expect the countries with higher investment rates in automation to have experienced greater employment loss in their manufacturing sectors,” said the report’s authors, Mark Muro and Scott Andes.

“For example, Germany deploys over three times as many robots per hour worked than the U.S.,” they wrote. “Yet Germany has yet to experience mass unemployment because of robots in the industrial workplace.”

Korea, France, and Italy also lost fewer manufacturing jobs than the U.S., even as they introduced more industrial robots.

The study concludes “there is, as yet, essentially no visible relationship between the use of robots and the change in manufacturing employment.”

Of course, the “as yet” is important, however the implications that robots, humans, productivity and prosperity may be different values of the same formula just now moving into position could mark a profound insight into the near future of work.

The ‘new productivity’

The ultimate result of that four-sided formula may well be one that describes the trajectory of automation itself: a robot-driven automation that finally yanks productivity out of its present-day stagnation. Call it the “new productivity,” for want of something better.

Ultimately, this new productivity might be the right solution for dealing with exponential increases in ecommerce and the demands of advanced manufacturing, both of which are straining current capabilities.

There’s an amazing mismatch between what these real macroeconomic numbers are telling economists and the current anecdotal evidence put forth surrounding jobs lost to robots.

“The data suggest that the arrival of robots tended to increase the employment and pay of skilled workers even as it seemed to crowd out employment of low-skill and, to a lesser extent, middle-skill workers,” said the study. “So while robots don’t seem to be causing net job losses, they do seem to change the sort of workers that are in demand.”

For humans, that’s more than a fair fight.