Is Automation To Be Feared? No.

From: B
Sent: Friday, April 12, 2019 7:39 AM
To: Walter Block
Subject: Free-market Automation vs. Government-Caused Automation

Dear Dr. Block,

This is not a criticism; I just want your opinion about a relevant topic today.

The topic of automation (replacement of labor with machines and computers) is becoming a central topic of discussion today, at least amongst some political circles, e.g. supporters of Andrew Yang (one of the Democrats running for president in 2020). Yang talks about how automation is destroying the poor and working class (not only economically, but socially and emotionally) and that the govt needs to step in and pay everyone a Universal Basic Income to relieve them from these pains. The underlying premise is that this move towards automation is bad but inevitable, so the govt needs to accept it and pay people who become victims of this “march of progress”. I fully understand the Austrian analysis of automation and know that it is not a per se bad thing, nor is it inevitable. However, it’s troubling to see some people who would never consider themselves socialists — or even claim to be libertarians(!) — accepting the underlying premises of Yang’s argument and would not necessarily rule out getting behind him in 2020.

I think there is an automation problem today but it’s caused by the government. Supermarkets and gas stations, for example, don’t really want to replace all their human labor with emotionless robots and computers, but they have to seriously consider doing so in order to remain profitable and competitive. The government — through taxation, laws (e.g. minimum wage), and regulations (think, law suits from employees) — has made employing human labor more expensive and risky from an economic point of view relative to automation, and this is what has caused an artificial (non-free market) boost in automation.

The problem is that we Austrians just address the issue from a per se point of view. We will say: “Automation, per se, is not bad because of X, Y, and Z.” That’s fine but the people who are affected by this artificial government-caused automation aren’t necessarily interested in the per se argument. They just call us homo economicus lovers, who only care about economic efficiency. This is a strategic error I think. Of course we need to provide the per se economic case in favor of automation, but we also need to make it clear to these people that we’re not necessarily defending all present trends of automation, or that the automation we see today is purely the result of free market forces.

It’s the same problem we have when talking about the contemporary issues of international trade. Austrians will correctly point out that the worry about trade, trade deficits, and job outsourcing today is wrongheaded, and we will lay out the pure economic case for free trade (which is 100% correct). But this leaves the impression that Austrians are claiming that the current state of international trading relations is purely the outcome of free market forces, which it is not. Again, the govt has come in with its taxation, laws, and regulations and affected the economy in a way that the free market would likely have not produced. What do you think about this? Do you distinguish between free-market automation and automation that’s artificially boosted because of govt intervention? Kind regards, B

From: Walter Block [mailto:[email protected]]
Sent: Saturday, April 13, 2019 5:22 PM
To: B
Subject: RE: Free-market Automation vs. Government-Caused Automation

Dear B:

Automation, per se, is not bad? No. Automation, per se, is not good, it is excellent! When the car beat out the horse and buggy, there were plenty of people who lost their jobs in the latter industry. This was excellent, not merely good. We know this praxeologically, since whenever anyone purchased an automobile, two people gained in the ex ante sense. QED. End of story. From a non praxeological point of view, think of the lives lost, and the people never born, were we nowadays forced to rely on horses and buggies for transportation.

The fallacy behind the worry of many people over robotics, etc., is that they think there is only so much work that needs to be done. If they only realized that our demands for goods and services are indefinitely large, they would be far less concerned about the “danger” of new technology.

I suggest such people reread Hazlitt’s Economics in one lesson.

Yes, the minimum wage law increases the rate of technological change, and this is to be regretted. But, not because automation is to be feared. Rather, this is just one more drawback of this pernicious legislation, in addition to unemployment for unskilled workers: we misallocate resources toward excessive capital formation, and away from where it is needed more.

The fear of automation springs from what is sometimes called the Lump of Labor Fallacy: there is only so much work to be done, and if machines do more of it, there will be less left for human beings to do.

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6:11 pm on August 14, 2019