Robotisation is not as bad as it is made out to be, writes economist Mathijs Bouman.
Against all established rules of column writing, I’m starting this one with a lengthy quote. Here it comes: ‘A new era of production has begun. Its principles of organization are as different from those of the industrial era as those of the industrial era were different from the agricultural. The cybernation revolution has been brought about by the combination of the computer and the automated self-regulating machine. This results in a system of almost unlimited productive capacity which requires progressively less human labor. Cybernation is already reorganizing the economic and social system to meet its own need.’
It’s an extremely creepy view of the future, and long-winded to boot. Here’s a slightly less ponderous version.
‘A future of almost unlimited production by a handful, for consumption by whoever can afford it, is a recipe for economic and social collapse.’
You catch the authors’ drift: the robot is coming and it’s going to take your job away. You will be jobless and poor while the owner of the robot factory rakes it in.
The second quote was taken from a panicky article on the World Economic Forum posted by former labour minister Robert Reich entitled ‘Why automation means we need a new economic model’.
The first quote is slightly older. It’s from an open letter written by 35 prominent American scientists, journalists and union leaders addressed to the president of their country. The name of the president was Lyndon B. Johnson and the year 1964.
Half a century later we find ourselves in an era in which technology is developing at a greater rate than ever before. Technological advances destroyed jobs but also created new and better paid jobs. Unemployment didn’t grow. Prosperity did.
And yet in 2015 here we are once again worrying about the combination computer/machine. Fear of technology is clearly one of mankind’s strongest primal instincts. The simple image of job-stealing robots plays on that fear and it’s difficult to convince people they’ve got it wrong.
Two courageous economists recently gave it a go. Georg Graetz of the University of Uppsala and Guy Michaels of the London School of economics collected data on robotisation, productivity and jobs for fourteen sectors in seventeen countries. Their dataset described the developments between 1993 and 2007 and only took into account robots and industry.
In the Netherlands robots are not exactly plentiful. ‘Robot density’, defined by Graetz and Michaels as the number of industrial robots per million hours worked, was 0.79 here in 2007. Few countries have a lower robot density. In Spain it was 1.6 and Germany 4.4.
These numbers are mainly based on developments in the car industry. Nowhere is the use of robots so widespread as in this sector, Graetz and Michaels found. The steel sector comes in a close second.
Did these countries and sectors experience job loss on a major scale? Not at all, is the clearest Graetz and Michaels can put it. They didn’t find a relationship between robot density and the number of hours worked. They did find a relationship with economic growth. More robots lead to more prosperity. Without the increase in robotisation we would have missed out on an annual growth of 0.36 percentage point from 1993. One-tenth of economic growth was down to robot use.
Are there no losers then? Perhaps there are. Graetz and Michaels found indications that employment for low-skilled workers had suffered from robotisation. That loss was compensated by new jobs for the highly trained. Clearly education and additional training are of the utmost importance when it comes to combating the down-sides of technological advances. But it’s not worth getting into a panic about: there’s nothing new under the sun.
Mathijs Bouman is a macro economist
This article was published earlier in the Financieele Dagblad