Self-Serve Registers
In a fit of self-loathing, I decided to walk to the Hardee’s near my office for dinner. I had heard some fast food restaurants were installing self-service registers, but this was my first time seeing them:
The really ingenious thing is that Hardee’s would knock 10% off the price if you used the screen. (The sign says that in the upper left of the picture.)
This trend is sweeping the country. The Post Office has machines that operate 24/7 to dispense postage, even for packages. The grocery store now gets by with one employee overseeing up to eight stations of customers bagging and paying for their groceries. Ostensibly “nice” restaurants like Panera rely on customers bussing their own tables. Car washes and (for a long time) gas stations operate largely through the customer’s labor.
Some of this reflects good old-fashioned capitalist innovation, and is a sign of progress. On the other hand, some of it also reflects the growing burden of labor regulations (of which the Affordable Care Act, aka ObamaCare, is the most notable example), plus actual and proposed hikes in the minimum wage.
In this post, I’m not going to pontificate on solutions. But over the coming decade, I think we are going to see a growing mass of unemployed and unemployable young people, who quite literally lack the skills to support themselves. If and when the economy crashes again, and especially if the federal government can’t or won’t continue with traditional welfare programs, things are going to get really ugly.
https://www.rebelmouse.com/brandoncormier/get-started-with-a-tsu-invite–834877226.html
The plot thickens. Austrian Economics gives no hope whatsoever. I know too much already.
Gives no hope, deservedly so, to state intervention yes.
No hope whatsoever? Not a chance.
Of course there’s hope. Ron Paul’s Homeschool, gives youngsters the opportunity to avoid being replaced by a kiosk and a card swipe. At least, it reduces the chance, without offering a guarantee.
How many people hire live music for parties? Maybe some very rich people, but statistically hardly anyone. How many people have butlers, house servants, maids, live-in cleaners, full time gardeners, cooks? Once upon a time these things were not considered all that unusual, now they are reserved for the ultra-wealthy. Lots of jobs have already gone by the wayside.
In terms of menial entry-level jobs being eliminated, I think it’s inevitable, but no doubt the high minimum wage encourages the process to happen faster. Young people need some way to get started on the ladder, so some percentage of menial jobs are not entirely a bad thing. These days they are shifting to internships but the activists are trying to yank that rung away too.
With skilled tasks, humans usually do a better job than machines, but at a much higher cost. It can be very hard on people who invested in a skill only to find it no longer in demand, yes everyone takes risks, but if we are going to genuinely minimise violence, we have to be willing to offer at least some safety nets to those who get into trouble through no fault of their own (and yes, it’s a difficult judgement to identify those cases).
Am I hearing “among the most viable of economic delusions” from Robert Murphy?!
“Destroyed a thousand times, it has risen a thousand times out of its own ashes as hardy and vigorous as ever.”
http://fee.org/the_freeman/detail/the-curse-of-machinery
I think this is some sort of post-Keynesian weirdness. Correct me if I’m wrong, Bob or Lord Keynes (whoever answers first).
No, you are not hearing that from him.
How can you be sure?
Because it’s obvious he isn’t blaming technology for creating unemployment on net.
I mean, he friggin said, “Some of this reflects good old-fashioned capitalist innovation, and is a sign of progress. On the other hand, some of it also reflects the growing burden of labor regulations (of which the Affordable Care Act, aka ObamaCare, is the most notable example), plus actual and proposed hikes in the minimum wage.”
It’s rather laconic. Let Bob explain.
Seriously!?
It’s clear as day he thinks a lot of the technology now replacing service jobs is a sign of progress. I was able to decipher his cryptic way of explaining this when he said this line, “Some of this reflects good old-fashioned capitalist innovation, and is a sign of progress.”
And then he goes on to blame government intervention for unemployment. I was able to figure out this mystery when he wrote, “On the other hand, some of it also reflects the growing burden of labor regulations (of which the Affordable Care Act, aka ObamaCare, is the most notable example), plus actual and proposed hikes in the minimum wage.
TLDR: capitalism and innovation = good
gov intervention = bad
It doesn’t go against free market economics to say that some government regulations make it cheaper to replace human labor with new tech.
It might be the case that fast food restaurants would hire more human labor over upgrading tech if the gov would get out of the way.
“It might be the case that fast food restaurants would hire more human labor over upgrading tech if the gov would get out of the way.”
Would this just be a short term fix? The pace of technological advance may bring the cost of the machines in at less than people just a little bit later in the absence of Govt interference.
I have no problem with technological advances. I don’t think that is a problem that needs to be fixed. My problem is with driving up the cost of unskilled labor through government intervention so that tech upgrades, which wouldn’t be more efficient absent those interventions, become necessary to reduce the cost of doing business.
Christ almighty Enopoletus.
You have Bob’s argument backwards. He isn’t saying these self-serve registers are causing unemployment.
He is talking about the causes for the use of such registers.
He is saying that good old fashioned innovation is partly responsible, and, also partly responsible, is government making relatively low skilled labor (such as cashier jobs) that are most affected by labor market regulations, such as minimum wage, have made it too expensive for employers to hire people to so this work.
It is clear to me that Bob Murphy means that government intereference, such as high minimum wages, will make it more difficult for those who would have done the jobs such machines do to find any work, and so develop any skills.
How can I be sure? I can be sure because he says so.
“Among the most viable of all economic delusions is the belief that machines on net balance create unemployment.”
What part of this post made you think he was making this mistake that Hazlitt described?
The primary sources of unemployment are government regulations and a well-meaning, but harmful, refusal to accept labor at lower wages.
If someone offers to work for a lower wage, it’s great that you [“you”, in general, not anyone in particular] think they should be paid more, but your kind-heartedness, coupled with your lack of ability to actually pay a higher wage, just means that they’re not earning wealth for themselves. They are worse off for your good intentions.
Desire for wealth is infinite, so there’s always something to do.
Enopoletus, the problem lies in the cognition of those whose jobs are being replaced. So, while it is true that automation frees people to direct their work to other areas they still must be willing to learn new skills. I think it is implicit in the claims for a living minimum wage that those workers are refusing to learn the skills required for advancement. I have been behind grandpa at the supermarket self checkout so I’m quite certain that the self checkout does not stand to increase productivity rather it is a response to ever growing labor costs. Opening new avenues for labor due to tech/automation does not change the fact that a certain demographic of the workforce finds themselves increasingly barred from entering the workplace. On the upside, this disaster will foster new opportunities for government intervention on behalf of those the government has already screwed over.
Structural unemployment was never a massive threat in the past, and I don’t think it will be a massive threat in the future. I think most of the structurally unemployed will be absorbed into the service sector, where they will become EITC recipients.
Thanks for the suggestion of the possibility, MF. You always have a good way of distilling the essence of thinkers’ arguments.
https://www.youtube.com/watch?v=07_p1PEQnrk
Our government is doing absolutely everything it possibly can to make it legally risky and highly unprofitable to hire low skilled workers. I guess it’s a good thing nobody needs to learn skills on the job any more due to our high quality education system!
I present to you, for example, one year’s worth of meddling at the state level in California. (This does not include any federal or local meddling, or tax changes, or other policy changes.) Who has time to keep up with all this stuff while trying desperately to stay in business ahead of the competition? It’s impossible.
http://www.cpehr.com/california-labor-laws-2014
It’s true. The Republican base is encouraging this by supporting raising the minimum wage, though this might be part of an Unz-ian plan on their part to disemploy insufficiently productive Mexicans and Black people.
unz.com/article/raising-american-wages-by-raising-american-wages/
1st encountered fast food kiosk in French McDonalds
Historically when a nation had a surplus of young men it went to war. Fortunately war is not the answer now as modern battle is fought with missiles, robots and drones. So what will so many unemployed young men do? The two most popular choices seem to be school and jail.
Regulations may be accelerating the trend, but ultimately Bob seems to be predicting a society where more and more complicated jobs can be done efficiently by machine, so more and more people become unemployable. The minimum wage may make this transition occur slightly sooner, as the machines need to be slightly less efficient than they would be otherwise.
A couple of points. The article Enopoletus Harding kindly points us to says of historical weavers “Now it is important to bear in mind that insofar as the rioters were thinking of their own mediate or even longer futures their opposition to the machine was rational.” Indeed, apparently it took 40 years for them and their families to emerge from the pit they had sunk into from the loss of their industry. It may be that we do not want to condemn entire generations to penury whilst we wait for the market to put things right. There were riots when this affected a few thousand weavers. What will be the result if this affects the growing mass (as Bob puts it) of unemployable youth?
The article lists the reasons why employment is not reduced: the extra profits the factory owner has are spent in only one of three ways:
“(1) he will use the extra profits to expand his operations by buying more machines to make more coats; or (2) he will invest the extra profits in some other industry; or (3) he will spend the extra profits on increasing his own consumption. Whichever of these three courses he takes, he will increase employment.”
This is an assumption that is not necessarily true. In 1), if this factory employed no people, then expanding operations would not increase employment. In 2) if the industry he invested in employed no people, there would be no offset of employment. In 3) if he consumed something that did not require people for its creation he would not increase employment.
Until now, machines were able to replace a very small fraction of what people can do. If we imagine a machine that could replace all the functions of a human, it would seem inevitable that as long as the cost were lower than humans, then machines would be used. So there does seem to be an end point where machines could cause permanent unemployment.
This could be a utopia: everyone could have pretty much what they wanted, and could spend their time however they wanted to. There would need to be some mechanism to distribute the wealth other than payment for employment. Currently, the other way people get money is return on capital. We would need to ensure that ownership of capital did not become too concentrated.
Harold, I think full automation is impossible even if the technology was realized. The consumer and worker are one and the same so eliminating too many workers would have the effect of eliminating your consumers. The machine you are imagining would be on par with god.
Of course full automation is an impossibility!
What full automation means is a world where people have the time to perform labor to make themselves wealthier in real terms, but choose not to because they are content with the fixed supply of goods being made by robots. But people will want more of course. That is what action is. Action is seeking ends. That requires means. Moving your body to achieve that which adds to your happiness that could not otherwise be had because the robots cannot anticipate your future desires, is labor.
If we imagine a future world where robots end up producing everything that is now produced, we would all realize we could produce new, previously unthought of goods. That takes designing and building new robots.
Full automation is not required for the logical conclusion of Hazlitt to be invalid. If there is only one option that our hypothetical capitalist could take that did not result in increased employment, then increased employment is not certain.
However, you get to the problem I was grasping at. The consumer and the worker are one and the same. Technological advances – from agriculture onwards – have resulted in new demands for labor. Thus the increased prosperity had an excellent mechanism to be distributed -through wages. During most of this time the population also rose significantly, providing new workers to satisfy the increased demand. I am hypothesising that there could be a point at which automation separated the putative consumer from the producer. We have noticed that population in developed countries is no longer rising significantly, so we have reached some change in the system. It could be that we find some people cannot contribute to production. The problem then becomes how to we allow these people to become consumers, if they have no mechanism of earning money.
Curiously, in the past the same argument was raised… People doing it were called luddites…
Consumer and worker are NOT the same. It’s because worker is worker from 8 til 5 and consumer at any other time.
Let me put it this way: 1500 years ago cotton clothing was reserved for kings. Everybody else was walking in pelts, wool or – rarer – linen. Maybe something else.
Then came machines and cotton became the poor man’s dress. Rich wear silk.
I can’t but notice that the moment the machines came, everybody’s living standards skyrocketed.
Also – ask any miner what he prefers – hammer or high power crusher? Or farmers – horse and plough or all kinds of machines?
Amish are living example – they do not have unemployment, but would you change places with one?
Developed countries developed social security. Which caused plummet in population increase… Why have children when THE STATE will pay my upkeep when I’m old?
“Bob seems to be predicting a society where more and more complicated jobs can be done efficiently by machine, so more and more people become unemployable.”
No that isn’t what Bob is saying at all. Gee whizz, like what is with projecting your own beliefs onto what he said?
Bob is not saying technology is going to make young, low skilled workers unemployable. He is saying labor market regulations are going to prevent young people from gaining any job at all because of the increasing burden that minimum wage laws have in a world of increasing technology that makes previous needs to hire obsolete. It is the regulation that is at fault, not the technological progress. Without any labor market regulations, not only would employers have less of an incentive to replace thqt work with “robots”, but even where technological innovation is economically worthwhile in a world without labor regulations, young people without much skill can find new jobs that do require labor because technology has not yet made that labor obsolete. Each subsequent innovation does not make “cheap” labor as such obsolete, it just makes heretofore previously utilized “cheap” labor obsolete. With all the extra “cheap” labor now available, given robots are doing previous “cheap” labor jobs, then, provided wage rates are legally allowed to fall and there is no government intervention from either inflation or minimum wage laws, there will always be a use for low skilled labor because now people’s unlimited desire to consume more can be afforded! They can be afforded because it costs less to produce products, given the technological innovations.
Do you think that people’s desire to consume will be fully satiated now that we can get cheaper food due to self-service registers? Of course not! What this does is make possible new, previously unsatisfied demands to be met, now that we have more labor available to produce more goods!
Bob gets all this. Please try not to impose your own false beliefs onto him.
OK, he said “But over the coming decade, I think we are going to see a growing mass of unemployed and unemployable young people, who quite literally lack the skills to support themselves.”
He also said “Some of this reflects good old-fashioned capitalist innovation, and is a sign of progress” So some people are not employed at some tasks because of innovation. This has long been the case and is a good thing. Hand weavers are no longer employed at that task because of automation.
Clearly, machines have never caused permanent unemployment throughout history. But is that guaranteed to continue?
I see why complexity was a cause of confusion (as Ben B commented on). In the examples cited by Hazlitt, the workers displaced were skilled craftsmen. It turns out that their jobs could be done by what we think of as simple machines. A loom has a few moving parts, and basically repeats the same movements over and over – much much faster than a human can. Ironically, replacing the skilled weaver with a machine is way easier than replacing the sweeper-upper or the window cleaner.
But now we have technology that can replace even the sweeper-upper. You say “young people without much skill can find new jobs that do require labor because technology has not yet made that labor obsolete.”
Whilst that may be true today, can we say that it will remain true? Are there certain things that cannot in principle be replaced by automation?
If we take it as read that it is regulation that currently makes use of technology marginally cheaper for a few minimum wage jobs such as fast food restaurant workers. Technology would not have to get much cheaper for it to replace these minimum wage jobs even in an unregulated market.
Since these are minimum wage, unskilled jobs, is it not conceivable that there will nothing that those displaced could productively do? If not, as technology gets even cheaper, wages would continue to drop.
Maybe not. Maybe there will be new demands that these workers can fulfil. However, can we be sure? The reasons given in Hazlitt’s piece are not sound for the reasons I gave. I am not saying that we will not continue our happy upward trajectory, only that we should have a look the see if our assumptions are valid. We have only had a historically short time since the industrial revolution. And geometric progressions do not continue forever.
Harold, you reversed the order of those two statements you quoted from Murphy. The order in which he wrote them is this:
1. “Some of this reflects good old-fashioned capitalist innovation, and is a sign of progress.”
2. “But over the coming decade, I think we are going to see a growing mass of unemployed and unemployable young people, who quite literally lack the skills to support themselves.”
You wrote them in the reverse order, thus making the “this” in statement 1. appear to refer to the “growing mass of unemployment” in 2.
But because the order in which Murphy wrote those two statements are as you see them above, the “this” in statement 1. is actually referring to the list of technological innovations, namely:
“The Post Office has machines that operate 24/7 to dispense postage, even for packages. The grocery store now gets by with one employee overseeing up to eight stations of customers bagging and paying for their groceries. Ostensibly “nice” restaurants like Panera rely on customers bussing their own tables. Car washes and (for a long time) gas stations operate largely through the customer’s labor.”
The innovations are what Murphy argued to be partly explained by “good old fashioned capitalist innovation.”
You then wrote:
“So some people are not employed at some tasks because of innovation. This has long been the case and is a good thing. Hand weavers are no longer employed at that task because of automation.”
That may or may not be, but that isn’t Bob’s argument. And I noticed you slightly changed how you are stating things. In that statement you just made, you’re saying some tasks might no longer be performed because of innovation. That is essentially a tautology, for innovation is in itself a transition from obsolete methods to newer methods. Some methods leaving, with new methods replacing them, is the same thing as some labor types disappearing and other newer labor types appearing.
That is not the same argument as people being unemployed or unemployable, which is Bob’s point.
“Since these are minimum wage, unskilled jobs, is it not conceivable that there will nothing that those displaced could productively do? If not, as technology gets even cheaper, wages would continue to drop.”
I don’t think so, because if it were true, there would have already been swaths of unemployable unskilled laborers ages ago. I think we might be taking for granted the meaning of “unskilled”. I think unskilled labor can continually be valued and continually become more productive as newer and better “dumb proof” machinery come into use. Unskilled labor today is benefiting from technology that would have been made such labor be considered “skilled” labor a century ago.
Humans as a species are learning. And even if some folks didn’t learn much, and remained about as intelligent as unskilled laborers a century ago, then we know from Ricardo that there will always be room for such labor that makes everyone better off.
When Bob noted that some unskilled young people might become unemployable he was talking about laws that ban their market valued employment.
I would only add to Bob’s point that should there be many such unemployable young people in the future, and the cultural state of reason and ethics is as deplorable as it is today, or worse, then they might very well become “employed”…by violent gang leaders, such as the state.
Why can’t “geometric” growth be considered infinite? I keep hearing this claim as if it is irrefutable. The universe is a huuuuuuge place remember. If the argument against “we can do this forever” comes down to “well, mathematically we just mean forever is impossible, it will just be trillions upon trillions of years”, then the argument while perhaps true in the strict sense, has no practical bearing on any of our lives. I see no reason why we cannot colonize the other planets, then other solar systems. We are only limited in our current imagination, but as long as we imagine and imagine big, then technology can catch up.
Finally, you ask:
“Are there certain things that cannot in principle be replaced by automation?”
The answer is yes. What automation cannot in principle replace are all those currently unknown, unproduced, unthought of goods that we all don’t have time to think about because we’re busy thinking about what we are currently thinking about given today’s level of automation. In other words, we will never be able to automate what has not yet been designed, and designing is a laborous activity.
Harold,
You mean uncomplicated and not complicated, right?
It took them 40 years to learn new skills and find new jobs? Is that the fault of the new industry? Since they “fell into a pit”, does that mean that they were previously well-off in terms of income? If so, why didn’t they save any of that income? Why did they self-condemn themselves to this state? If they had saved anything from their high incomes, couldn’t they have invested in the new technology themselves? Or, if they didn’t have a high income to begin with, then didn’t they just transition from one pit to another? Many times people just don’t want to change, even if the newer circumstances aren’t that much worse. Were there other non-market obstacles such as patents and/or regulations that prevented labor from transitioning out of this new pit? Were there non-market obstacles such as taxation that discouraged savings that could be used to employ this new labor supply? If so, then that’s not really the fault of new technology or the market is it?
Were there enough real savings to support an education market that these workers could utilize to help them get out of this pit? Couldn’t Harold start a fund for “saving individuals from those whose better entrepreneurial foresight has condemned”? Or, perhaps, with the increased productivity and savings, this savings could be invested in lengthening the structure of production especially in the area of education. Harold, you could encourage people to borrow these funds, or even loan them yourself, so that they may increase their value as a laborer, while also not “falling into a pit”.
Displaced workers have a right to riot? Or, are you saying that because people may react violently to a situation where they aren’t willing to take personal responsibility, or at least refrain from blaming others who are not actually responsible, then we should avoid these situations all together? Almost everything I do within the division of labor could create negative externalities leading to violence on the part of others.
“You mean uncomplicated and not complicated, right?” I mean jobs of increasing complexity can be done by machine.
I am not apportioning blame for the fate of the weavers, only quoting Henry Hazlitt. The article said that their opposition was rational, because their situation became worse and did not recover for 40 years. I don’t know why, or what they could have done to ameliorate it. The fact is they didn’t, and it took that long, and Hazlitt thought this made their opposition rational from a personal short and mediate term view. I would say for an individual 40 years was long term. I am not saying rioting is justified, but possibly predictable.
“If so, why didn’t they save any of that income?” Because they lived in the real world, where people do things like that.
““You mean uncomplicated and not complicated, right?” I mean jobs of increasing complexity can be done by machine.”
Wait, so this is your prediction and not what you thing Bob’s opinion is? Because in your original reply you said, “…ultimately Bob seems to be predicting a society where more and more complicated jobs can be done efficiently by machine, so more and more people become unemployable.” I don’t see where in Bob’s original post he predicts a world of increasing unemployment in more complex jobs. In fact, he says, “I think we are going to see a growing mass of unemployed and unemployable young people, who quite literally lack the skills to support themselves.” He is talking about uncomplicated jobs here.
“I am not apportioning blame for the fate of the weavers, only quoting Henry Hazlitt.”
Henry Hazlitt did not say, “It may be that we do not want to condemn entire generations to penury whilst we wait for the market to put things right.” This was a statement made by you. It certainly seems like you are apportioning this blame to “we”, which is not the weavers themselves, right? BTW, Henry Hazlitt shares my skepticism about the forty years of penury: “For William Felkin, in his History of the Machine-Wrought Hosiery Manufactures (1867), tells us (though the statement seems implausible) that the larger part of the 50,000 English stocking knitters and their families did not fully emerge from the hunger and misery entailed by the introduction of the machine for the next forty years.”
“The article said that their opposition was rational, because their situation became worse and did not recover for 40 years. I don’t know why, or what they could have done to ameliorate it.”
If you don’t know why, then why did you seem to suggest that the market had failed because it wasn’t adequately able to fix the problem in a timely manner? If you don’t know why, then isn’t it possible that non-market factors such as government intervention could have played a role in “condemning entire generations to penury”?
“He is talking about uncomplicated jobs here.” Jobs that are simple for people are complicated for machines.
It’s mostly a non-issue because government regulations and regulatory capture are not keeping pace with technology but, when you include gas stations going self-serve, the biggest problem was government requiring that service stations hire attendants to pump the gas (no doubt because of the hours of highly specialized training that the rest of us would never be able to master). That is still true in parts of the northwest US and Canada.
The real tragedy is you eat at Hardee’s.
http://www.blueillume.com
My one big hope lies on the idea that as automation makes things cheaper, so to it will drive down the cost of re-training people, especially the young, for tasks that are more useful.
Already you can get a full undergraduate education from the internet for free (not counting cost of electricity and internet connection, clearly) so I don’t think it’d be hard to imagine a future where retraining is a fast, easy, and cheap process that the average person can undertake from the comfort of home.
Now, the universities who are used to having a monopoly on this sort of thing will probably raise a fuss, and it will take some serious social change to make an online degree as useful a signal as an in person one, but it can be done.
Whether this is sufficient to overcome the built-in inefficiencies of the system is a big question.
The reason to do this is simple. Why pay someone something to do what a machine can already do and for next to nothing.
Just you wait- eventually government will start mandating health care, family leave, and payroll taxes for robots.
lol That is when AI comes into being but then all you have to do is create a machine without ai and all is good.
Ridiculous…this is much more a story of technological innovation than excess gov’t regulation driving up labor costs. Automatic tellers have been in existence long before Obamacare was passed haven’t they?
Government redistribution to the poor will only become more critical as the wealthy continue to accumulate capital.
I agree; so much wealth is concentrated in the hands of the government. We should redistribute it back to the taxpayers.
Murphy’s post specifically says that some of this reduction in employment is due to innovation and some due to government regulation, which means it’s possible that Murphy also believes automatic tellers existed before Obamacare.
Quite an interesting alternative point of view this on technology and jobs.
http://www.capx.co/escaping-innovation-inertia/