This question is raised more by pundits and economists alike. Some of the stated predictions are very scary indeed. As an example: In a joint statement by Citi-Bank and Oxford University of February 2016, it is stated that the proportions of jobs being replaced ranged from 77 percent in China, 47 percent in the U.S., and 35 percent in Britain. Scary indeed, but let’s examine the facts: First, a look back in history; in about 1745, the so-called "Luddites," British factory workers, rebelled being afraid that machines such as mechanical looms would replace their jobs.
They need not worry, since those machines created cheaper clothing which then were purchased by more people. This resulted in more factories being built requiring more workers.
Now let’s look at the practical aspects of factory automation.
We all were fed news videos of gleaming factory halls showing fully automated welding robots putting automobile chassis together. What a labor saving, you think. Not really, what you don’t see is that on the left of the machines is a glass walled office. Behind each window sits a technician observing his robot, since any misstep could be very costly indeed for the assembly line.
Furthermore, back in the office are a number of computer programmers working to program the robots to adjust to any shape and size of the different chassis. Finally there are a number of highly trained maintenance technicians, ready to respond to a sudden mechanical problem with any of the many robots.
Is the use of robots really labor savings? It's debatable.
The facts are that it takes nearly the same time to build an automobile as it did 20 years ago. For example, in 1972 one Ford worker was needed to produce 21 automobiles per year, now one worker is good for 23 automobiles.
Not much of an improvement due to automation, is it?
Here is another example. A friend of mine very proudly showed me a fully-automated machine center, costing him approximately 1 million dollars.
This machine would take a casting and drill a number of holes, then rotate the casting and drill some more holes. No human labor was involved, except a man was needed to load and unload the castings.
When I looked sideways, I noted a glassed office. Inside was a person working on a computer. Replying to my question, my friend told me, "That is the fellow who programs the machine."
Let’s make a comparison: The salary of an engineer, the wages of the man placing the castings versus the cost of a manual drill press operator (it takes the same time to drill a hole whether by robot or by a drill press). Besides labor cost, one should consider the cost of depreciation of expensive automatic machines. Luckily, this expense goes into overhead and does not directly affect the cost of the part to be machined, and thus distorts the apparent cost savings.
Finally, when in 1984 personal computers started to be used extensively in offices, pundits proclaimed that this would result in massive job losses. Quite to the contrary, computer use resulted in the addition of hundreds of thousands of new office workers making software, programming, and servicing computers.
A last word:
For every very intelligent machine replacing a worker, there are still workers needed to build those machines. My advice to my readers is: Sleep well, then for every blue collar worker’s job replacement, there will be another person added to the service section or offices.
In a finely balanced economy, there is a balance between production of goods and consumption of goods. Recessions happen when such balance is impaired.
The Chinese government understood this well. When, in 2017 the Chinese industry only grew by 3 percent, the government made sure that the service sector grew by 10 percent in order to achieve the stated yearly growth rate of 6.7 percent.
The result? A balanced economy.
As an afterthought: In my blog of Feb. 22, 2017, I warned about the dangers of cyber- attacks on U.S. power plants. Trying to get the attention of the U.S. government, I wrote a letter to U.S. Secretary of Energy Rick Perry, pointing out the extreme danger of connecting operating machinery in electric power plants to the Internet, thus inviting hacking. I got no reply.
After a follow-up letter, I finally got an e-mail from an "OE Webmaster" informing me that my letter had been forwarded to the Office of Electricity Delivery, meaning that my letter has wound up in the bureaucratic swamp.
Wait for the next black-out!
Hans Baumann is a licensed engineer in four states and a member of Sigma Xi, the Scientific Research Society. He is an adviser to the dean of the University of New Hampshire Business School. Dr. Baumann has published manuals on valves and was a contributor to many works including the "Instrument Engineers' Handbook" and the "Control Valves Handbook." He has also published several books on business management and German history, including "Hitler's Escape," which suggests that Adolf Hitler did not commit suicide and survived World War II. In his latest book, "Atomic Irony" he proves that the Hirshoma Atom Bomb contained captured German Uranium. For more of his reports, Go Here Now.