Is Automation The Great Destroyer of Jobs?

Lets do a quick exploration of where jobs come from, where automation comes in, and what actually destroys jobs.

Jobs come from the Division of Labor

Having help doing labor increases your productivity. Even if the help you receive is inferior to your own, having help can increase productivity by allowing you to focus on what you are best at. For example a surgeon can easily clean their own instruments but with help from a nurse, the surgeon can spend more of their time in general on surgeries rather than on tasks easily done by almost anyone.

Division of Labor Demonstrated in Math

If you want to understand it mathematically you can think of it terms of two people and two tasks, and they can either do both tasks independently themselves or they can cooperate and each does one of the tasks. So task one done by Alice is AX and task one done by Bob is BX, and task two done by Alice is AY and BY done by Bob. Alice is better at doing both tasks but even better at doing task one than two, so let AX=3 AY=2 BX=1 BY=1.

If they work independently Alice's output would be AX+AY=5, while Bobs output would be BX+BY=2, both combined outputs would only be 7.

But if they work together and divide the tasks, with Alice and Bob doing what they are best at, you would get AX+BY+AX+BY=8, so overall they increased output by 1.

The only time this doesn't apply is when there is symmetry in their output between tasks. So with Alice being better at task one by a unit of 1 and if Bob was also better at task one by a unit of 1, BX=2, then it doesn't matter if they cooperate or not the output is the same. But there is still a benefit to cooperation and that is that overtime they can specialize and improve at individual tasks instead of being a 'jack of all trades, master of none'.

Automation

The creation of jobs also means jobs are created for machines, animals, and even mother nature to do. For example a windmill uses the power of wind in a machine to grind grains or pump water, tasks that would take a man a lot of time and energy to do.

While the increase in automation can take existing jobs from people, it doesn't mean that labor cannot be further divided and that human productivity cannot be increased by further divisions of labor among people.

So what then motivates people to divide tasks? The price of labor. So with a more abundant increase in labor that drives the price of labor down it is more tempting to then divide tasks so that productivity can be increased. For example, everyone would want to have maid and servants in their home if they were cheap enough to have. In much the same way, software developers would love to have more testers to track down bugs, people for managing builds, etc. In that way these are luxuries, and it is a matter if they can be afforded or not.

Decrease in General Income

This brings up the issue that while new jobs could be created in the face of automation, it will still decrease the income of displaced workers in order for new jobs to be created by division of labor.

But this does not take into account that automation means businesses can lower prices and will need to lower prices. The decrease in income of the displaced people will mean their demand of products will decrease, and in order to increase that demand, businesses will need to lower their prices.

Some might see that in some cases a business can't lower it's prices because it must sell products previously created by people at a higher cost. That is, they paid $100 to create a widget using human labor, and even though automation means they can produce a widget for $50, they still have widgets to sell that cost them $100, and with people laid off they can't afford to pay the $100 for the widget, so a business would be stuck with inventory that the market can't clear. But...

Capital Accumulation allows for Change

This is where we can see that capital accumulation allows for people and businesses to adapt. You can think of it as a capacitor that can even out changes in income.

This capital accumulation could be in the form of a business saving money, or in individuals saving money and banks lending money to businesses to deal with short term fallouts in profits to be made up for over a longer period of time by increased productivity.

It's also worth noting that capital accumulation also means retirement, which means less individuals doing labor which means those who do will have increased income.

The Real Destroyer of Jobs

So what is the real destroyer of jobs? It is going to be things that interfere with labor being divided. The most prominent of which is going to be labor laws which create disincentives and difficulties towards the desire to hire people. This includes price fixing wages, fixing working hours, and denying special arrangements, and even the way taxes are handled can make this difficult.

The savior would be that which can go around law, either as technicalities or as simple difficulty of enforcement. In fact automating labor management in the form of a DAO that has no owner, a computer that hires people, there would be no one to go after legally. After all most laws are to punish human association.