Chief Economist, John Norris, answers the most commonly asked questions.
You all recently did a podcast about Artificial Intelligence (AI), and stated it was the reason why Washington has gotten interested in things like a Universal Basic Income and Modern Monetary Theory. While I am not sure about all the ins and outs of those theories, what is the likelihood robots will eventually replace humans in the workforce?
First things first: thank you for listening to our podcast. As for AI replacing human beings in the workforce? I suppose it depends on your definition of AI, your sense of history, and basic economics.
You see, to a peasant farmer in the 1600s, Cyrus McCormick’s very basic mechanical reaper and Eli Whitney’s cotton gin would have been so much science fiction. The same could be said of the first steam engines, locomotives, automobiles, telegraphs, telephones, and a host of other inventions. They made a lot of people redundant and jobs obsolete.
However, as you know, other jobs and industries developed to absorb the excess capacity. There is no reason to think this time will be any different. That doesn’t make it any less scary though, does it? Change often is.
As for timing? That depends more on the economics than the technology, as hard as that is to believe. Let me give you an example to prove my point.
On a recent weekend, I walked into a McDonald’s in a small town in Alabama and ordered the Egg McMuffin breakfast with a large coffee. The cashier took my order and my money and handed me my food when it was ready. I took it out to my car and ate my meal as I drove up the interstate at a very questionable rate of speed.
Not too long ago, I went into a fast food joint in Philadelphia, and used a self-service kiosk to order. Actually, it was the only way to order. I stuck my credit card in the machine to pay, and a person called my name when my food was ready. I imagine this use of kiosk technology probably eliminated the need for two cashiers, on average, throughout the day.
What’s my point? Well, I would imagine the market equilibrium for fast food workers in Philadelphia is higher than it is in Springville, Alabama. As such, it is more advantageous for the store owner up there to employ kiosk technology than it might be in St. Clair County, Alabama. This makes sense.
With this in mind, how fast will new technologies eliminate jobs? The most honest answer is when human beings price themselves out of work. Such as it was 100 years, so it is today.