Does automation always cause unemployment? Stefan Molyneux looks at several myths about automation and explains the history of and economics which often remain obscured in discussion of the topic. Your support is essential to Freedomain Radio, which is 100% funded by viewers like you. Please support the show by making a one time donation or signing up for a monthly recurring donation at: http://www.freedomainradio.com/donate
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| Hey everybody, it's Stefan Molyneux from Freedom Aid Radio. | |
| I hope you're doing well. Time for your daily argument. | |
| Today, my friends, we are dipping into the highly dangerous intergalactic realm of killer automation robots that eat the unemployed and crap the poor. | |
| Yes, we're talking about the myth that automation creates unemployment. | |
| So here's how the standard myth goes. | |
| You have some medieval worker who takes a whole day to produce 10 nails. | |
| Then some jerkazoid capitalist monocle-wearing monopoly man comes along with some machine that produces, with just about the same amount of time, a thousand nails. | |
| So you have 990 nails where you didn't have them before. | |
| Because you have a hundred times more nails than you had in the past, 999 out of 1000 nail makers is unemployed. | |
| They have to run through the ditches eating dandelions and preying upon squirrels for their sustenance. | |
| And because they're unemployed, they're no longer making money, you see. | |
| Because they're no longer making money, their demand for goods and services collapses. | |
| And that means because there's less demand more people are thrown out of work because they have no one to sell to and then you get this vicious death star snowballing that wipes out civilization just because of a hundred times nails. | |
| So that's kind of how it works in theory. | |
| That's not how it works in practice, even remotely. | |
| So let me sort of break it down for you. | |
| I can't believe things people say. | |
| I swear to God, the free market is like an IQ test. | |
| It's all it is. All it is. | |
| So here's how it works. | |
| If it takes one guy a day to produce 10 nails and then the same guy, let's just pretend, you know, there's capital investments and more energy and so on to run the machine. | |
| But the same guy then produces a thousand nails. | |
| What happens? Well, the price of nails goes way down. | |
| And what happens is when the price of nails goes down, You have elastic demand, which means that as the price of something goes down, more of it will be bought. | |
| Because human beings, including myself, have a great fetish for nailing things together. | |
| It's great fun. Nothing more satisfying than that. | |
| Boom! One hit goes straight in. | |
| No thumb blood. | |
| Excellent. So when the price of nails goes down, people buy more nails to make stuff with. | |
| And because, you know, the guy who's using nails to build a table, the price of the table goes down because he's paying less for his nails. | |
| The price of the table goes down, the price of chairs, the price of crucifixion, sadly, the price of you name it, whatever involves nails, the price of that's going to go down. | |
| Because you're paying less for nails, so you can charge less. | |
| Now, when the price of everything goes down, whereas you used to spend $100 for a table, now maybe you're only spending $95 for a table or $98 or $97 or $90 or whatever, that extra money you then go and spend somewhere else. | |
| Or even if you stick it in the bank, the bank then takes it and lends it out to other entrepreneurs who are creating jobs. | |
| See how this works? | |
| See why I call it a... a bit of an IQ test so when the price of goods goes down because some source material is cheaper people have more money to spend on other things which drives up demand for those other things which otherwise wouldn't really be there so yes it's true you've lost some demand from the one guy or the couple of guys who've been thrown out of nail jobs or whatever but It's more than made up for it by everyone else. | |
| Now, this of course is the problem, and this is a repetitive problem in thinking about the free market, talking about the free market, and it's really annoying, nails on a blackboard kind of problem, which is that the government It subsidizes complaining and whining enormously. | |
| Enormously! Because, you see, if you are a bunch of people who are thrown out of work because of automation, you normally, without a government being able to give you stuff, you'd just go retrain, you'd go figure something out, you'd start your own business, whatever, right? | |
| But because whining and complaining to the government might get you extended unemployment benefits or hired by the government or retraining money, then what happens is the government fundamentally subsidizes complaining. | |
| It subsidizes helplessness. | |
| It subsidizes victimhood. | |
| It subsidizes attacking the other, right? | |
| The money is just the payment for it, but that's the actual subsidy. | |
| And so this is why you've got this whole victim-bully mentality, because if you can portray people as bullies and you can portray yourself as a victim, the government will fire cash at you. | |
| Buying the resentments of the uninformed is, well, that's democracy, right? | |
| So this virtuous cycle where Productivity, increased productivity actually creates jobs. | |
| You listen to the people who are complaining about being thrown out of work, you think it's a disaster. | |
| And of course, all of the people who have jobs because the price of nails went down, the people who sell more furniture, they don't know that they're expanding their workforce to sell more furniture because as the price of furniture goes down, people buy more of it. | |
| They don't know that. Everybody who's hired doesn't know it's because the price of nails went down. | |
| So you've got this concentrated group of subsidized winers, and then you have this diffused group of people who benefit who can't even trace back directly where the benefits came from or what happened. | |
| And this is why you need principles, not personal stories, when you're making decisions about society. | |
| And so people say, well, people are thrown out of work. | |
| Like, that's a bad thing. It's a great thing that people are thrown out of work. | |
| You know, when public executions were banned, well, public executioners didn't have a job anymore. | |
| Ooh, that's terrible. You know, when the Nazi concentration camps were liberated, the Nazi guards were thrown out of work. | |
| So, you know, unemployment is not an evil and employment is not necessarily a good. | |
| Now, you can, of course, guarantee full employment. | |
| You can guarantee full employment very easily. | |
| You can do it in one stroke of a legislative pen. | |
| Ban all farm machinery. | |
| No more threshers, combine harvesters, you name it, right? | |
| None of the things that bind up hay or whatever it is in those weird little circular balls of twine that you see out in the countryside. | |
| I'm not a farmer, as you can tell. | |
| So you ban all farm machinery, ban trucks, ban trains. | |
| People have to carry goods on a Burrow an ass or a donkey or on their heads for that matter and look at look at that we have full employment but nobody would imagine we're richer right of course you've banned farm machinery then farm productivity is going to collapse and billions of people are going to starve to death but it's okay because you have full employment it makes no sense let's say you're some teenage kid and you're bored right you go to your dad you say dad i'm bored you know with that entitlement that some teenagers have wherein it's your job to make their lives more interesting And your dad says, | |
| well, I got a good job for you, son. | |
| Here's a pair of nail clippers. I want you to go out and trim all of the bushes in the backyard. | |
| Cut down the biggest tree in the forest with a herring. | |
| Okay, well, you now have a very, very busy Sunday afternoon, but wouldn't you feel resentment? | |
| Would you feel like, wow, Dad, you gave me a great job. | |
| I'm so thrilled to be not unemployed. | |
| This is terrible. Ban your lawnmower. | |
| You've got to cut your grass with a pair of pinking shears. | |
| Ban pinking shears. You have to do it with your teeth. | |
| Okay, well, you have a job, but I don't think you think you're richer. | |
| See, People being thrown out of work is how you know the economy is progressing. | |
| Like, if you look at the Middle Ages, you had this strangulation economy where no innovation was basically allowed because the guilds and the state were so powerful in controlling people's creativity, which meant you basically didn't have your own property rights. | |
| And in the Middle Ages, yeah, pretty much everyone had a job. | |
| But it was a horrifying environment. | |
| How do you know he's a king? He hasn't got shit all over him. | |
| So if you want everyone to be fully employed, yeah, ban automation and ban innovation and ban creativity. | |
| You know, think of the people who used to process, like, bought all these chemicals to make film, like the old-school film, and then they used a bunch of chemicals and horrible processes on the environment to process the film and produce the photographs and so on. | |
| Now you take your picture on your smartphone, you store it on your computer, you show it on your TV or your tablet. | |
| Are we going to say, well, that's a really bad thing? | |
| All those people who lost their job as chemical, old-timey school film processors, they're all out of work. | |
| That's bad. Well, no. | |
| Because once you switch to smartphones, you drive demand for smartphones. | |
| With the driving demand for smartphones, you drive the demand for memory chips, you demand the computer chips, you name it. | |
| You didn't need any computers in the old cameras. | |
| They just opened the aperture and printed it on the film, and then you developed it from there. | |
| And because there are now ubiquitous smartphones, you can do apps. | |
| You can do, of course, if you're good at knowing how film works or how cameras work or how photographs work, you can create an app if you want to help people process their photographs or put cat eyes on their faces or whatever. | |
| And yeah, this takes some retraining. | |
| This takes some retooling. Nobody sits there and says, well, all those people who used to process film chemicals and develop film in red-roomed vat basements look like something out of an Amsterdam red-light district. | |
| Well, they... They just went and did something else. | |
| Because demand for something else opened up. | |
| Demand for other things opened up. | |
| So this idea that automation creates unemployment. | |
| Price of nails goes down. | |
| Price of assembling things goes down. | |
| You end up with cheaper houses. | |
| You get cheaper houses. | |
| Absent mass immigration, of course. | |
| You end up with cheaper houses. | |
| When houses are cheaper, people spend less money on mortgages, they spend less money on rent, so they have more money to spend on other things. | |
| It's really not that complicated. | |
| Automation drives down the price of things. | |
| It can increase demand, which may mean even the same people can stay in the job. | |
| Drives down the prices of things. | |
| People have more money to spend on other stuff. | |
| Creates more work. Lickety-boom. | |
| All done. Now, please don't forget to go to freedomainradio.com slash donate to help out the show. |