The Humanity Of Automation
When the overall cost of production rises, businesses must find a way to continue making a profit. A price increase is risky, and there is no guarantee that consumers will continue to frequent the business at the same rate. Similarly, a business could reduce the quality of goods to reduce costs, but that could alienate consumers. The safest solution is to cut the cost of labor, which means to produce more with fewer people, and the simplest way to create a more efficient workforce is through automation.
Henry Hazlitt, an early 20th century capitalist economist, described the necessity of automation in his chapter “The Curse of Machinery” in Economics in One Lesson.
He begins by making clear his position on the issue: “Among the most viable of all economic delusions is the belief that machines on net balance create unemployment. Destroyed a thousand times, it has risen a thousand times out of its own ashes as hardy and vigorous as ever.”
Although it might seem strange today, our society was once opposed to the use of machinery in business. For 200 years, most papers on economic policy were neutral or skeptical of industrialization, and Hazlitt explains: “Whenever there is long-continued mass unemployment, machines get the blame anew. This fallacy is still the basis of many labor union practices. The public tolerates these practices because it either believes at bottom that the unions are right, or is too confused to see just why they are wrong.”
But there is little difference between machines and any other advancement in technology: “Not only must we be causing unemployment with every technological improvement we make today, but primitive man must have started causing it with the first efforts he made to save himself from needless toil and sweat.”
Hazlitt then moves on to the evolution of different groups that opposed machinery until the modern era. Often, these groups claim that industries would be destroyed and workers displaced, but history shows that the industry grows as a result and more people are ultimately employed.
In 1932, a group called the Technocracts appeared. Although they were debunked, “their doctrine, which preceded them, lingers on. It is reflected in hundreds of make-work rules and feather-bed practices by labor unions; and these rules and practices are tolerated and even approved because of the confusion on this point in the public mind.”
Of these lingering effects, unions required items to be assembled within certain locations, restrictions were placed on different tools, and local workers must be used to handle goods. They also required certain numbers of employees in various rules, providing more workers than the jobs required. It was a push for more inefficiency within the workforce.
The opposition to workforce efficiency justified by a desire for more workers. Hazlitt argues that such a belief throws into jeopardy all progress: “Not only should we have to regard all further technical progress as a calamity; we should have to regard all past technical progress with equal horror. Every day each of us in his own capacity is engaged in trying to reduce the effort it requires to accomplish a given result.”
To refute this mistaken belief, Hazlitt takes up the example of a clothing manufacturer who turns to automation. At first, half of his workers are let go, which suggests a loss. However, the machines had to be made and installed, which increases labor elsewhere. Additionally, the machines would only be used if they produced better goods, cheaper goods, or a combination of them, which benefits all who would purchase the item.
Hazlitt then explains that there are three uses of the higher profits made through automation: “(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.”
All money saved through automation is reinvested in the economy, and labor would increase elsewhere. At the same time, competitors would turn to automation to compete, and the price of goods would further decrease. This leads to more consumers, and Hazlitt points out, “This means that, though it takes fewer people to make the same number of overcoats as before, more overcoats are now being made than before... then more people may be employed even in making overcoats than before the new labor-saving machine was introduced ”
The point of incorporating machines into production is not to increase jobs. Instead, Hazlitt makes it clear that “the real result of the machine is to increase production, to raise the standard of living, to increase economic welfare... In other words, they either increase money wages or, by reducing prices, they increase the goods and services that the same money wages will buy. Sometimes they do both.”
However, Hazlitt does not discuss the need to turn to automation when governments create policies that either mandate an increase in the cost of labor or issue regulations that increase costs. By reducing costs, businesses would be cutting employees merely to keep up their previous economic situation. There would be fewer laborers to produce items with the same cost. Industries, especially fast food, can be automated with few problems.
Hazlitt describes the natural progress of the market, but government interference creates an unnatural progress. By increasing the cost of production, governments incentivize automation that may have been too expensive under previous conditions. Industries have no other option but to cut jobs if they wish to remain in business. The very policies that lawmakers claim will “help” workers will only lead to fewer of them.
Machines and technology are important to a thriving economy, and a natural progress of advancement allows an industry to become more efficient. Government interference can never increase wealth or production, and it always leads to lower production or a more expensive workforce. If we truly want more employees, we need to remove policies that interfere with the natural progression of business.
Jeffrey Peters is an Annapolis, Md.-based writer and political consultant.