Google chief economist Hal Varian says that we’re grossly underestimating the productivity benefits we’re getting from robots and other forms of automation.
Speaking at a Churchill Club forum in San Francisco last night alongside Paul Thomas (Chief Economist, Intel) and Jaana Remes (Partner, McKinsey Global Institute), he mentioned on multiple occasions that he views productivity as the true driving force of the global economy going forward.
But we’re not measuring it right.
According to him, the issue with using GDP as a measure is that it doesn’t take into account robots, which he claims are all in transaction costs:
“The first invasion of the robots…washing machines, dryers, vacuum cleaners, dish washers, lawn mowers, et cetera…they showed up in domestic production but weren’t in GDP, because it’s not a monetized sector.”
The key to economic growth, he says, is in the time-savings that come from automation:
“The paradox…is that everybody wants less work but more jobs. This idea that the robots are going to come and take away our jobs seems to be vastly overblown…they haven’t destroyed jobs, they have typically destroyed work. People…have offloaded these unpleasant tasks to computers.”
Google wants this to be true, since they are a leading company in this era of complete automation. At the same time, researchers from Oxford say that 45% of American jobs will be automated in the next 20 years.
The answer probably lies somewhere in the middle. Automation will take away jobs, but it will also create new jobs — like building the robots that build the new products we want, or increasing demand for new ways to fill our leisure time.
Varian also said that way to counter automation is with better education for everybody — especially people who might previously have not been able to get an education.
“I would say that the smartest person in the world is in China or India or Africa and they’re stuck behind a plow. 10 years ago that talent would have gone to waste, but now they have access to the internet.”
He also cited online video, like the lessons offered by Khan Academy, as the single most important aspect in educating children in developing countries.