It’s time to welcome our robot overlords, says University of Manchester economist Diane Coyle in the Financial Times.
While there’s a lot of fear out there about how machines will replace human jobs in the future, Coyle argues it’s possible automation could be a really good thing for the economy.
This is particularly true if you are also worried about persistently low productivity growth, which Coyle connects with secular stagnation.
She’s wrong on that point, but I’ll get to that in a bit.
Coyle gives the historical example of the washing machine: very suddenly cleaning the household’s clothes and linens went from a physically intensive, hours-long process to something that could be done more or less with the push of a button. That freed up women to use that time for other things, and their productivity went up in a way that people weren’t expecting when laundry still had to be done by hand.
This isn’t to say that as workers — particularly low skilled workers — become displaced by automation they won’t have a tough time finding another job. But, Coyle says, anyone who is worried about secular stagnation should prefer the robots to anemic productivity growth.
Here’s the thing: No one is quite sure that productivity growth is the answer.
Sure, if the robots come and take everyone’s jobs, but then people find ways to work the same amount doing different things, productivity will increase drastically. The economy will probably boom. But this assumes that nothing blows up the global economy before we get to that point.
Here’s Larry Summers, who has been beating the drum on secular stagnation, throwing some shade on this:
The important point to recognise is that — as the experience of the US economy in the 1930s demonstrates — even with rapid innovation it is possible for economic performance to be very poor when finances are not successfully managed. Recent good news about the state of the US economy should not blind us to this reality.
If low interest rates continue to create asset bubbles that then pop dramatically — which seems to be the real fear of some people who are talking about secular stagnation — the economy could be in rough shape for a long time before the robot (or demographic) saviors come.
It is possible to be afraid of robots and of asset bubbles at the same time.
Disclosure: Marc Andreessen is an investor in Business Insider.