Category Archives: Laissez faire

NPR, Robot Guy, and Econ 101

I heard a story on NPR this morning about small wagon sized robots that may soon deliver takeout food in Washington D.C.  It’s already being tried out in town.  Once up and running it is said to be able to pick up and deliver food in a two mile radius.  It uses the coordinates provided by the purchaser via a smart phone to identify the location for the delivery.  Very cool if it all works out.

What wasn’t so cool was a question asked by the reporter which revealed her ignorance of economics and worse, the answer given by the interviewee (robot guy).  The reporter asked whether the robot will eliminate jobs.  The robot guy’s response was “absolutely not”.

Huh?  How can something so obvious be beyond the grasp of such really smart people?  Why doesn’t the reporter know instinctively that if the robot works as planned and does so more inexpensively than hiring human labor it will end up doing the designated work rather than humans?  And why would the robot guy be so positive that somehow, this labor saving device, designed for the very purpose of saving human labor, will not save human labor?

Because we think, humans have been discovering and inventing ways of doing less work since the beginning of humanhood.  Domesticating horses reduced by orders of magnitude the time and human labor it took to move people and materials from one place to another.  Locomotives, motor vehicles and airplanes again did the same.  The first shovels reduced by orders of magnitude the time and human labor it took to dig a hole.  Motorized digging equipment again did the same.  Wash boards reduced by orders of magnitude the time and human labor it took to wash clothes.  Electric washing machines again did the same.  Each time a labor saving technique or device is created, guess what it does?  It saves labor. 

This robot was invented for the very purpose of eliminating labor.  Right now, some human, either the purchaser or the seller or an independent delivery service has to transport food purchased at a restaurant for take out to the place where it is to be consumed.  The purpose of the delivery robot is to eliminate that human labor.  The reporter should have known the answer to her question before she asked it.  Unless the robot is only to be utilized on behalf of purchasers who, but for access to the robot, would have left their house, driven to the restaurant, picked up the food and returned home with it, jobs will necessarily be eliminated.  And if the robot is so relatively inexpensive that purchasers choose to use it rather than other human oriented delivery services, what will happen to those delivery service jobs?

If the robot works as expected and is cost effective, i.e., cheaper than the alternatives, it will thrive and the alternatives will not.  This is the nature of a free economy and the nature of creative destruction.  It’s quite simple, even elementary.  The troubling thing is that it apparently isn’t understood by two people who are sufficiently intelligent and well educated to be an NPR reporter and a robot guy.

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Hillary Employing The Statist Playbook; Divide And Dupe To Gain Power

Hillary Clinton garnered praise from organized labor for backing New York’s increased minimum wage.  Organized labor is a special interest looking for its share of patronage from government.  Whether organized labor praises any policy position is not the question.  The question is, what does that policy position do for (or to) society at large.

It is illegitimate in a free society for government to use the force of law to modify what would otherwise be voluntary exchanges.  Consider; I am willing to work for you for $1 an hour.  I’ve judged it in my best interest to do so.  Otherwise, I would work elsewhere. 

You are willing to pay me $1 per hour and are satisfied with my services.  The government forces you to pay me $2 per hour and you say, “well, at least everyone else has to pay more too.  I’ve lost no comparative advantage.  But now my profits will suffer unless I raise prices.” 

What do you think you will do?  You will raise prices because you will lose no comparative advantage in doing so.  You know that everyone else who hires so called “minimum wage workers” will make the same decision to raise prices. 

However, later, when your customers decide to purchase less of your product, you will suffer.  Over time, you may realize your sales have decreased somewhat so you may reduce prices a bit in order to increase sales.  But your profit margin will then be lower than it was before the government mandate came into effect. 

Through this process, the immediate benefit of higher wages for me, is counterbalanced by your widely dispersed and far less identifiable lower profits and by higher prices for consumers.  Finally and ironically, those higher prices will end up neutralizing the original coerced pay raise.  Those who received the mandated pay increase have living expenses which must rise as well.  They are consumers, and no consumer is immune from the choice which must be made; pay more for the product or use less of it. 

The minimum wage is a ruse used by the political class to dupe voters, nothing else.  At the end of the day, the statist politicians get what they want…votes.  Everyone else is, at best, left in the same situation as before the mandate. 

In a free society, government has no business compelling the terms of voluntary transactions.  When it comes to the economy, we must demand that our elected officials “make it free and leave it be”.

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