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How Much Automation Is there in Chad?

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Here’s a letter to Reason:

Ronald Bailey brilliantly surveys many reasons why automation will not lead to mass unemployment (“Are Robots Going to Steal Our Jobs? [2]” July 2017).  Let me add one more reason.  It’s one that my friend George Selgin frequently makes in conversation: automation is not automatic.

Nearly all discussions of the effects of automation on employment proceed as if automation simply happens – as if automation is, in econospeak, “exogenous.”  Yet while some advances in automation might be serendipitous, most automation – its development and its implementation – responds to market wages.

Innovators and businesses have little incentive to seek out and use labor-saving devices if wages are low.  Incentives to find and to use labor-saving devices intensify only when and where wages are rising.  Yet because in market economies rising wages reflect rising opportunity costs of the time of workers whose wages are rising, automation is largely a market response to the happy reality that other and more-productive opportunities are emerging for these workers.  Put differently, because in market settings automation is a response to labors’ increasing opportunities and, hence, increasing scarcity, we need not worry that automation will cause labor to become superfluous.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

And keep in mind that trade – being a form of innovation [3] – is driven and guided by similar incentives.

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