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Creative Destruction: The Economics of Robotics

May 17, 2013 • Businesses, Demand, Supply, and Markets, Economic Debates, Economic Growth, Economic History, Economic Thinkers, Education, Innovation, Labor, Macroeconomic Measurement, Tech • 369 Views    No Comments

  • Once there was a computer therapist named ELIZA. While her developer thought she was just a machine, the people who talked to her liked her patience and enjoyed her empathy.
  • In the operating room, da Vinci is a robotic surgeon whose sense of touch engineers have begun to develop.
  • Factories have robots that move, slice, sharpen and precisely place objects.
  • And what about Roomba, the vacuuming robot?
A human surgeon uses da Vinci.

A human surgeon uses da Vinci.

Researchers predict that by 2025 computers will have caught up with the processing power of the human brain. Calculated in flops–floating-point operations per second–the processing power of the human brain is 10 petaflops. (A peta is the next level after giga and tera.) If we agree with Moore’s Law, then every 18 months, computer capacity doubles. So, going back to the first computers in 1940, with processing capacity doubling every 1 1/2 years, it will take until 2025 for computers to have the 10 petaflop capacity of the human brain.

But…what then?? What if computers can equal the human brain’s capacity (and that is a BIG if)?

With computers able to do human jobs more productively, economist Paul Krugman says we wind up with a “capital bias” that is controlled by an affluent elite. Leaving many of us behind, the income gap will increase and inequality will accelerate.

Disagreeing, a second group says “capital bias” creates jobs. Technological leadership brings production back to the US from the developing countries. Yes, it requires structural economic change but people have always worried about the deleterious impact of machines. In 18th century England, the Luddites worried that mechanized looms would create joblessness by replacing people. Instead, we got railroads and steel factories and more production, more jobs, more wealth and a rising living standard. In 1900 a typical worker put in 2300 hours a year. Now that number is down to 1800.

Deciding whether robotics will be good or bad for jobs takes us to Joseph Schumpeter and creative destruction. The transition to robotics has begun. Replacing old technology, it is another example of the disruptive impact of innovation.

Sources and resources: Radiolab tells us more about ELIZA, here, and Slate discusses Da Vince here and Haptics (the touch part) here. However, the best article I read about the economics of artificial intelligence was in Mother Jones. Meanwhile the Krugman postion is here and the oppostion is here. Finally, for the overview, here is the Schumpeter, creative destruction explanation, a TED talk on “Robots Will Steal Your Job, But That’s Okay,” a 60 Minutes segment, and a NY Times discussion.

 

 

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