Will Automation Kill the Economy ?

Automation is the next big thing! Right from the time of the printing press, automation has always been making headlines. It fundamentally changes the way jobs are performed. However, given the rapid technological advancement in the recent past, there has been an unusually high level of scaremongering regarding how automation is going to affect the workforce. Pretty much every day, there are newspapers full of articles screaming that automation will kill 50% or more of the jobs in the next quarter century! Automation has suddenly worn a villainous robe. But is it as awful as it is being made out to be? Will automation really kill most of the jobs?

In this article, we will try and understand the various effects of automation.

Automation Gaining Momentum

Firstly, it is important to acknowledge the speed at which automation is taking over the world. What was once a dream is now a reality! Companies like Google have been continuously testing driverless cars. While it is true that these cars may not be economically viable today, technology may make it possible in the future. This endangers a large number of jobs of both commercials as well as taxi drivers.

Similarly, Amazon has launched self-checkout stores in Seattle, Washington. This will eliminate long queues at the shopping malls. The company wants customers to spend time shopping and not standing in line to pay the bill. Once again as this technology becomes more streamlined, it will eliminate thousands of jobs at supermarkets.

The Fast food industry, which is highly automated, is becoming even more automated. Some fast food restaurants are being entirely run by robots with humans only operating the machines and collecting the money! If this concept turns out to be successful, fast food firms are well capitalized to take advantage of these advances.

To sum it up, in almost every field imaginable, we are on the cusp. In the next few years, the role of humans will increasingly diminish, and the role of automation will increase exponentially.

Better Ways of Doing the Job

This is the first time in history that human beings are so wary of automation. This may be partly because this is the first time, this is happening on a mega scale. However, newer and better ways of doing the jobs have always been the case.

Consider the case of the printing press making scribes redundant. Also, consider the case of online media making printing press redundant itself! DVD players made cassettes obsolete to be later made obsolete by MP3. When iPods came in, they made MP3’s redundant too! This is how the world has always been functioning. Newer technologies make doing things easier. This leads to a temporary loss of jobs for a few people. However, in the long run, the society saves resources, and everyone is better off. Newer are better ways of doing tasks free up resources. These resources can then be used for other tasks, and the economy as a whole grows.

High Skilled vs. Low Skilled Jobs

The argument against the above point is that automation brings about a transfer of jobs from low-skilled jobs to higher skilled jobs. For instance, drivers get replaced by software engineers and so on. The argument is that the lowest rung of society suffers the most because of this displacement. Also, these people do not have the means to upgrade themselves to higher social strata via education and hence automation is unfair.

The reality is that automation does, in fact, diminish jobs lower in the value chain and creates fewer value added jobs at the top. However, people at the lowermost ends are selling labor and not any specific skills. As a result, they can quickly move jobs. For instance, store clerks at Wal-Mart could easily switch jobs to being security personnel! Hence, automation will lead to displacement, but the affected people will be easily able to cope with it.

Higher Standards Shorter Work Hours

The positive side of automation is that it will reduce the cost of production. For instance, driverless cars will reduce the cost of transportation. Similarly, self check-out retail stores will be able to drop prices and benefit consumers. As a result, people will be able to sustain on a lower salary and still have a higher standard of living. This is what automation has been doing for all of the 20th century! Today, people work for 8 hours instead of 12 at less grueling jobs and have much more abundance than their forefathers did!


The automation juggernaut is both real and unstoppable. As a result, resisting it would only lead to problems. Instead of making futile attempts to stop an economically viable idea politically, people need to accept the reality.

Governments and worker unions need to be ready with massive re-skilling programs. This will ensure that the pain felt is less. The displaced workers need to be re-employed almost immediately at a somewhat similar job which will offer somewhat similar pay

There is no hiding from automation. It is going to impact everyone’s life. The smart workers will upgrade to higher skills when there is still time.

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