Automation, the power to enrich all our lives

The main consensus around the world is that automation is killing jobs and increasing the wage gap. That it is making the rich richer and the poor poorer. To fix that, people have been calling for everyone to be paid a living wage. Doing nothing for an income. Let's see the free markets response to all of this.

When technology improves then the productivity of each worker improves. The amount of output on goods and services that each worker produces will go up. In a true free market system, that would mean, the cost of goods and services will go down.

In this scenario, as technology increases, our standard of living will increase and costs of living should decrease as a result. In other words, things should get better and better as more technology gets developed.

When a person looses their job because of an automated system that is replacing them. For that person, it sucks for the time they are out of work, however, logic dictates for a majority of people, it is a good thing, in that the business would not have made the switch to automation if they could not cut costs as a result. 

When they cut costs, they can return that gain back to the consumer. They can cut costs for the consumer and in most cases they do, so long as there is legitimate competition in their industry and there usually is. Competition is always driving prices down so long as they are not propped up by a cartel or favorable government regulations that are preventing legitimate competition from arizing from start ups.

In a lot of cases, the free market is being prevented from functioning as a result of unnecessary government regulation. What we see today is that many of the big companies around us lobby the elites in Washington, Ottawa, London, etc to pass new regulations on their industry. 

Now, why would they do that? If you can make it more difficult for the little guy, the entrepreneur with a brilliant idea, the Uber's or the Air B&B's of the world from functioning by imposing a massive overhead dealing with the unnecessary regulations, then you win. Remove the regulations (and the subsidies) and you will even the playing field.

The Free Market Scenario

For a simple example of how consumers will benefit from automation. 100 years ago, dairy farmers had to have dozens of staff in order to milk 100 cows. Today, they have automated machines hooked up to the cows that can do all of that. They now only really need 1 or 2 workers. That cost savings will be passed on to the consumer. 

So milk is cheaper to buy with the automation than it would be with the 10 - 20 dairy laborers. This will decrease the living costs by a little bit for a maximum number of people. All of the consumers of milk will have their standard of living go up as a result because they now have more disposable income to spend on other things.

Because of economic analysis, we know for a fact that there is a net benefit to society as a result of this type of automation which counters the net loss to those 10 - 20 farmers. So overall it is good for the majority of people. 

A narrow minded person only analyzing the plight of the dairy farmer might say it isn't worth it and might want to ban automation as a result. If you do ban it, progress will stagnate and the majority will not benefit like we outlined above.

This extra money that people now have as a result of buying things at a cheaper cost, now can spend that money on things they never would have before. Such as buying those new fancy hiking boots, surfing lessons, a home renovation, a trip to Hawaii, etc. When people are spending more money on these other things, these other industries will boom as a result causing more jobs etc to be needed in those industries.

The free market will dictate where the jobs should be in this scenario. Automation will constantly be shifting jobs around to different industries. In almost every case automation will create more jobs elsewhere and even some people might not have to work as much because they aren't spending as much money as a result of the savings that automation is bringing them. That less work will even create another job to cover the extra work that you used to do.

The big thing, is if you look at the lives of those individual people who are losing their jobs as a result, then your perspective becomes skewed to the reality that automation creates just as many if not more jobs then the ones that are lost as a result if it.

Someone might say, the savings a company gets, will just sit in the bank and not help anyone else out. A company should be free to do that, but companies always want to grow and expand, its in their nature and their shareholders demand it. 

When Apple made their billions on their first iPod, did they bank the profits and stop innovating? They hired more workers produced more ideas they had and the world is a better place because of it.

Profit is not a bad thing, it allows companies to expand their businesses, hire more people, research and innovate which all gets passed on to enriching the lives of millions of consumers everyday.

Free market capitalism does all of that. It increases productivity, drives innovation, increases progress and is really good if it is allowed to work.

The Real World

With all of this progress and innovation why are we not seeing the increased job growth and people not needing to work as much because the cost of living should be dropping incredibly fast? The main reason is the government.

50 years ago a gallon of milk might have cost 5 cents, but now it costs 3 or 4 dollars. What gives? I thought automation was supposed to decrease the price of milk. The answer is inflation.

Inflation is not rising prices. Rising prices are a symptom of inflation. When the government prints money, the value of money goes down. So the government drives the prices of everything up. Inflation hurts poor people way more than it hurts rich people. The government prints money to support the welfare programs and the warfare state it wants to do.

The reason we have a rising wealth gap is because of inflation. The wealthy and the insiders get the full value of newly printed money and by the time it trickles down into the economy and gets to poor people the prices of everything has increased so they see no benefit to the newly printed money.

Also with taxation, When the government funnels productive wealth out of the free market and into government bureaucracy, then you are taking money from a more efficient place and putting it into a less efficient place and its like an anchor on the economy dragging it down.

This is what is happening and sadly, the wealth gap is increasing and will continue to grow as a result of inflation and taxation. However, our government educated world is convincing people that more government is the answer to fix these issues, when logic dictates the free market is the answer. 

Just let freedom work and then jobs, technology, productivity, wealth will all increase at a pace that most people have never seen in their lives. We believe in free market capitalism as the best solution for the maximum number of people and automation is a good thing for all of us.