Does automation really bring efficiency? Can all work be left to robots, and is it really necessary? How has technology affected worker incomes? Could choosing migrant workers over robots make the world a better place?
The Global Economy Needs Immigrants Before Automation
While the world is experiencing a new technology revolution, regular and irregular migrants are at the top of social debates in many countries, including Pakistan. Technology claims to deliver greater productivity with less labor, but the impact of automation on labor markets remains controversial.
Lant Pritchett, a former World Bank economist who conducts research on Labor Mobility, stated in his article published in Foreign Policy , that information technologies increase the quality of our lives, but that turning to automation instead of unskilled labor does not benefit anyone, and that it is necessary to employ domestic and foreign labor force for such jobs. He argues that it will benefit everyone.
Here are the highlights of the article:
“We live in the age of technology…or so we are told. Machines promise to transform every aspect of human life: robots will work in factories, self-driving cars will dominate the roads, and artificial intelligence will manage weapon systems. They argue that governments should mitigate the costs of progress. Those who make these claims present technological change as a natural transformation and believe that modern life should keep up with this change. According to them, the speed of change is unstoppable and new technologies will recreate societies. So all people can do is figure out how best to deal with this change…
Nowhere is this perspective more evident than in the discussion of the impact of automation on employment. Much has been written to explain how automation threatens some low-skilled workers and what governments should do to help. It has been argued that countries can support reeducation initiatives, renew their education systems, or invest in restructuring the social division of labor.
At the same time, many governments believe that machines can save their economies from demographic decline and the negative consequences of aging. Techno-optimists argue that rich countries with dwindling working-age populations need automation to fill the workforce gap.
However, this view misses a very simple point. As shocking as it may seem, technological change is not a natural force, it is the work of man. Of course, technology has radically improved human life: No one wants to live without electricity, toilets or a heating system. But in other cases, what societies need most is new policies, not new technologies.
Automation is a choice
Automation is often a solution, a choice people make. It is certainly not an inevitable situation or a necessity. For example, the United States is facing a truck driver shortage. In 2021, the American Truckers Association announced that the truck driver deficit reached 80,000, and that the deficit could reach 1 million in the next 10 years, considering the aging drivers. To close this gap, tech companies like Amazon have invested in driverless truck technology. Amazon believes self-driving cars will cut costs. But driverless trucks do not create greater economic value. Whereas there are millions of people in the USA who would be happy to drive trucks. It will suffice to give them a work permit.
In the USA, a truck driver earns $23 an hour, while in developing countries it drops to $4. But due to immigration restrictions, companies cannot recruit workers from abroad. For this reason, employers in the USA are forced to prefer machines and reduce employment by using technology. National restrictions are driving businesses to invest in technologies that no one really needs.
Resources are Wasted
Barriers to immigration are a horrendous misdirection of resources. In the world's most productive economies, business leaders, scientists and engineers devote their capital or energies to developing technologies that minimize the use of one of the most abundant resources on the planet, the workforce.
Labor is the most important (and often the only) asset that low-income people in the world have. The urge to have machines do work that humans can easily do not only wastes money, it also keeps the poorest out of their poverty.
Of course, concerns about the movement of economic migrants between countries, the control of these flows, the impact of migration on domestic workers and the social tensions it may create are legitimate. Human rights defenders are also justified in their concerns about the exploitation of migrant workers. From a private sector perspective, getting AI to drive a truck is easier than reducing the bureaucratic hurdles of immigration restrictions.
However, it is a mistake to prefer devices over people. This misses the real economic and human gains that can come from letting people go where they need to, rather than trying to invent machines that can replace them. Not allowing people to cross national borders as economic migrants, especially to work in jobs that require only basic workforce skills, worsens the plight of everyone, especially the world's poor, and hinders the course of technological change.
Technology has failed to replace humans in low-skilled jobs
A prevailing view in the West is that the governments of wealthy societies do not need to bring in more workers. They can easily raise border barriers as technological progress eliminates so-called low-skill jobs. But that's not the case.
Some technological changes are powered by progress in basic science. In discussions about the future of labor, it is often assumed that the effects of technological change on workers are a natural consequence of scientific progress. But economists have a new understanding of technology's impact on the workforce and wages.
The standard economic interpretation was that advances in information technology would help increase the incomes of highly educated workers while reducing the incomes of all less educated, low-skilled workers. But that didn't happen: wages in traditionally low-paying occupations have risen as a percentage of those in the middle-income, and occasionally even those at the top, although salaries for the high-skilled have increased relative to those in the middle-income since 1979 in the United States.
According to research conducted by a team led by economists David Autor and David Dorn, high-demand, manual and non-routine jobs such as cooking, cleaning, hygiene jobs, health-care services and security were not affected by the developments in technology, as they required the direct physical presence of the worker, and wages rose. . There are many jobs that will not be digitized or subcontracted like this.
Undoubtedly, truly revolutionary changes have occurred in the way people communicate, seek information, process data, and entertain themselves. However, the idea that rapid technological change in some sectors in recent years has accelerated the transformation of the entire economy is wrong.
In fact, "total factor productivity" in industrialized countries has been increasing very slowly since the 1980s. Meanwhile, the supply of manual jobs has also decreased in industrialized countries due to low fertility and increasing education levels. This supply will decrease further towards the 2040s.
More than a trillion-fold increase in computing power over the past century has radically changed occupations where people do routine and repetitive work. The calculations for going into space are no longer done manually, but with much more efficient computers.
However, the increase in computing power does not make some jobs more suitable for machines to perform. Machines are not better at self-care, machines are not better cooks, and there is no guarantee that machines will be better at driving trucks than humans. Firms still opt for automation because it is much easier to solve even the most difficult technical problems, such as those that automated control machines and self-driving cars are trying to solve, than for countries to overcome the social and political barriers to accepting migrant workers.
Is Your Birthplace Your Destiny?
Absolute facts such as date of birth, nationality and citizenship deeply affect people's lives. Essentially, where people are born and where they move to shape how much money they can earn in their lifetime. Restricting the cross-border movement of people creates a huge income gap among equally productive workers.
A study of the earnings of workers born and educated in 42 countries found that equally productive workers in other countries earn between two and 10 times less than workers in the United States. This gap in the wages of equally productive people in different countries is the biggest pay distortion caused by politics in the world today (and possibly in all of human history). Barriers to migration create an artificial labor shortage. Many industries in the US struggle to find workers with the labor costs they can afford. This gap encourages companies to seek solutions through unnecessary and inefficient automation and other technologies.
Stupid Solution to Wrong Need
All inventions are born out of need, but wrong needs breed stupid inventions. The prohibition of liquor, which was implemented in the USA at the beginning of the 20th century, led to an explosion of moonshine, and smugglers resorted to various means to deliver their goods to consumers.
Proponents of curbing immigration insist that it is necessary to protect citizens' wages, but this is not true. There have been times in the last century when governments worried that their countries wouldn't be able to provide enough jobs for their citizens, but the changing demographics of the wealthy industrial world have completely disproved that logic.
The challenge for the foreseeable future will be to find enough workers to fill existing jobs. Even countries that traditionally do not welcome immigrants, such as Japan, are now recruiting workers from abroad. Economically, immigrants are not taking away the job of the native worker, but more immigrants are raising the average wage of citizens. For example, having more assistants does not lower the wages of skilled workers such as nurses,
Don't teach the poor how to fish, give him a job
It is the poor of the world who lose from the restrictions placed on labor mobility by rich countries. Decades of well-meaning development programs and aid initiatives are no more beneficial to a person living in a poor country than being allowed to work in a richer and more productive country.
For example, an article published in Science in 2015 looked at the effects of an anti-poverty program that provides farm animals to chronically poor families in six poor countries to increase their incomes. It spent $4,545 per household in the first two years of the program. In the third year, annual household consumption increased by an average of just $344 in five of the six countries where the program had positive results (Ethiopia, Ghana, India, Pakistan and Peru). In the sixth country, Honduras, almost all livestock died. Considering that many attempts to increase incomes of the poor through similar projects have failed, the study authors viewed this modest $344 gain in annual household consumption by spending $4,545 as a great success.
In contrast, a study I did show that workers without even a high school diploma will earn an average of $13,119 per year in the US than their counterparts in those five countries, and 35 times greater income growth than an effective, well-designed and well-implemented anti-poverty program would provide. had demonstrated.
Today, global poverty is more of a problem of people "trapped in poor places" who cannot be separated by barriers that limit their movement, rather than "poor people". Some sarcastically argue that these people are poor because they "lack human capital." In developing countries, however, education has advanced tremendously. An adult in Haiti today is more educated than in France in the 1970s. But Haiti is a chaotic and low-productivity place to tap into human capital. For this reason, most Haitians who have come out of poverty did so by leaving their country.
Some worry that a poor country will lose its skilled human capital and become poorer due to the "brain drain". This is a false concern. Generally speaking, there is no evidence that emigration harms a country's future. It is worth remembering that many of the richest countries in the world today, including Denmark, Italy, Norway, Spain and Sweden, were the countries with the highest rates of immigration in the late 19th and early twentieth centuries.
Wage differences create a deep desire to cross national borders. Between 2015 and 2017, public opinion research firm Gallup asked people around the world if they would move to another country permanently if they could, and if so, which country. The survey showed that approximately 750 million people would leave their country if possible, and 158 million of them would prefer the USA. Australia, Canada, France, Germany and the UK were each preferred by approximately 30 million people. This does not mean that these countries should or will accommodate so many immigrants, but it does show that there is no shortage of people ready to work in rich countries. Automation is not inevitable, but artificial labor scarcity is driving the employer towards automation.
International regulation required for economic migration
Of course, it will not be easy to understand how countries can realize their current workforce potential in the world. Global institutions such as the UN, IMF, and World Bank have driven the globalization of goods and capital markets, but have not created a meaningful infrastructure to stimulate the labor movement. Money and containers cross borders freely, but people cannot.
Today, large countries impose restrictions on the entry of foreign nationals, taking into account the high costs. In 2022, the US spent $26 billion on border controls. Countries should devote their resources to creating a global mechanism for labor mobility, rather than pouring resources into border controls or the fictitious pursuit of job-killing technology. Workers must be fairly recruited and contractually placed in jobs suited to their abilities, protected from exploitation and facilitated repatriation.
A well-functioning, ethical global industry that pairs people who want jobs with businesses that need them would benefit everyone.
Wealthy and democratic societies need to stop blindly following technological advances that save money on what is precisely abundant around the world. Rich countries offered strong incentives to firms to prefer machines over people. Now is the time to create a future for the people, by the people.
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