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Is efficiency bad?

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On Acts of Volition, Steven asks if efficiency is a good thing.

What does it mean when we invent a robot that can mow our lawns for us? We all have a few extra minutes to spare each week (how does free time affect the economy?). Lawn care businesses go under. A robot-mower industry is born. What is the net outcome of all of these changes to the system? Is there a net gain to the economy?
Acts of Volition: Calling all economists: Is efficiency a good thing?

There have been numerous instances throughout history of new technology replacing industries. Ice delivery, carriage manufacturing, and typesetters were all common businesses, but they have been replaced by refrigerators, automobiles, and computers, respectively.

On the other end of the spectrum, we have the government passing laws that protect companies from changes in technology. This past summer in California, there were strikes and lockouts at dockyards because dockworkers didn’t want shippers installing new technology. The technology would make the shippers more efficient, resulting in more jobs, but in the short term some dockworkers would find their jobs replaced by the technology.

The music industry can’t figure out how to make money in a world where people download and share music, so they attempt to legislate the technology away.

In the US, we have exported many low-wage manufacturing jobs overseas and to Mexico. In the short term this has an impact on those whose jobs have moved to Mexico, but in the long term, the economy grows from it. Low paid sewing machine assemblers learn new skills and the country begins its transformation to a knowledge economy.

Progress is good for the economy. As the world moved from the agricultural age to the industrial age, the quality of life improved. In industrialized countries death from childbirth is a rare occurrence. We have the ability to travel great distances and make machines that do work for us.

As we move from the industrial age to the information age, similar improvements in the quality of life will occur.

Richard
April 17, 2003 9:21 PM

The problem with efficiency is that as technology improves, people will still work for essentially the same amount of hours, but produce more. Unless pay increases at the same rate as production, it effectively means a pay cut.

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