Well, yes, obviously

A higher minimum wage acts as a subsidy to automation

There’s even a substantial current in economics insisting that the industrial revolution happened in Britain because wages were higher, thus making automation more worthwhile.

16 comments on “Well, yes, obviously

  1. And most of what replaces them is software investment cost. It’s not the hardware of the McDonald’s kiosks that costs so much. And once someone’s invested that, you’re never getting the old jobs back.

  2. The Romans never bothered with automation. The principles of block printing and steam power were both known to them, for example. But slaves were cheaper.

  3. Yes the link is there (didn’t get beyond the paywall) , but its questionable to advocate against minimum wage by playing on a fear of a robot job-pocalypse. Automation leading to greater efficiency is good. What is wrong is not the automation but the incentive. It’s market interference leading to a less efficient outcome.

  4. @ Andrew C. The principles of steam power may well have been known to the romans, but the metallurgy necessary to make the principles work wasn’t.

  5. “The principles of steam power may well have been known to the romans, but the metallurgy necessary to make the principles work wasn’t.”
    ?
    Bronze is a better engineering metal than steel, let alone iron, for the sort of applications needed in building steam engines. Bronze was ancient tech in Roman times.

  6. There’s a great deal of misunderstanding about how development of tech happens. Fueled by how the history of tech is written. The attachment of famous names to various inventions as if the inventors were unique geniuses.
    It just doesn’t work like that.
    If you’ve a problem & a given toolkit of skills, materials etc, solutions will be generated. Who does it first – or more likely who gets the credit for doing it first -is largely chance.

  7. BiS

    “Bronze was ancient tech in Roman times.”

    Interesting point. But would clay moulds provide bronze of the necessary quality? I’ve no idea, just asking.

  8. If you employ people you get a tax penalty: Employers NI contribution – literally “a tax on jobs”.

    If you employ machines you get tax breaks: Capital Allowances and Depreciation.

    The Government says: “Don’t employ people – employ machines”

  9. So, the author of this piece doesn’t understand the difference between a subsidy and an incentive. Who is this fool?

    Ryan Bourne occupies the R. Evan Scharf Chair for the Public Understanding of Economics at [the] Cato [Institute].

    Ah, yes. The Cato Institute. The Koch-backed “libertarian” think tank (snigger) that does little more than demonstrate just how spineless and ineffectual Republican/conservative “intellectuals” (and their monied masters) are.

    Want to know why Donald Trump is President and Jeb Bush/Marco Rubio/Mitt Romney isn’t? Read Bourne’s article.

    And of course…

    Bourne holds a BA and an MPhil in economics from the University of Cambridge, United Kingdom.

  10. Dear Koch Brothers –

    When you give resources to an economic actor who is working to innovate, you are providing them with a subsidy.

    When you redistribute income via minimum wage laws, there will come a point where economic actors who are having their profits redistributed will innovate to lessen the impact of said redistribution. That is an incentive.

    You’re welcome, and no, I don’t want to occupy a chair at the Cato Fucking Institute.

  11. Dunno. I’d have called the minimum wage a tariff, and tariffs and subsidies are reflections of one another. It’s like the difference between a debt and a credit – it depends whose point of view you’re taking.

    A subsidy is an economic benefit granted by a public body to encourage something to happen more cheaply. A tariff is an economic penalty imposed to prevent competition doing something more cheaply. Minimum wage law is a tariff on human labour that may be considered an economic benefit for automation.

    It’s an abuse of terminology, but I suspect the real issue is about the emotional baggage the comes with the choice of word. ‘Subsidies’ are bad and unfair (especially to free market types) but ‘incentives’ are good. The Cato Institute are about public outreach, not technical accuracy in the academic economics literature. The idea is for people who don’t normally listen to this stuff to understand that minimum wage law is not necessarily good, and they don’t always understand the words the way we do.

    At least there’s someone out there arguing against minimum wage law, rather than arguing against robotics for nullifying minimum wage law’s effects. Be thankful for small mercies.

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