Meet the Army of Robots Coming to Fill In for Scarce Workers

Robots are spreading at a record pace, from their traditional strongholds like making automobiles into nearly every other human endeavor

By Christopher Mims of The WSJ. 

Before the excerpts from this article, it is not necessarily the case that robots or automation will reduce the total number of jobs. According to Carlos Bonilla, an analyst at Econsult Solutions:

"Every few decades, predictions about the “end of work” have pervaded public discourse, and they’ve always been wrong. There was a spike of automation anxiety in the late 1920s and ‘30s, when machines were starting to take over jobs on farms and in factories. Automation anxiety surged again in the late ‘50s and ‘60s, when President Kennedy ranked automation as the major domestic challenge of the time."

See Will Automation Lead to Mass Unemployment?

Also, we know that in the long run of history, the share of workers in farming has declined dramatically yet we still have lots of jobs for people.

Right now, "farmers and ranchers themselves make up just 1.3% of the employed US population." See 9 mind-blowing facts about the US farming industry by Sara Lepley of Markets Insider.

What did it used to be? 

"In the first U.S. Census of 1790, the new nation’s population was about four million people, almost all of them living in the countryside or in small towns and villages, and 90 percent of them listing their occupation as farmers."

That is from chapter 11 of a book called American Environmental History by Dan Allosso.

Excerpts from the Mims article:

"A combination of hard-pressed employers, technological leaps and improved cost effectiveness has fueled a rapid expansion of the world’s robot army. A half-million industrial robots were installed globally last year"

"an all-time high exceeding the previous record, set in 2018, by 22%."

"The total population of industrial robots in the world has now also reached an all-time high, 3.5 million"

"There’s every reason to believe the accelerated embrace of robots will continue, given the aging workforces and other demographic shifts that are driving long-term worker shortages all over the world."

"Driving that adoption is the spread of robots from longtime uses like welding in automobile manufacturing into more challenging tasks. These include picking parts and operating other machines, tasks that require more dexterity, flexibility, and a dollop of artificial intelligence and machine vision."

"The “service” robot industry . . . is also growing at a rapid pace"

"These service robots include everything from autonomous cleaning robots scouring the floors of your local grocery store"

"to delivery robots and mobile robots taking over jobs like unloading trucks."

"there are more than 1,000 companies worldwide manufacturing them, 10 times the number making industrial robots. At least 121,000 service robots were installed in 2021"

"The convergence of three forces is driving the robot renaissance. The first is that demographic trends in rich countries mean there simply aren’t enough workers, says Craig Webster, a political scientist and associate professor at Ball State University who recently wrote a paper on the topic. His work is backed up by a comprehensive analysis published last June by economists at the Massachusetts Institute of Technology and Boston University, which found that across countries, an aging workforce drives adoption of robotics—and the faster that workforce ages, the faster robots are adopted.

The second factor is that robots have become more capable, more quickly, than at any other point since their earliest adoption by the automotive industry in the middle of the 20th century."

"This new generation of robots have mobility and vision, and are capable of flexibility in their behavior that simply hasn’t been possible with the kinds of industrial robots that have been in use in manufacturing since the 1960s."

"The third factor is the sum of the prior two: surging human labor costs and more-capable robots mean the amount of time it takes a new robot to pay for itself is shrinking"

"In China, for example, a robot that can operate a machine tool in a factory can do the work of two or even three humans, and can pay for itself in less than two years."

"One unresolved issue in negotiations between terminal operators and the trade unions representing longshore workers on the West Coast is which terminals will be automated, and what will happen to the truck drivers and other port workers who will lose their current jobs as a result.

Similarly, labor shortages and management’s response to them in America’s railroad industry were at the heart of recent negotiations between unions and employers. Rail companies have proposed eliminating train conductors entirely, and fully automating their trains.

History shows that, while automation typically takes over some of the tasks performed by humans, over time companies shift workers into different types of jobs, especially in tight labor markets. But, as was the case with the 19th century weavers known as Luddites, more automation can lead to smaller workforces in the short term, as well as worse conditions for workers."

"Roboticists say realizing a roboconomy will require meeting the robots in the middle: Robot makers will continue to improve their products’ ability, while we also remake our world in ways that accommodate these robots."

Related posts:

Walgreens Turns to Prescription-Filling Robots to Free Up Pharmacists (2022)

Are robots writing fake product reviews? (2022)

Answering the Call of Automation: How the Labor Market Adjusted to the Mechanization of Telephone Operation (2022)

Many Jobs Lost During the Coronavirus Pandemic Just Aren’t Coming Back (2021)

Can computers write poetry?Could they replace poets? (2020)

Will computer programs replace newspaper columnists?  (2020)

McDonald’s Tests Robot Fryers and Voice-Activated Drive-Throughs: Burger giant wants to speed service as competition for fast-food diners mounts (2019)

Is Walmart adding robots to replace workers or because it is hard to find workers? (2019)

Robot Journalists-A Case Of Structural Unemployment? (2010)

Structural Unemployment In The News-Computers Can Now Tell Jokes  (2013)

WHAT do you get when you cross a fragrance with an actor?

Answer: a smell Gibson.

Robot jockeys in camel races (2014)

Are Computer Programs Replacing Journalists? (2015)

Automation Can Actually Create More Jobs  (2016)

The Robots Are Coming And It Might Not Be A Case of Structural Unemployment  (2018)

Broncos to debut beer-pouring robot at upcoming game (2018)

Robots Are Ready to Shake (and Stir) Up Bars (2018)

Is Covid causing some structural unemployment? (2020)

Is Covid causing some structural unemployment? (Part 2)
(2020)

Warehouses Look to Robots to Fill Labor Gaps, Speed Deliveries  (2021)

Is unemployment still high because of structural unemployment?    (2021)

The Pizza Delivery Guy Will Be a Robot at Many Campuses This Fall  (2021)

Coffee Market Goes Cold as Brazilian Weather Normalizes

Futures prices have plunged since August, with coffee-growing conditions bouncing back from last season’s drought and frost 

By Kirk Maltais of The WSJ. Excerpts: 

"Coffee was one of the hottest commodities earlier this year, but it has now gone cold, with prices declining more than 20% in the past month.

Wet weather in farming areas such as Brazil and Indonesia is raising the prospect of a good crop and bigger coffee supply, sending prices down. At the same time, a strong dollar this year has pressured prices of many commodities.

Arabica coffee futures have shed 22% in the past month."

"Cheaper robusta beans fell 15% in that same time."

"Coffee futures jumped to an 11-year high of $2.58 a pound in February after crops in Brazil were hurt by drought, then frost. Prices softened but then rallied again in late August—and are now down about 30% from then."

"The dollar, meanwhile, remains up for the year, despite a harsh snapback Thursday after new data showed slowing inflation. Commodities tend to be priced in dollars, so a strong dollar makes them more expensive for buyers around the world.

Coffee demand soared during the Covid-19 pandemic when people stayed home, as did coffee prices, so some of the recent price drop reflects a return to normal.

But coffee drinkers shouldn’t expect a sudden drop in the price of their morning joe. Futures prices can take a while to trickle into retail prices, if they do at all. Besides, many caffeine lovers appear unwilling to kick the coffee habit no matter the price."

One problem is that the demand for coffee is inelastic ("The elasticity of coffee demand is only about 0.3; that is, a 10% rise in the price of coffee leads to a decline of about 3% in the quantity of coffee consumed." See Elasticity and Pricing from OpenEd CUNY). So if supply increases or shifts to the right, the price decrease is large, as shown in the graph below.

Related post: 

Can Coffee Bean Growers Be Like OPEC?

Are robots writing fake product reviews?

I have posted alot about products and services that have something fake about them and also posted about robots in the economy. So it was interesting to see an article that combined both themes.

See Can You Tell Whether This Headline Was Written by a Robot? Not this time, but AI is churning out articles, illustrations, fake product reviews and even videos by Christopher Mims of The WSJ. Excerpts:

"You probably haven’t noticed, but there’s a good chance that some of what you’ve read on the internet was written by robots. And it’s likely to be a lot more soon.

Artificial-intelligence software programs that generate text are becoming sophisticated enough that their output often can’t be distinguished from what people write. And a growing number of companies are seeking to make use of this technology to automate the creation of information we might rely on, according to those who build the tools, academics who study the software, and investors backing companies that are expanding the types of content that can be auto-generated."

"AI content services are thriving. They make content creators more productive, but they also are able to produce content that no one can tell was made by a machine."

"The rise of AI-generated content is made possible by a phenomenon known variously as computational creativity, artificial creativity or generative AI."

"Here are a few examples of the coming bounty of synthetic media: Artists, marketers and game developers are already using services like Dall-E, Midjourney and Stable Diffusion to create richly detailed illustrations in the style of different artists, as well as photo-realistic flights of fancy. Researchers at the Meta AI division of Facebook parent Meta Platforms unveiled in September a system that can automatically generate videos from a text prompt, and Google unveiled what appears to be an even more sophisticated version of such a system in October."

[there is a] "a system that can write newspaper articles in the style of any paper fed into their software."

"Automatic text-generation systems are helping novelists speed up their writing process, powering customer service chatbots, and powering a service, Replika, that hundreds of thousands of people treat as their artificial boyfriend or girlfriend—and with whom many say they’ve fallen in love.

One downside of this type of artificial creativity is the potential erosion of trust. Take online reviews, where AI is exacerbating deceptive behavior. Algorithmically generated fake reviews are on the rise on Amazon and elsewhere"

"While most fraudulent reviews are still written by humans, about 20% are written by algorithms"

See Walgreens Turns to Prescription-Filling Robots to Free Up Pharmacists to get a list of the many posts I have done about robots.

See You can hire someone to do the job interview for you to get a list of the many posts I have done about fake products and services.

Farm Bureau Survey Shows Thanksgiving Dinner Cost Up 20%

By Mike Tomko & Bailey Corwine. Excerpts:

"Spending time with family and friends at Thanksgiving remains important for many Americans and this year the cost of the meal is also top of mind. Farm Bureau’s 37th annual survey provides a snapshot of the average cost of this year’s classic Thanksgiving feast for 10, which is $64.05 or less than $6.50 per person. This is a $10.74 or 20% increase from last year’s average of $53.31.

The centerpiece on most Thanksgiving tables – the turkey – costs more than last year, at $28.96 for a 16-pound bird. That’s $1.81 per pound, up 21% from last year, due to several factors beyond general inflation. Farm Bureau “volunteer shoppers” checked prices Oct. 18-31, before most grocery store chains began featuring whole frozen turkeys at sharply lower prices. According to USDA Agricultural Marketing Service data, the average per-pound feature price for whole frozen turkeys was $1.11 the week of Nov. 3-9 and 95 cents the week of Nov. 10-16, a decline of 14% in just one week; and the share of stores offering feature prices rose from 29% to 60%. This means consumers who have not yet purchased a turkey should be able to find one at a lower cost than the Farm Bureau average.

“General inflation slashing the purchasing power of consumers is a significant factor contributing to the increase in average cost of this year’s Thanksgiving dinner,” said AFBF Chief Economist Roger Cryan. General inflation has been running 7% to 9% in recent months, while the most recent Consumer Price Index report for food consumed at home reveals a 12% increase over the past year.

“Other contributing factors to the increased cost for the meal include supply chain disruptions and the war in Ukraine,” Cryan said. “The higher retail turkey cost at the grocery store can also be attributed to a slightly smaller flock this year, increased feed costs and lighter processing weights.” Cryan said the supply of whole turkeys available to consumers should be adequate this year, although there may be temporary, regional shortages in some states where avian influenza was detected earlier this year."

Here is a similar graph that goes back to 1986. Both graphs show that over the long run the cost has not changed very much adjusted for inflation. In fact, the cost fell in the late 1980s and generally has not gone up that much until the last two years.

Also interesting: The percentage of income that Americans spend on food has been in a long-term decline  by economist Mark Perry.

Related post:

Were The Pilgrims Capitalists Or Socialists?

CORRECTLY DRAWING THE ZERO ECONOMIC PROFIT GRAPH FOR A MONOPOLISTICALLY COMPETITIVE FIRM

This is a paper I presented at a conference several years ago.

ABSTRACT

Many principles of economics texts do not correctly draw the graph showing zero economic profit for a monopolistically competitive firm. The average total cost curve and the marginal cost curve are not consistent with each other. That is, they are not derived from the same total cost curve (as shown by numerical inspection of these curves). Also, the marginal revenue line is often not twice as steep as the demand line.

Using a total cost curve of the form TC = fixed cost + aQ³ – bQ² + cQ and a linear demand line, I find the general form equation for calculating the slope and intercept of both demand and marginal revenue for a chosen quantity. That quantity is such that P = ATC, MR = MC, the slope of marginal revenue is twice as steep as the demand line and both the ATC and MC lines are derived from the same total cost curve. These equations are used to generate the correct graph in a spreadsheet program.

 

INTRODUCTION

Principles of economics books usually contain a graph of a typical firm in monopolistic competition earning above economic profit. Then nearby or right next to it, there is a graph of the firm earning normal profit. As the story goes, the above normal profit caused more firms to enter the industry (which easily happens since free entry is assumed). For the typical firm this means that their demand curve shifts to the left as far as is necessary for profit to be driven down to zero or normal (meaning P = ATC). Sometimes demand is said to move down and part of this process could also involve demand getting more elastic. Once profit is zero, no more firms enter.

            But rarely do the textbook graphs list any numbers, so it is not easy to see if they are realistic. That is, the ATC curve may not be consistent with the MC curve. If they were consistent with each other, they would both be derived from the same total cost (TC) curve. There is usually not any indication that they are. The ATC in these graphs can be approximated at various quantities using a ruler or grid placed over the graph. Then multiplying this ATC times Q leaves TC which then allows for MC to be calculated. In many textbook graphs, the approximate numbers on the MC line are not consistent with or close to the numbers found in the TC approximation. That is how the ATC and MC lines are not consistent with each other. Other apparent problems include the MR line not being twice as steep as the demand line and ATC and MC being in different places in the above normal profit graph than they are in the normal profit graph.

            Even in the initial work by Chamberlin and Robinson, it does not appear that ATC and MC lines are consistent with each other. It also looks that way in the recent book The Monopolistic Competition Revolution in Retrospect.      

ILLUSTRATION OF THE PROBLEM 

            In Figure 1 below, as in many textbook cases, the case of zero profit is shown, but it is not clear if the graph is drawn correctly. There is no way to tell if ATC and MC are consistent with each other.

There are no numbers to verify what MC and ATC actually are at various quantities. There is no table showing these numbers. But this is normally how it is done in the textbooks. So how do we know that if MC and ATC are consistent with each other, and MR is twice is steep as demand, ATC will be tangent to demand at the same Q where MC = MR? The next section uses a set of equations representing the typical firm which allows us to know the precise slope and intercept of demand and MR if we have MC and ATC curves that are derived from the same TC curve given a certain quantity. At that Q, profit will be zero. 

FINDING THE SOLUTION

            Suppose we have a TC function of the form

(1) TC = F + aQ³ – bQ² + cQ

Where F is fixed costs. This function can lead to a TC curve that looks like the following in Figure 2 below:

 

So the ATC will be

(2) ATC = (F + aQ³ – bQ² + cQ)/Q

MC will be the derivative of TC, equation (1)

(3) MC = 3aQ² – 2bQ + C

Then equations (4) and (5) are demand and MR:

(4) P = I – SQ

(5) MR = I – 2SQ

That means that P – MR = I – SQ – (I – 2SQ) = SQ. Knowing this will be helpful in finding the solution. If we look at Figure 1 again, we can see that when profit is zero ATC – MC = P – MR is true. Then

SQ = ATC – MC

That means that

(6) S = (ATC – MC)/Q

If we pick a Q, we can calculate MC and ATC.  Plugging that into equation (6) would give us S. Let’s call the calculated S, S*. So we have the slope of demand. Re-arranging equation (4) leaves

(7) I = P + SQ

But since we will know S (what we called S*), we have

(7a)  I = P + S*Q

We will also know that P = ATC. Whatever value we found for ATC can be used for P. That means that equation (7a) will give us the intercept of demand.

Below is a numerical example

(8) TC = 11 + 0.05Q³ - 0.5Q² + 4Q

Then

(9) MC = 0.15Q² - Q + 4

Suppose we pick Q = 4. If we plug that into ATC (5.55) and then MC (2.4), and then those numbers get plugged into equation (6), S* = 0.7875. Then we can assume that P = 5.55 since P must equal ATC to have a zero profit. Then the values for S*, P, and Q get plugged in to equation (7a) to find I. This is 8.7. Given all the values so far, both MC and MR = 2.4. So at Q = 4, ATC = P and MC = MR. 

Figure 3 illustrates this. By now the curves and lines should need no labels. The vertical line is a visual aid to see where MC crosses MR and ATC is tangent to demand.

REFERENCES

Brackman, S & Heijdra, B.J. (Eds.) (2004).  The Monopolistic Competition Revolution in Retrospect.  New York: Cambridge University Press.

Chamberlin, E.H. (1969, 8e).  The Theory of Monopolistic Competition.  Cambridge: Harvard University Press.

Robinson, J. (1938).  The Economics of Imperfect Competition.  London: MacMillan.