Chinese robots

Last weekend the news broke that the electronics manufacturer Foxconn was planning to replace a large number of its million or so Chinese workers with robots. Foxconn manufactures most of the gadgets that readers of Webwereld like to comment on and bicker about.

Over the last 15 years, Western countries have rapidly moved their industrial infrastructure to China. Initially this was not glaringly obvious, but nowadays most gadgets say: "Designed in California – Made in China". We all seem to think the low labour costs are a justification for moving the factories to a country that only 20 years ago was crushing students with tanks, especially if it means affordable gadgets and bolsters the profits of Western companies that provide our pension funds.

Foxconn and its much smaller rivals constantly compete to lower costs and increase production. People, even very cheap people, can quickly become a bottleneck. They may work 12-14 hours a day, but only for 26 days per month. Robots work 24/7 (minus some downtime for maintenance). And robots are spreading to other sectors: from offshore oil platforms to ATM machines, from self-scan tills to ticketing on public transport. A robot does not need to look like a person to replace a person. We gadget-lovers think it’s just peachy that Foxconn keeps the prices low. But there is a problem.

Over 100 years ago, Henry Ford successfully developed the concept of mass production of complex consumer products. According to Ford, the trick was to make quality products as efficiently and cheaply as possible., While paying your factory workers so well they would also become paying customers. Because if you mass-produce, you also need masses of customers. But if an increasing share of the production is performed by robots, who will your customers be? The classic answer has been that the unemployed factory workers then find new, better jobs as a municipal official, an insurance salesman or or web designer. And this indeed was the case during the switch from an industrial to an information/service economy. Machines caught up with us physically a while ago, but now they are increasingly taking over post-industrial jobs. They are doing so at a pace equal to or higher than jobs are created by economic growth. Even China’s near-slave labourers are not immune to this process. While human labour will only become more expensive, robots are becoming cheaper. The outcome is clear.

A 2010 American research paper shows that the labour market is indeed becoming polarised. It now consists of highly-qualified work for a small proportion of the population and for the rest, low-value services which have yet to be automated (nearly all industry has moved to Asia). The low-value category is further eroded by ever advancing technology. The numbers for the Netherlands seem ok but that has also to do with its large public sector (healthcare, education) and hundreds of thousands of "medically-unfit-for-work" skewing those numbers.

Marshall Brain, the man behind howstuffworks.com, wrote a book way back in 2002 that can be read here. His alarming theory sounded implausible back then, but looking at the current situation in the US, with 45 million people living on food stamps and a real unemployment rate of over 20% (according to European-style calculations), it now suddenly doesn’t look so bad. The fact that the richest 400 Americans, own as much as the poorest 150 million altogether and are in de-facto control of the country, confirms Marshall’s prediction of extreme wealth & power concentration.

Marshall Brain’s novel also suggests a way to escape the BladeRunner-style world. The book is set in an egalitarian Australia society where robots meet all our basic needs for free or almost free. There are no paid jobs , but that is not a problem as long as everyone has enough for a decent life. Most of his countrymen would call this "communism". Here in Europe we might have a more nuanced view.

Robots + 3D printers + open source software makes possible an extreme decentralization of production, and hence wealth and power. Much of the work currently undertaken in China and India could come back to Europe, but not necessarily as paid work, that is unless Chinese robots somehow work more cheaply than European robots. But that seems unlikely as the main inputs, material and energy prices, are the same worldwide. So ultimately we could all enjoy an almost permanent holiday, which could be handy when summers only occur in May and September.