Do Machines Make Us Poor?

Where does the answer lie
Living from day to day
If it's something we can't buy
There must be another way
--The Police

Nice discussion by Gary North on the flawed thinking that machines make us poor. Sometimes called the Luddite Fallacy, the premise is that employing machines in production processes makes us worse off, because those machines often do the work of much manual labor. Those who lose their jobs to productivity-enhancing machinery must somehow be protected or compensated.

The premise is obviously false because, taken to its logical conclusion, it requires scrapping all machines and tools in favor of manual labor. Such action would reverse hundreds of years of progress, returning us to widespread poverty. The population of the world would shrink to a fraction of its current size as economic resources that support standard of living disappear.

As GN observes, anything that can be done profitably by machine should be done by machine. This frees up labor, the most flexible of all productive resources, for more productive use.

Permanent unemployment due to the use of tools in production can only occur when a) there is no additional demand to be satisfied after the implementation of machines, or b) some other factor of production runs dry, thus restraining further production with labor.

Because human desires are insatiable, a) seems forever unlikely. Currently, there is need in the world that can be satisfied by more production.

Because economic resources are scarce and some of them (e.g., fossil fuel) not easily replaceable, b) seems a more plausible scenario. But in free markets, higher prices of increasingly scarce resources drive entrepreneurs to bring new technologies to market that alleviate resource restraints.

Thus, if markets are allowed to work (yes, increasingly a bigger 'if'), then b) seems unlikely as well.

Viewed thru this lens, what we face in this world is not a labor glut, but a labor shortage--a shortage that machines help us manage.