FactReal

QUICK FACTS: Politics, News, Economy, Religion, History…for busy people!

OBAMA IS WRONG: ATMs and Automation Do NOT Cause High Unemployment (Video, Chart)

Posted by FactReal on June 16, 2011

OBAMA – ANOTHER PROGRESSIVE WHO HATES PROGRESS
Obama wants us to think that his high unemployment numbers are because our businesses are too efficient due to technology and automation. But in reality, companies are not hiring because of Obama’s anti-free-market and pro-union policies. Obama ignores that innovation and automation have increased worker productivity.

Obama believes in the Automation Myth[1] — “the belief that increased productivity, efficiency, and technical innovation lead to net involuntary unemployment as well as other woes — is Marxist malarkey that won’t die…Whenever there is a long-continued mass unemployment, machines get the blame anew. This fallacy is still the basis of many labor union practices…” But facts prove them wrong.

“There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.”

Obama to NBC’s Ann Curry, June 14, 2011

AUTOMATION LEADS TO HIGHER EFFICIENCY, PRODUCTION, AND STANDARD OF LIVING[1]
Companies strive to maximize output while minimizing inputs and that’s a good thing. (If only government did likewise.) We act similarly in our personal lives. This leads to the most efficient and economical outcomes, guiding scarce resources to where they are needed and valued most.

Using an example of a coat manufacturer, Mr. Hazlitt [an economist and author][2] explains in detail the impact of technological improvements and labor-saving machinery. He writes of all eyes being focused on “Joe Smith,” who loses his job to the new machine. Forgotten are ” Tom Jones, who has just got a new job in making [or servicing] the new machine,” “Ted Brown, who has just got a job operating one, and Daisy Miller, who can now buy a coat for half what it used to cost her.” Overlooked too are the manufacturer’s higher profits, which are spent on new machines, invested in new businesses or lines of business, and/or consumed, each of which increases employment. […]

In short, the “real result of the machine is to increase production, to raise the standard of living, and to increase economic welfare” by lowering prices or raising wages or both.

MANUFACTURING WORKERS IN AMERICA KEEP GETTING MORE PRODUCTIVE [3]
The chart above shows annual real manufacturing output per worker from 1947-2010 using data from the BEA[4] for manufacturing output by industry and data from the BLS on manufacturing employment. […]

Manufacturing workers in America keep getting more and more productive, which then allows us to produce more and more output over time, with fewer and fewer workers. That’s a great story about an American industry that is healthy, successful and thriving, and not an industry in decline.

By continually increasing worker productivity and productive efficiency, the American manufacturing sector has been hugely successful at achieving one of the most important economic outcomes of being able to “produce more with less.” In the process, those efficiency and productivity gains have helped conserve scarce resources, including human resources, more effectively than almost any other industry, except maybe farming. It’s hard to overstate how much the efficiency gains achieved by U.S. manufacturing have contributed to the improvements in our standard of living by making manufactured goods more affordable over time. We should spend less time complaining about fewer workers in manufacturing, and more time celebrating the phenomenal gains in manufacturing worker productivity.

WHAT IF OTHER PRESIDENTS HAD COMPLAINED ABOUT INNOVATION[5]
With no less justification – but with no more validity – any of [Obama’s] predecessors might have issued complaints similar to [Obama]. Pres. Grant, for example, might have grumbled in 1873 about “some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank that uses a modern safe and so employs fewer armed guards than before, or when you travel on trains which, compared to stage coaches, transport many more passengers using fewer workers.”

Or Pres. Nixon might have groused in 1973 about such labor-saving innovation: “You see it when you step into an automatic elevator that doesn’t require an elevator operator, or when you observe that polio vaccination keeps people alive and active without the aid of nurses and all those workers who were once usefully employed making iron-lung machines, crutches, and wheelchairs.”

ATMs BROUGHT EFFICIENCY AND CREATED JOBS IN THE ATM INDUSTRY.
THERE ARE MORE BANK BRANCHES. TELLER JOBS ARE PREDICTED TO INCREASE 6%.
[6]
Aside from the myriad ways in which ATMs boost efficiency, liquidity, consumer spending (and don’t forget all of the jobs created for technicians and manufacturers of ATM machines), I’m not sure you can even blame a drop in bank teller jobs on bank machines. This is just a quick take, but just think about it for two seconds. The number of bank branches has soared[7] in recent years. Those branches need human tellers (and bank machines). That’s why the BLS predicted that teller jobs would grow about 6% from 2008 to 2018[8] (it predicted other banking jobs would grow as well)[9]. That estimate may be lower now because of the recession, but that’s the recession’s fault — i.e. in Obama’s political wheelhouse — and not because of the “structural” issues Obama’s trying to pass the blame off to.
SOURCES
1. K.E. Campbell, American Thinker, Obama and the Automation Myth, June 14, 2011
http://www.americanthinker.com/blog/2011/06/obama_and_the_automation_myth.html

2. Henry Hazlitt, Economics in One Lesson, 1946
Via The Foundation for Economic Education (FEE)
http://www.fee.org/library/books/economics-in-one-lesson/#0.1_L8

3. Dr. Mark J. Perry, Professor of Economics and Finance – University of Michigan, Phenomenal Gains in Manufacturing Productivity, June 14, 2011
http://mjperry.blogspot.com/2011/06/phenomenal-gains-in-us-manufacturing.html

4. Bureau of Economic Analysis (BEA) – GDP by Industry Accounts (1947-2010)
http://www.bea.gov/industry/gpotables/gpo_list.cfm?anon=954246&registered=0

5. Donald J. Boudreaux, Professor of Economics – George Mason University, Open Letter to Barack Obama, June 15, 2011, http://cafehayek.com/2011/06/open-letter-to-barack-obama.html

6. Jonah Goldberg, National Review, ATMs and Automation, June 14, 2011
http://www.nationalreview.com/corner/269632/atms-and-automation-jonah-goldberg

7. Ronna Larsen, Colliers International, The Skyrocketing Number of Bank Branches
http://www.ctmt.com/pdfs/emergingDirections/BankBranchesSkyrocket.pdf

8. Bureau of Labor Statistics (BLS), Occupational Outlook Handbook, 2010-11 Edition, Tellers
http://www.bls.gov/oco/ocos126.htm

9. Bureau of Labor Statistics (BLS), Career Guide to Industries, 2010-11 Edition, Banking, Occupation in the Industry, http://www.bls.gov/oco/cg/cgs027.htm#related

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s