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For over 100,000 years, humans have competed with humans for work. The world's population has doubled in the last 42 years.
The growth rate in humans has nothing on the growth rate in robots though. This is especially true in Japan.
December 25, 2008
Top 10 World’s Industrial Robot Population
The above chart shows Japan in a commanding lead with 295 industrial robots per 10,000 manufacturing workers. In Fact, there are now 1 million industrial robots toiling around the world, and Japan is where they’re the thickest on the ground.
...
By 2011, the world’s industrial robot population is expected to rise to 1.2 million. Which countries these new robots will call home—and how the machine-to-human balance will change—remains to be seen.
Meanwhile...
July 24, 2009
Gray Menace
Why Japan's aging, shrinking population is bad for the United States.
...
Not only is the Japanese population aging, it's also shrinking, from 127 million today to a projected 89 million by 2055, the result of a plunging fertility rate. This unfortunate combination is causing the country to lose its edge and dynamism. Older workers are less innovative; older, more "mature" markets attract less investment. Older populations live off savings, rather than generating new capital. And, as the number of working-age citizens diminishes, pension funds will be exhausted and tax revenues and government budgets will be squeezed.
June 28, 2010
Japan May unemployment surprises with rise to 5.2%
SAN FRANCISCO (MarketWatch) -- Japan's unemployment rate rose in May to a seasonally adjusted 5.2%, according to government data released Tuesday, marking an increase from 5.1% in April and confounding expectations for a drop in the jobless rate.
I expect a bull market in "confounding expectations" well into the distant future. If Japan's unemployment can actually rise even as their population shrinks then one can only imagine what the rest of the world's employment outlook is.
Picture the average robot. It can work 24 hours a day, 7 days a week. It never takes a vacation. It never complains. We're competing with them just like we're competing with Chinese factory workers. Chinese factory workers do complain though, not that it will do much good.
June 22, 2010
Rising China Wages Prompt Nissan, Foxconn to Boost Automation
June 22 (Bloomberg) -- New minimum wage laws, a looser yuan and worker strikes like those affecting Honda Motor Co. and Toyota Motor Corp. are raising costs at plants in China’s Pearl River Delta, leading to increased automation of assembly lines.
Foxconn Technology Group, Nissan Motor Co.’s Chinese venture and VTech Holdings Ltd. said they are investing in factory equipment to reduce their reliance on labor. Wages in the region called the world’s factory floor increased 17 percent in the past six months, according to a survey by the government- backed Hong Kong Trade Development Council.
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“We are trying to increase automation and ensure our processes will rely on fewer workers,” Tong said. “For products that need to be manufactured in high volumes, automation will help improve efficiency.”
I've been talking about this since I started my blog back in 2007.
September 25, 2007
Automation and Inequality
The extrapolator in me has always wondered what would happen if we could automate all of our jobs away. Now I think I might know. As it relates to farm labor, wages are simply redistributed. The total amount of real wages (wages adjusted by the CPI) has held fairly constant over the years. If you are lucky enough to keep your job, you'll be worth more. You'll be happy. If you aren't, well, sorry about that.
If one was to keep extrapolating this trend to its logical conclusion, at some point there will be just one farmer. He'll have all the wages and will simply press the "harvest" button on his desk.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
11 hours ago
28 comments:
Ok tell me there is NO CORRELATION between robots expanding in Japan and that population decreasing???
Mark stop scaring me! We need to stop Cyberdyne systems now!
GYSC,
Ok tell me there is NO CORRELATION between robots expanding in Japan and that population decreasing???
I can't. What if the Japanese realized that their children could not compete with the robots for jobs? What if that's one reason they stopped having children?
Roughly 3% of the manufacturing workers are already robots.
Each human works 2,000 hours per year (40 hours per week, 50 weeks per year).
Each robot can work at least 8,000 hours per year (160 hours per week, 50 weeks per year).
If the robots were 10x faster at doing the work then the humans have already lost the race.
The above chart shows Japan in a commanding lead with 295 industrial robots per 10,000 manufacturing workers.
In other words, 295 industrial robots working 4x more hours and 10x faster would be worth 11,800 manufacturing workers to a Japanese factory.
Sigh.
I think I am scared, thanks Mark!
Can you play "Crazy Train" on the game yet?
GYSC,
Crazy train is only available on Guitar Hero I think.
And from the frustrating files...
Rock Band 2
Three songs from Rock Band are not transferable: "Enter Sandman" by Metallica, "Run to the Hills" as made famous by Iron Maiden, and "Paranoid" as made famous by Black Sabbath are unavailable for transfer in all versions of Rock Band...
I bought a key so that I could play Rockband songs in Rockband 2. I kind of assumed that I'd be able to play ALL of them. Go figure.
You are better off, Rhoads was classic guitar trained so the fret moves and rhythym will not be easy.
Dude,
your lady lets you play that at your age (29)???
Rising productivity results in greater wealth disparity between the owners of capital and the laborer.
But the dominant expense in most everyone's lives is not goods or services, it is the money we have to spend to secure tenancy in our personal space aka real estate.
Older "workforces" ie populations have fewer needs and thus I think the whole graying thing will be a wash.
Declining population in Japan will reduce pressure on use of external resources and also be a push for lower space rents (especially out in the sticks, where even twenty years ago old but livable houses were basically free to anyone who could re-homestead them).
Old people in Japan need rice, vegetables, and medical care, all domestically provided. I think Japan Inc can pay its way in the world so I do not see an economic crisis facing them. Mild depopulation has its advantages.
But like my China perspective, I could be wrong, even though I did live in Tokyo for most of the 90s.
Japan's declining population though does introduce systematic stresses in the labor market and also expose malinvestment in eg. schools and other youth-oriented capital.
I created this image:
http://i.imgur.com/aFcX4.png
that demonstrates the changing demographics of Japan 2005 vs 2050. The solid color is new population in 2050 and the translucent color is lost population in 2005 (vs 2005).
So there will be 8M fewer young people in Japan in 2050, that works out to roughly 300,000 fewer school jobs.
The 6M additional 80+ deme is of course eyebrow-raising. That's a lot of future nursing need.
I was studying Mandarin last decade to go with my Japanese, but I think since China is facing its own demographic crisis Japan is going to have to go to the Philippines for its labor needs.
"Domo Arigato, Mr. Roboto"!
Hey I just did sarcasm in Japanese.
Thanks Cyberdyne!
Troy,
Since you lived in Japan, why do you think Japan stopped having children?
Is it for the same reason we are starting to slow? I can't speak for others, but I'm not planning on having children and at least some of it is due to economic reasons.
Birth Rate Is Said to Fall as a Result of Recession
For the first time since the decade began, Americans are having fewer babies, and some experts are blaming the economy.
GYSC,
The rule of the house says that video games can be played from 12 midnight to 12:01 AM to 11:59 pm. There's an optional moment of silence at each end. That's only true on days that have "day" in their name though. We do have our limits! Hahaha!
Let's see. Can I play today? It is ThursDAY! Woohoo! Yes I can!
watchtower,
Anata no hiniku wa oishikatta!
Mark, the intro to Idiocracy explains all.
Having a kid in Japan is hella expensive, at least before the gov't introduced new subsidies.
Japan's national health system works on the copay system, where the user is generally responsible for the first 20%.
Part of the problem is lack of quality housing options for families in the cities. The housing stock is skewed towards the small and family-friendly apartments & condos are very expensive relative to wages.
Replacement requires almost 3 kids per couple since there are so many single people, too. Having 3 kids with no car is quite an adventure.
Also, with all the familial obligations towards the parents it's not that enticing to add more obligations by producing kids.
But I didn't really mix in the adult world of modern Japan so I don't know the real reasons.
Japan lacks a certain civic focus on kids that exists in the US -- church, little league, scouting, etc are shadows of their American cultural footprints.
It's a miracle the Japanese have any kids at all.
Troy,
I worked at branch office in Seattle of a Japanese landscape architect company back in the early 1990s. We were pretty much a "trophy" office. There were just 4 of us.
Having 3 kids with no car is quite an adventure.
My boss lived in Japan for a few years and had similar stories. He heard stories of people who had their life savings tied up in an individual parking space. No car to go with it!
It's a miracle the Japanese have any kids at all.
I'm hoping that our population hits 400 million in my lifetime. It will more than likely prove me wrong about our economy's future. I'd like nothing better than to be proven wrong!
The Coming Population Bust
The U.S. is the only developed country in the world that will continue to grow in coming decades; U.S. population will grow by about 100 million (one-third) by 2050. The fertility rate in the U.S. is about 2, and that is by far the highest fertility rate of any modern nation. U.S. population growth will be driven exclusively by immigration.
I hope I am alive long enough to see if he's right. I hope he's right. I have my doubts though.
When populations cease growing and start shrinking, economies become more like a zero-sum game. To increase your share of the wealth pie, someone else has to accept a smaller share. Construction doesn't open new expanses of land to development, it mainly concentrates on replacing and improving existing structures. Productivity becomes the key to growth.
I certainly agree with that.
If real economic growth in Europe approaches zero (a shrinking labor force offset by positive productivity gains), must real yields on inflation-linked bonds also approach zero? (If real yields are not equal to or less than real growth, then inflation-linked bond returns will equal or exceed nominal growth, and that poses competition to equities, since earnings growth on average is limited by nominal GDP growth.)
And I have been predicting the death of real yields on TIPS and I-Bonds (and put my money where my mouth is).
I strongly disagree that population shrinkage is a negative trend for wealth creation.
So much of our GDP chases land rents -- 20% or so. Reducing the competition for land opens up more productive uses of capital.
As does not having to build new fixed improvements but just maintain or recycle what has already been built. Population shrinkage in this regard might be an economic headwind, as built capital has to be abandoned before the end of its useful service life.
Talking about economies under stress when the top 5% is raking in 40% of the pie is . . . I guess missing the forest for the trees ?
Plus depopulation means we can invest more in the human capital we have. So much of the human capital in the US is NOT educated to its full potential.
Quite the opposite. More people is more problems AFAICT.
I foresee depopulation in Japan proceeding as a long centripetal migration into the big cities.
Overpopulation forced people onto marginal land, where many people have had to try to live with 3 months of snow, their sources of income being cottage-industry scale of charcoal, silk, and truck gardens.
With depopulation, these people can come down from the hills and live better lives in the regional cities and towns.
The bottom line in any economy is resource wealth created vs. resource wealth consumed. Fewer people shift the balance between labor and capital more towards labor, which is a good thing in my book.
I fail to see how 100M more mouths to feed in this country are going to find gainful employment. Productive capacity utilization is still really low. Farming is like 1% of the job base and is contracting. Mining? Construction?
I'd rather see us go back to 200M than go up to 400M. The Central Valley (of Cali) is mooted as expansion room, but unemployment is already 20% there. What will all these people *do*?
TBH, I do oscillate between Japan doing well this century and becoming overwhelmed by the Chinese competition for resources as China will have 5X or so the footprint of Japan later this century.
Troy,
I strongly disagree that population shrinkage is a negative trend for wealth creation.
Who would service our debts if 80% of the US population died off due to a plague in the next year? What would happen to our banking system?
I'm pretty darned sure that our entire financial system is built on the idea of exponential growth, and population growth is a big part of that.
As long as the population increases exponentially, we can always borrow from our unborn grandchildren. That seems to be our current government policy. If there is one senior citizen to provide social security and medicare for now, then surely we can borrow from two unborn grandchildren to pay for it.
Troy,
I'm not saying I agree with our current policies. I'm simply saying that's what I believe the reality of our situation is.
Troy,
I fail to see how 100M more mouths to feed in this country are going to find gainful employment. Productive capacity utilization is still really low. Farming is like 1% of the job base and is contracting. Mining? Construction?
Hey! I agree with you. Remember that my premise was...
I'm hoping that our population hits 400 million in my lifetime. It will more than likely prove me wrong about our economy's future. I'd like nothing better than to be proven wrong!
Another 100 million would prove me wrong.
That said, if you told me today that there would only be 200 million Americans instead of 400 million Americans then I would definitely remain bearish. The transition to that world might be better for the planet and humanity in general, but certainly not for my nest egg.
Debt is orthogonal to wealth.
Japan is an interesting example of this -- a "nation of savers" in twice as deep as the US.
Yet they've got $800B of US treasury debt . . . the interest alone on that can pay the salaries of a million filipina care givers.
Unsustainable is what unsustainable does. You can't bamboozle or bezzle your way through deflation.
But I don't really know anything or what's going to happen this decade or next, and I don't underestimate the power of BS.
Like you, I just see a lot of somewhat unexpected pain coming to the middle class. Potentially.
The poor is used to being poor. Our middle class, not so much.
Humans have been competing with robots for jobs for a long time. A Jacquard Loom (1801) is a robot; so is the copying lathe (1820) and the numerically-controlled machine tool (1950s). Whether or not the robot looks vaguely human doesn't really affect its economic impact.
David,
I never claimed that the robot's looks had anything to do with it.
I did claim that the industrial robots at Hyundai's recent factory help it crank out 300,000 vehicles per year with just 2,000 workers and that there are currently roughly 15 million unemployed Americans. I would also claim that it would take 7,500 such factories to employ all of them.
Industrial robot
An industrial robot is officially defined by ISO[1]as an automatically controlled, reprogrammable, multipurpose manipulator programmable in three or more axes.
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George Devol applied for the first robotics patents in 1954 (granted in 1961). The first company to produce a robot was Unimation... For some time Unimation's only competitor was Cincinnati Milacron Inc. of Ohio. This changed radically in the late 1970s when several big Japanese conglomerates began producing similar industrial robots.
Who are having the remaining children in Japan? I would bet its the super rich, the really smart, and some still at the low end. Those people will all have jobs, even it is programming the robot, or fixing the plumbing at the programmers house.
Also, why does real estate cost so much in Japan/Taiwan and now China? My theory is the mercantilist policies mean a lot of the trade surpluses end up in local real estate prices.
why does real estate cost so much in Japan/Taiwan and now China
As for Japan, they have very low interest rates now, 3% for a 35 year loan. That's great!
Mainland Chinese have nowhere to put their cash but in real estate. If Chinese wages boom this century like Japanese wages did 1950-1990, this will prove to be a very wise investment, since real estate is the Great Sponge that collects all surplus wealth in the system.
My theory is the mercantilist policies mean a lot of the trade surpluses end up in local real estate prices
Real estate is magic, as Churchill said 102 years ago it is the "mother of all monopolies". It is the source -- and the sink -- of all wealth.
My parents were economic idiots and did not teach me this, I had to find it out on my own, rather late in life, alas.
Anonymous & Troy,
Mainland Chinese have nowhere to put their cash but in real estate.
That certainly seems true at the moment, but check this out.
China's latest export: home buyers
Half a world away, a handful of Chinese citizens are feverishly planning a Canadian real-estate shopping excursion.
A farmer, an engineer, a furniture maker and a caterer are among the 30 hopeful investors who have paid $5,500 each to take a real estate tour of Toronto and Vancouver in August. This isn’t about tourism: Each of them expect to drop at least a half-million dollars on downtown condos during their 10-day visit.
While Chinese investors in Canada are nothing new, this delegation is thought by those in the industry to be one of the largest to travel in one group. The trip was put together by Ricky Zhang of TransAsia Investment Partners, a Chinese company that was created to help residents buy properties abroad, particularly in Canada.
Mark,
The 2000 workers for 300,000 vehicles is an impressive number...it would come to about 13 hours per vehicle, vs the 20 or so that is often quoted for automotive final asssembly but bear in mind that this does not include the labor all down the supply chain, for subassemblies and parts..and lower-level components of parts...down through raw materials.
There's an interesting recent economic-history paper, which I've been meaning to post about, which analyzes the question of why the industrial revolution happened in Britain rather than, say, France, by looking at the specific case of the spinning jenny. The author concludes that the *higher* cost of labor in Britain, combined with the *lower* cost of capital, made this device economically rational in Britain but not in either France or India.
David,
This is what really knocked me over with a feather back in December.
Jobs of the Future, Part 3
The Chicago-based company plans to hire up to 50 people...
Peebles said the company expects to produce about 100 million pounds of product a year.
That's just a staggering amount of product per employee.
David,
I would be very interested in reading that bit of history about the spinning jenny.
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