Automation benefits and costs – Economics Help

Definition of automation

Automation refers to the process of automatically producing goods through the use of robots, control systems and other appliances with a minimal direct human operation.

Within manufacturing industries, automation has led to increased labour productivity as fewer workers are needed to produce the same number of manufactured goods.

A perceived downside of automation is that it leads to jobs being displaced in traditional areas of work in particular, blue-collar manufacturing jobs. Less visible is how the process of automation leads to the creation of new jobs in areas such as robot manufacture, research, marketing and software development.

However, there are still concerns about the social and economic impact of the rapid job displacement associated with automation and globalisation. In fact, there is enduring concern automation is costing jobs an idea some economists argue is just an enduring faith in the Luddite fallacy.

Automation is a major influence on the economy and will continue to be over the next decade. In theory, automation can lead to significant benefits for the whole economy. Greater GDP, higher productivity and increased customisation of the consumer experience. However, there are legitimate concerns about how these gains will be distributed. It is tempting to dismiss all concerns of new technology as the old Luddite fallacy. But, there is no guarantee that displaced workers will be seamlessly integrated into a very different labour market.

But, on the other hand, it would be a mistake to be too pessimistic. Past trends in automation have served the economy well. Who would go back to a time of 1 million people working as a coal miner or 90% of the population growing their own food? Automation will lead to new opportunities, and with increased technology, we could see the potential for a revitalisation of cottage industries with self-employed workers having the ability to use their creativity to join a fast-changing economy.

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