Monday, August 10, 2009

Robots and computers

Over in the WaPo, Gregory Clark has an article about the robots that are coming to steal our jobs. Ryan Avent believes that Clark is wrong:
But this is silly. Why? Machine and robotic resources aren’t free; they’re resource constrained just like everything else is resource constrained.
[snip]
Meanwhile, as demand for robot labour increases, the price of robot labour will also increase (since the stuff robots are made of is scarce), making the use of a robot for any given task less attractive.
This seems like basic Econ 101. Demand goes up, price goes up. However, let's see what happens when we apply that second sentence to computers.
Meanwhile, as demand for robot labour computers increases, the price of robot labour computers will also increase (since the stuff robots computers are made of is scarce), making the use of a robot computer for any given task less attractive.
This is, of course, patently absurd. The demand for computers has undoubtedly increased, pushing the demand curve to the right. If supply stays constant, this should increase the price of computers. However, because of incredible innovation in the design and manufacture of computers, supply has not stayed constant. The supply curve has shifted even farther to the right, resulting in increased quantities of computers sold at a lower price.

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