Like it or not, we live in an age of globalization and extremely rapid technological advancement. The job of management is to maximize productivity, defined as the ratio of output to inputs used in the production process (O/I). Inputs include labor and capital (including the costs of purchasing and maintaining equipment; i.e. automation). To improve productivity, you need to increase outputs or decrease inputs. Generally speaking, it is easier and more effective to decrease inputs than it is to increase outputs.
There are some situations where labor is overwhelmingly more effective than automation. There are situations where automation is overwhelmingly more effective than labor. In between the two is a huge middle ground where management must decide whether it is more cost-effective to use machines (automation) or humans (labor). Smart managers don't make this decision lightly; at the graduate (MBA) level, there are entire courses dedicated to just this one decision process and consultants who are good at it are very sought-after and highly compensated.
Increasingly, the decision is being made to move from labor to automation because labor is getting more expensive and automation is getting cheaper. It's not evil. It's not greed. It's necessary to continue to operate in the global economy where industrialized nations are competing against nations where the government can drive down labor costs to less than a tenth of what is paid in democratic industrialized nations.
Why is labor so expensive? Well, humans get sick... or sometimes just call in sick because the weather's nice, they're hung over or they just don't feel like showing up. They take vacations. They are entitled to benefits. They make mistakes. They goof off. They get injured. They fail to follow procedures. They form unions and go on strike.
Some forward-thinking economists have suggested that we're approaching a tipping point where we will need to start paying people a basic living "wage" not to work because automation will become so much more efficient than labor. That is an idea Americans rankle at because it's fundamentally at odds with the American work ethic. The reality is that things already kind of work that way (badly) through entitlement programs. I can definitely foresee a day when that happens. The corporations definitely won't like it, but all it would take is removing a few loopholes that encourage offshore taking of profits and we could definitely collect enough in corporate tax to make something like that work.
There are some situations where labor is overwhelmingly more effective than automation. There are situations where automation is overwhelmingly more effective than labor. In between the two is a huge middle ground where management must decide whether it is more cost-effective to use machines (automation) or humans (labor). Smart managers don't make this decision lightly; at the graduate (MBA) level, there are entire courses dedicated to just this one decision process and consultants who are good at it are very sought-after and highly compensated.
Increasingly, the decision is being made to move from labor to automation because labor is getting more expensive and automation is getting cheaper. It's not evil. It's not greed. It's necessary to continue to operate in the global economy where industrialized nations are competing against nations where the government can drive down labor costs to less than a tenth of what is paid in democratic industrialized nations.
Why is labor so expensive? Well, humans get sick... or sometimes just call in sick because the weather's nice, they're hung over or they just don't feel like showing up. They take vacations. They are entitled to benefits. They make mistakes. They goof off. They get injured. They fail to follow procedures. They form unions and go on strike.
Some forward-thinking economists have suggested that we're approaching a tipping point where we will need to start paying people a basic living "wage" not to work because automation will become so much more efficient than labor. That is an idea Americans rankle at because it's fundamentally at odds with the American work ethic. The reality is that things already kind of work that way (badly) through entitlement programs. I can definitely foresee a day when that happens. The corporations definitely won't like it, but all it would take is removing a few loopholes that encourage offshore taking of profits and we could definitely collect enough in corporate tax to make something like that work.