[arcanus]

This article does not address the basic economic premise of the substition effect, by which consumers will search for cheaper goods of equivalent value.

It would strike me that with massive labor shortages, many businesses will look to technology to replace labor. This could be via AI, or other automation systems.

Not an economist.

[bingohbangoh]

This argument never sat well with me.

Businesses buy machines, AI, and other automation systems to improve their standing. They do this regardless of the price of labor (unless labor gets really cheap but this is broadly not true in the US or EU). Investing in such assets give them an advantage.

The problem is when everybody does this. Then its no longer an advantage but a necessity. There's probably something to be said about this also raising the barriers to entry in certain fields (e.g. try opening up your steel foundry).

Therefore, businesses will look to technology to augment and/or replace labor whenever they can. This is regardless of the current labor market (barring extreme circumstances, of course).

[pdonis]

> businesses will look to technology to augment and/or replace labor whenever they can

But a big part of "can" is whether or not the solution using technology is cheaper than the solution without it. And a big part of that is the cost of human labor. If human labor is more costly, it is more likely that a technology solution that allow more value to be produced with the same human labor will be cost effective. Conversely, if human labor is cheap, plenty of technology solutions that would allow more value to be produced with that labor simply don't make business sense--you'd be spending more for the same output.

So while it's true that businesses are always looking for uses for technology, regardless of the current labor market, whether or not they actually end up implementing them does depend in large measure on the current labor market.

[hpoe]

Yes but it is a supply demand. If putting in the automation infrastructure is going to cost be $500,000 and $100,000 a year to maintain it then as long as I can keep an employee for $30,000 a year that probably doesn't scale. Whereas if the cost of the employee moves to $50,000 or $60,000 a year it becomes more advisable and prudent to do so.

[throw0101a]

> It would strike me that with massive labor shortages, many businesses will look to technology to replace labor.

Sraffa went over this in his Production of Commodities by Means of Commodities:

> In essence, Sraffa shows that:

> 1. It is not possible to identify a law that simultaneously determines the wage and the rate of profit because: i) the rate of profit can only be determined by setting the wage (or vice versa); ii) it is impossible to measure capital without also determining prices (including the profit), so it is not possible to calculate the profit based on the value of capital (as its remuneration).

> 2. It cannot be assumed that, as wages increase, labour is replaced by capital, as the value of the capital depends on the duration of the initial investment; considering capitals of different duration, it may well happen that we prefer to replace capital with labour even if wages increase (so-called "return of techniques"); consequently unemployment cannot be attributed to the increase in wages.

* https://en.wikipedia.org/wiki/Piero_Sraffa#Production_of_Com...

[Syonyk]

> This could be via AI, or other automation systems.

All of which require chips that even companies like Toyota can't get enough of to maintain their production goals. When Toyota says, "Yeah, this chip shortage sucks, we're going to be 40% lower in monthly production," you know it's not just a few people suffering gaming GPU shortages.

[ZoomerCretin]

McDonald's and low-wage employers in general are not automating their entire workforce in the next month. I would wager they are not going to automate 10% of service jobs in the next twenty years. Why do you think it's just around the corner?

[vvarren]

Hasn’t this been the trend for a while now, though? My understanding is that self driving trucks are still a decent time ahead of us, and logistics seem like the primary bottleneck causing a lot of these shortages.

Labor systems will definitely be seeking AI replacements, but just because they are needed now doesn’t necessarily mean they are available now. Although you make a very good point, and I think we will certainly see acceleration in this direction.

[pessimizer]

Workers are cheaper and smarter than machines (even at the vast sum of $15/hr), and expected to maintain themselves.

When a business manages to automate in some small way that allows them to reduce staffing, that's a good thing. It's hard to do. If enough of them do, raise wages again to make up for it. In the year 3021, every 10th person works 10 minutes a day while the robots hum, and with their wages can take care of 9 other people.

[nitwit005]

Many of the things that haven't been automated are unsolved challenges. I'm sure restaurants would love it if you could fully automate their cleaning, answering the phone, or fixing the broken milkshake machine, but we only have partial solutions to those sorts of activities.

Which means that if consumers do get pushed to alternatives, it might be getting a frozen pizza instead of a restaurant pizza.

[6gvONxR4sf7o]

It’s not just about things that aren’t automated yet. There’s also the stuff that is automated in some places, but not automated everywhere yet. Companies who are dragging their feet on modernizing.

[hobs]

You can't have something for nothing, and it turns out you need a lot of human to make just a little AI.

[rcMgD2BwE72F]

Or labor assisted by machines: if businesses start to repatriate factories, one can expect them to take the opportunity to automate plants like never before. There would be few but highly paid jobs.

There must be a business case for bringing manufacturing jobs home, or I've missed something.

[vvarren]

Well the business case as of late is that the global supply chain isn’t as resilient as previously believed, with all of the disruption seen during covid. Primarily with surgical masks and medical equipment at first, but now with nearly every good experiencing disruptions of some sort.

[jdavis703]

Exactly, we’re already seeing this. Lots of restaurants are cutting back on front of house staff and replacing them with QR codes, cellphones and iPad kiosks.

[miketery]

QR codes and having a phone for menu is a brutal experience.

Personally I go to a restaurant to have face time with people, the phone (or tablet) is a wrench in that, and not worth it. I’ll pay a premium to not use an electronic interface.

Edit: it does make sense for fast food, especially mobile ordering (I salute the McDonald’s UI/UX(though recent updates are making it worse.. typical))

[jdavis703]

How is staring at the phone for 2 minutes different than staring at a menu for 2 minutes? At least in my circle the phones go away afterwards.

[Barrin92]

makes sense but automation is hard, it doesn't fall from the sky like manna.

Reality is that automating the easiest jobs is the hardest (old Minsky observation) and most essential services you can't substitute fall into that category. No robot plumber or roof tiler in the near future.

Article is right to point out that the pandemic together with the anti-migration stance and isolationism is going to push the cost of labour as well as goods.