[alex_young]

The small town constraint is a bit artificial to this problem isn't it?

If you operate a machine shop in a large urban area, have competitors, and access to much improved low cost tooling, would you:

a) lay off a bunch of workers, or b) lower your prices and capture more orders?

Same thing with accounting firms or marketers or business consultants.

[PaulHoule]

The assumption that (b) happens is known as Say's Law

https://en.wikipedia.org/wiki/Say's_law

I can say that people are loathe to do it for various reasons.

[runeks]

No the assumption is just lower price increases demand

[crabbone]

Well, it's the same problem with all sorts of free-market capitalism and derivatives. They all believe there's infinite "somewhere else" that resources can come from, or the customers, or the funding etc. But reality is very much finite. And so instead of the theoretical equilibrium we get monopolies and collusion to manipulate markets.

The article, actually, addresses your claims:

> The optimists will tell you this is just productivity gains. The economy has absorbed automation before; agricultural employment collapsed from ninety percent of the American workforce to two percent and civilization continued. David Autor at MIT has shown that roughly sixty percent of today’s jobs didn’t exist in 1940. New technologies create new categories of work. True. But there’s a difference between an observation about the past and a law of nature, and the optimists consistently confuse the two. The agricultural transition took a hundred and forty years. Carl Benedikt Frey at Oxford has documented that the Industrial Revolution took seventy years before wages and employment recovered for the workers it displaced. In the interim, wages stagnated, the labor share of income collapsed, profits surged, inequality skyrocketed, and the political consequences included the Chartist movement and widespread social upheaval. As Frey puts it: “Most economists will acknowledge that technological progress can cause some adjustment problems in the short run. What is rarely noted is that the short run can be a lifetime.”

So, the author believes that the problem with your reasoning that it will take a long time for the niches you are talking about to be filled (lifetime, maybe more), meanwhile things will look quite bad for most those involved.

I am even less optimistic than the author. The new aspect of this workforce displacement is the centralization. Of course, previous advances in automation also caused a degree of centralization, but AI is posed to become super-centralized if you will. There will be just a handful of suppliers and nobody will be able to challenge them, similar to situation we have with microprocessors today. Needless to say this is absolutely not a healthy situation for the world's economy.

[twoodfin]

Carl Benedikt Frey at Oxford has documented that the Industrial Revolution took seventy years before wages and employment recovered for the workers it displaced.

I can’t imagine what claim this sentence is intending to describe.

Obviously individual workers can’t “recover” their wages: 70 years later they’re no longer working.

It also can’t make sense as a recovery of labor in displaced industries, since those are largely gone once they’re supplanted by labor-saving technology.

[dag100]

It means it took 70 years for the average income and employment rate of socio-economic class of people who used to work those jobs (presumably formulated as some percentile of society by income) to rise back to the the same level.

[twoodfin]

Employment rates are weird bags of demographics and culture (think women’s rate of workforce participation) as well as economics, so I’m not sure how you extract that particular signal.

70 years to restore income levels across any strata is still not plausible: Even godawful economic growth would compound way too much. Maybe relative share of income for some decile? But now we’re back to asking why we should care about that if absolute real incomes are rising.

I guess I have to go find the research.

[dag100]

> Even godawful economic growth would compound way too much.

You vastly overestimate how much of the growth would be going to the workers in question. Especially as, before fiat currency and electric communication, prices were (relatively) more stable than today, and hence so were incomes, especially for labour work. Why would some factory owner in the 1800s pay his workers more than he needed to find new workers? Most economic growth was captured by capital owners and what would today be known as the middle class, but back then were merchants, doctors, etc. - basically just the tier below the capital owners in the social hierarchy. The vast majority of people were peasants.

[alex_young]

I read it, but I don't think it's compelling. "the short run can be a lifetime" is kind of a throw away phrase not backed by evidence.

We've seen rapid growth of knowledge work at the same time as increased productivity, and there doesn't seem to be any compelling reason that greater productivity will reverse this persistent trend.

[convolvatron]

the number of functioning machine shop in the US in large urban areas has been plummeting for decades. where there were 50 there are now 3. the customers for machine shops are large production facilities with a need for custom parts. they're all gone. now its little bits of rnd work and some custom architectural design kind of stuff. and the margins are punishing.

ok, so machine shops aren't really central to the argument, but the collapse of demand is.

[fragmede]

Kinda. What's the lead time on my high precision metal part that needs to be cut on a 6-axis lathe? Or a metal 3d print? Neither of those machines are cheap, so not only is lead time astronomical, profit on them is also pretty great for the machine shop, which implies there's room for more machine shops. There's a lot of red tape for the orders I see, (CMMI etc) so maybe AI will help machine shops get that and be competitive.

[convolvatron]

that last point doesn't really follow. yes, you can do you ok if you have the kind of expertise to actually make that high end part and the position in the market to get the kind of work, but I think you overstate the margins and its certainly not the 'are you going to drop people or just increase your volume' argument that gp was making.

[fragmede]

Well yeah, I'm not gp. My point is that, sure, machine shop count has gone down, but machine shop capacity, with conditions, currently has a 16 week lead time and high prices. If the argument is "there is enough machine shop output that everyone is going to get fired after the robots come" I'm saying there's a long way to go. And the same argument for writing software applies to machine shops. There's more to programming than writing code itself. There's room to grow upwards and meet the customer more where they're at so the machine shop isn't an extension of a robot that does cut x at point y and bends at z, but with the design process of the part before it gets to that.

[convolvatron]

fair enough, I don't participate really in the high end market, so I don't have any real insight. does seem like something of a market failure. the two things that stand out to me though is the very high capital cost that probably adds friction to investment, but probably more the people skills. there are tens of thousands of banger low precision machinists like me out of work, but outside of Europe where do the high-precision machinists actually come from? particularly one that shade over into material science and would be effective design partners. are those mechanical engineers that just specialized?

[rustyzig]

They're all gone completely, or gone as in moved to where they don't have to suffer ridiculous real estate costs? There are approximately 50 machine shops within a stone's throw of my place out in the middle of nowhere. I haven't been around long enough to truly know if that is more or less than the historical norm, but best I can tell it is a growing sector locally.