Technology drives to better labor conditions for economic reasons

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Forbes Magazine Building. Photo Credit Wikimedia Commons

When I was younger and I was studying economic theory in my engineering school, the professor recommended us that we should work better in high tech industry in order to get better salaries. He was explaining us the economic theory of the market of plusperfect competition. In that kind of market, that is an ideal model, of course, but it can be useful to understand how salaries are formed, the cost of the production factors is finally divided equally among all factors. This means that in a capital intensive business with lower workforce the cost of production factors will be distributed equally. Higher capital requirements will imply higher cost dedicated to the workforce too, and if the number of workers is lower, its salary will be higher.

The salary of the people does not depend on the technology itself, the salary of people is higher in the industry than in the primary sector due to economic factors only, and it is true for the qualified and not qualified workforce. A secretary in a business of recollection of tomatoes will have a lower salary than a secretary in the aerospace industry although they are doing the same work, and the reason is the same why a secretary in a bank, that is not a high tech business, has a higher salary too: the aerospace industry is capital intensive instead of workforce intensive.

When politicians that proceed from bureaucracy alert people against modern technologies as robotics saying that their jobs and salaries are in danger, they are only showing a great ignorance. If those politicians are economists, it is worse. They are simply lying.

People that want to make their own opinion about the economic effects of technology must know that engineers of highest education have some education on economy but economists of higher education have not education on technology. An engineer of highest education is always a good source of knowledge and information about the effects of technology on the society, especially if he has additional education on economic matters.

Technology will never destroy the economic system because it is a part of it. Robots will never produce the destruction of the employment of most people for a simple economic reason that any mean economist must know: The law of offer and demand. Although technology could substitute all workers in the Mcdonalds by robots, there will never be more robotized Mcdonalds than those ones that could return the investment through the incomes from consumption of people. A robotized business is more capital intensive than a not robotized one. It requires a higher initial investment because a robot is an investment while a worker is expenditure. A robotized Mcdonalds will require people consuming during more time in order to become profitable. If robotics would have destroyed the jobs of most people, many of them would never be built.

A society more depending on new technologies would be driven to improve the education and conditions of workers because it would need both qualified workers to support production and a higher market to make the required investments profitable.

New technologies affect more the jobs of politicians than the employment and laboral conditions of people, because the political power depends on the economic one, and the latter one moves from old actors that control not qualified worforce to new ones than control the qualified workforce. Political power moves from unions and old political parties, to the actors that provide better paid salaries: businessmen of the new economy, associations of scientists and technologists, and political groups with different vision.

The fear that some politicians have to the new technologies is not a fear for the jobs of not qualified workers but a fear about their own political power. The status of the unionists and many politicians depends on the preservation of an ignorant workforce instead of the development of new technologies that requires workers with higher education.

The change would be good for the working class, because the new ruling class would have more interest in put them out the ignorance and they would offer better labor conditions due to that the increase of productivity in the economy that technology produces, will drive to a higher benefit to be distributed among all the production factors, and the part of the working class would be assured by the need of a higher market to make the technology investments profitable.

A process of technological change is always long, and in the meantime there will be always a bloody political fight due to unions and political parties would try to stop the process in order to preserve their own status. The cost of this bloody fight would not be paid by them, but by both qualified and not qualified workers instead. And this cost could be avoided if unions and political parties accepted that the technological evolution of the society is unavoidable, and they were trying to adapt themselves to the changes if they want to continue having some influence on the society.


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