Robots Versus Humans: Why The Latter Will Prevail In Job Market

Robots Versus Humans: Why The Latter Will Prevail In Job Market

When I read about some of the arguments regarding robots replacing people, and creating more unemployment, I shake my head and say to myself, “Nobody studies history.”

Most of human history has had a surfeit of people versus those that controlled capital and resources.  What did the excess people do (those that lacked resources and were unskilled)?  They became servants to those who were better off.

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In such a situation, some servants would become critical to the success of the wealthy family.  They would become better paid as a result.

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First, the needs of people are unlimited.  Wealthy people could use help managing their vast enterprises, and reducing their own efforts at home that take them away from their profitable endeavors.

Second, people are more flexible and clever than robots — they can deliver personal services to those that need them.  Also, robots cannot deliver the “human touch;” regardless of how clever the AI gets, people will feel better receiving services from people who show that they care.

I realize that language like this may be offensive to many — that is not my intent.  My view is one of mean-reversion.  Income inequality has been the norm throughout human history.  Attempts at creating “equal” societies fail, because people aren’t equal — some are more talented than others, and deserve more as a result.  We are reverting to the norm — inequality.

That is part of the problem with the Eurozone — different countries are varyingly productive, but many expect similar abilities to consume.  Accepting inequality would be wise — abandoning the Euro would be genius; let countries manage their own prosperity.  The Euro allowed weak countries to take on too much debt.

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I do not think that robots bring unemployment in the intermediate-term.  People will adjust, and wages will adjust.  Some unskilled people will serve the wealthy.  That will be a good thing, because service is not shameful, and people are happier when they are working.

By David Merkel, CFA of Aleph Blog

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David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.