Automation Causes Job Loss in China, Too (And That's Great For Human Wealth)


The (good, wealth-creating) properties of technological improvement allowing us to do more with less are clear even in faraway and mysterious China, even where labor costs are tiny compared to those in the United States.

Details from Andrew McAfee's blog:

 Even though hourly manufacturing labor costs in China are only 4% of those in the US, it's still attractive for Chinese factories to replace people with technology over time. This allows them to turn out more stuff with fewer people. How much more, and how many fewer?….

China's manufacturing output was over 70% greater in 2008 than it was in 1996. Over the same period, manufacturing employment in the country declined by more than 25%.

Obviously, this is not because of outsourcing (companies outsource to China, not from China). It's because technology is now so cheap, useful, and universally available that when more and more Chinese companies upgrade an old factory or build a new one, they don't fill it up with cheap labor. They fill it up with hardware and software, just like we do in the US.

Reason on outsourcing and China.