Robots and Comparative Advantage
By Arnold Kling
Using the theory of comparative advantage, James Miller explains why robots cannot replace humans completely.
Now, assume that in our simple wine/cake world robots begin large-scale manufacturing. They could easily change the relative prices of wine and cake. Perhaps if they just made cake, cake would become cheap and so you could buy 1000 cakes for just one bottle of wine. In such a cheap cake world, humans could profitably make wine. Alternatively, robots might just produce oceans of wine and therefore make cake relatively more valuable than wine, creating incentives for humans to bake cakes. It must always be profitable, however, for humans to make at least one of these goods.
For Discussion. Does re-writing the paragraph substituting “cheap Asian labor” for “robots” and “American workers” for “humans” change the analysis?