Hazlitt starts with a rejection of the fallacy that mechanisation causes greater unemployment. Consider the industrial revolution for example: the one hundred fold increase in male employment in industry occurred even though greater use of machines in the stocking industry became common in the 19th century, prompting riots from workers. Hazlitt then moves on to consider the continuation of this analysis in the relationship between man and machine in the labour market by raising the example of the Technocrats: a group in Depression hit America who lobbied for ‘make work’ in those industries increasing the extent of automation. The ideology behind these measures continued into the 1960s.
Hazlitt sets out the implication of the arguments of the ‘technophobes,’ and shows that an acceptance of their case would go against the grain of current civilisation. Employers would no longer seek maximum efficiency and workers would no longer try to complete a task with the minimum amount of effort required. “Why should freight be carried from Chicago to New York by railroad when we could employ enormously more men, for example, to carry it all on their backs?”
Those who oppose automation do not take into account the labour needed to make the machines which employers buy to increase efficiency of production. Furthermore, the increased profits derived from this greater efficiency will be used to increase social gains for labour, through increasing the business’s operations, or by the owner increasing his own consumption or investments.
Increasing efficiency in this way will lead to a more productive market as other firms increase their own automation. The resulting price savings will be passed on to consumers who then have more disposable income to create more employment in other sectors producing more, and more varied, goods and services to everyone’s benefit.
Inventions and discoveries can bring into being services and products which otherwise would not exist. Hazlitt uses the example of the emerging US automobile industry in the early 20th century to show how new inventions can create employment. Mechanisation increases standards of living and thus facilitates sustainable rises in population. Real wages will also rise due to the increased production and lower prices brought about by automation.
Both long and short term effects of automation must be considered. Unemployment of skilled workers by mechanisation is a tragedy for those involved but it is an inevitable consequence of society making progress and, in a prosperous society, that tragedy should be only temporary.