Arnold Kling has an interesting question:
Explain why, with unemployment over 9 percent, there has emerged the phenomenon of self-service frozen yogurt shops.
The obvious answer being that the employers think they can make more money by trusting the portion control of the customers rather than employing people to create portions.
However, my little change to the question is, given the UK unemployment rate, why are so many supermarkets installing self-service check out tills?
Clearly and obviously, part of the answer is the same: because the employers think they will make more profit this way. Another part of the answer is the same as well: part of the labour formerly being done by paid staff is now being done by the customers: portion creation and bar code scanning.
However, in our supermarket tills example, there's something more as well. It's something that we hear quite a lot when we talk about the minimum wage and what rate it ought to be. We can push it ever higher, because, yes, well, OK, manufacturing jobs can go overseas but service jobs can't. So whatever we say that minimum wage is then there'll still be jobs here for people to do at that wage.
But that ignores the point that offshoring isn't where most jobs go to die. It's automation. If we push wages up over the cost of doing the same job by a machine then that job will be done by a machine and it's got nothing at all to do with offshore or globalisation.
If every supermarket cashier had to be paid £50 an hour then there wouldn't be any, only those machines. If everyone collecting the supermarket trolleys had to be paid such there wouldn't be any: we'd all pay a £1 deposit and recover it when the trolley was returned.
Yes, it's absolutely true that such liberated labour would then be available to satisfy other wants and desires: but it's still true that a minimum wage that is too high will destroy jobs. The most likely replacements being machines of one kind or another.
