Against the ATM Scourge
In his eventful Today show interview this morning, President Obama advanced this penetrating insight to explain why unemployment has been hovering between 9% and 10% throughout his presidency:
“There are some structural issues with our economy, where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller… or you go to the airport and you use a kiosk instead of checking in at the gate. So all these things have created changes.”
As Rush Limbaugh observed, we had lots of ATMs during the Bush years, and his unemployment rate was half of Obama’s. Did the number of automated tellers and airline ticket machines double since 2008?
Besides groping for any possible excuse to evade responsibility for skyrocketing unemployment, Obama’s comments represent the convergence of two lines of populist liberal thought. One is the Left’s curious conviction that people absolutely hate ATM machines, based on the occasional round of complaints that fees for using the machines are too high. I suspect most people would be far more upset if automated tellers were not readily available – a distinct possibility, given legislative attempts to cap the amount of money banks can charge for debit card transactions. Price controls always come with a reduction in quality.
The other, much older, criticism Obama raises is the fear of productivity, which is part of the Left’s overall critique of capitalism. Machines are cheaper than people; businessmen want to reduce cost, and do not care about people; therefore, they can’t wait to automate and fire everyone in sight.
This betrays a deep misunderstanding of the power of productivity. Machines don’t really “replace” human employees. They make humans more productive. ATM machines allow banks to service their customers with many more convenient locations – a machine built into the wall of a grocery store, or located in a small booth, can provide easy access to funds for customers.
Is every 20 or 30 ATMs roughly equivalent to one bank office that doesn’t need to be built, and staffed with human tellers? It doesn’t really work that way. ATMs increase the productivity of the existing bank staff. If they didn’t exist, the banks wouldn’t be making a lot of big investments in bricks, mortar, and tellers. Instead, people would drive further to get their money, spend more time standing in line, and arrange their affairs so they didn’t have to go to the bank as often. If you’re not old enough to remember what that was like, watch movies from the 60s and 70s, and look for scenes set in banks.
Increased productivity doesn’t destroy jobs, any more than the development of automobiles put the people who make buggy whips out of work for the rest of their lives. We would not have achieved such low unemployment rates during periods of great technological progress otherwise. Freed human capital is not automatically wasted human capital… provided opportunity can be accessed with relative ease.
To put it simply, if automation “wipes out” a number of jobs, and a given company cannot find new purposes for its displaced workers, some of them will create new businesses in pursuit of new opportunities. A huge economy brimming with resources and consumers provides plenty of opportunity. This natural flow is interrupted, and the overflow of unemployment results, when forming new business ventures and hiring employees becomes too difficult. High labor costs and regulations create such barriers. Introduce high licensing fees for lemonade stands, and there will be fewer lemonade stands.
The other factor that can stymie the pursuit of opportunity is a lack of capital. Investors don’t provide capital when they know their investments can be destroyed through capricious government action, including government support for politically-connected competitors. They also make fewer investments when they know their profits will be taxed away. If anything, the lack of machinery – equipment, property, fuel for transportation and delivery costs – thwarts job growth.
This is all common sense to anyone who isn’t prepared to make silly arguments like “ATMs cause high unemployment.”