What if robots take all the jobs? Hint: They can't.

"People have it all wrong" about AI and robots, says philosopher Harry Binswanger. 

Robots are going to take your job? No doubt.

What if robots take all the jobs?  Hint: They can't.

You may not keep this job. But your next one will pay so much more.  How can we know that?  Because, he argues, "We’re all going to get richer. The more that AI and robots can do for us, the richer we will get."

How so? Because AI and robots makes everyone’s labour far more productive -- and the result will be more goods produced, and hence "more wealth in the whole economy."

More wealth means more savings. More savings means more investment. And "more investment means more goods produced, which means a drop in the cost of living, which means a rise in the standard of living."

But how can he be so sure that if your job is replaced you'll be able to find a new one and "take part in this bonanza?"

The temptation is to answer by finding things robots won’t ever be able to do. “Robots will never be great chefs.” “Robots will never be venture capitalists.” “Robots will never write a first-rate symphony.”

That’s irrelevant. The point is that even if AI and robots could do everything better than any human being, that would enhance, not undermine, the value of human labour.

Why? The explanation comes from applying here an important truth discovered two centuries ago. In 1817, the great English economist David Ricardo identified “The Law of Comparative Advantage.”

Ricardo's Law of Comparative Advantage explains that no matter how poor you country may be at producing stuff, if both you and others specialise in what they each do best then, at the end of the day, we are all better off. It's best, for example, if Scotland trades whisky with France for claret and burgundy, rather than the other way around. ("It is the maxim of every prudent master of a family,"explained Adam Smith, "never to attempt to make at home what it will cost him more to make than to buy.")

Equally, the best way for New Zealanders to get cars and electronics is not to try making cars and electronics ourselves, but to process grass into milk powder, meat and wool so that New Zealanders can trade for those fancy devices. And when we do, we're all better off. ( If you're struggling with the concept, because it is remarkably subtle, PJ O 'Rourke's short explanation is one of the funniest on record, and undoubtedly the only one using Courtney Love to help explain things.)

Recognising that self-same principle of Comparative Advantage applies between people as it does to countries, economist Ludwig Von Mises expanded Ricardo's Law to make it "one of the most beautiful laws of the universe." Calling it the Law of Association he showed that specialisation allows even the less productive to benefit from working with the more productive -- or what his student George Reisman characterises as 'what the productive cleaner gains from the genius inventor.'

Even if the inventor can clean faster than a given cleaner, it still pays him to hire that cleaner because off-loading the cleaning work saves him time. He can then use that saved time in the area of his comparative advantage: inventing and selling more stuff.

Likewise, even if there comes a time when the robots can do everything better and faster than human beings, [even] more wealth will be produced if robots and humans each specialise in what they do best. Super-robots would produce more for us if we save them from having to do things that are less productive [for them].

(Of course we won’t be trading with robots: robots own nothing. Robots are owned by people, and those people will be paid for selling robots or for renting them out, just as you can rent power tools from Home Depot today.)

The Law of Comparative Advantage means humans will never run out of productive work to do. There will always be tasks that you don’t want to waste your rented or owned robots’ time in doing.

If you’ve got a robot building you a swimming pool, you don’t want him to stop to cook you dinner.

A chainsaw is a lot more efficient than a knife at cutting. But you don’t use a chainsaw to slice a loaf of bread. Particularly not if that chainsaw is being used by a robot to clear a place for a tennis court in your backyard.

So, rather than panic over “the rise of the machines,” let’s bear in mind the Law of Comparative Advantage ....

And let's recognise that "even with science-fictional super-robots, there will still be money changing hands and a price-system, just as now. You will still be paid for working in the field of your own comparative advantage.

New kinds of jobs will appear, as they always have when technology advances. Ironically, most of the jobs people are afraid of losing -- such as programming jobs or truck-driving jobs -- were themselves created by technological advances. There used to be an American saying: “Adapt or die.” Having the same kind of job as your father and grandfather did is not the American dream.

What new types of job will be created? I can no more project that than a man in 1956 could have projected that today there would be jobs in something called “social media”; or that money can be made by driving for Uber and by renting out living space through AirBnB.

The robots will make work much easier, more interesting, and much better paid.

Prepare to be enriched.