ATMs v. Obama's Economic Ignorance

President Obama made the following statement yesterday in Kansas (or was it Texas?) "Layoffs too often became permanent, not part of the business cycle. And these changes didn't just affect blue collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs and the internet." It is not the first time that Obama has blamed automation for job losses. The man's ignorance of economics knows no bounds. Automation has always created more jobs than it replaces. It may be counterintuitive, but the effects of the division of labor often are. The classic example for the division of labor is from Adam Smith's The Wealth of Nations where he explains the making of a simple pin. One man "could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty." Smith witnessed ten men using simple machines and a division of labor "make among them upwards of forty-eight thousand pins in a day." By...(Read Full Post)