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The Robot Revolution: Panacea or Pandora's Box?

With offshore labor costs continuing to rise, the need for cheaper labor and cheaper energy has forced many manufacturers to rethink their strategies. We've already seen several companies such as Apple, GM and GE pull their manufacturing efforts back to the United States, but according to Peak Prosperity's Gregor MacDonald, resource scarcity and the diminishing supply of the cheapest global labor will push us toward something a bit more radical: the robot revolution.

Amazon has already been seen jumping onto the bandwagon by buying out warehouse robot company, Kiva Systems, in March of 2012. When viewed alongside the construction of highly-automated distribution systems, it's clear that Amazon is looking to minimize the amount of human labor necessary to run its business.

While this can help Amazon to meet the one-day shipping demand of its many Prime members, the part of the robot promise that is so tempting is its capability to cut down on energy costs, particularly at a time when energy costs have jumped. The long-term idea, however, is that this could spark an automation revolution that will be the answer to the declining rates of physical production that we've seen over the past 30 years.

Because robots would depreciate like any other capital equipment, require no wages, no healthcare and no payroll taxes, it's easy to see the appeal. Combine that with expensive shipping rates between the U.S. and offshoring hubs such as China, and the U.S. is once again looking to be the destination for manufacturers.

So what's the problem? Unlike the Industrial Revolution, which required immense quantities of human labor and thus provided countless jobs, a robot revolution will come, as MacDonald put it, “at the expense of human employment.”

As it stands, many of the largest data centers and automated manufacturing facilities employ less than 50-100 employees, but with companies beginning to invest in “intelligent machines” to guide robot production lines, the demand for human labor may shrivel even further.

The question then must be asked – when deprived of jobs but supplied with cheaper goods, can the existing labor force manage to prosper? If not, MacDonald believes that the robot solution may be worse than the problem we designed it to solve.

Full story at Business Insider

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