The flip side of an entitlements crisis is a labor shortage.
By HOLMAN W. JENKINS, JR.
The Wall Street Journal
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In 1999, a golfer named Payne Stewart and crew were rendered unconscious by a loss of cabin pressure and their private jet crashed when it ran out of fuel. What does this have to do with the fiscal cliff? Read on.
Even in 1999, one could puzzle over why controllers on the ground couldn’t take command of a plane and bring it down safely. Technology certainly existed to make such a thing possible. Yet today we’re skipping right past pilotless airliners in anticipation of self-driving cars.
Why? Because we’re old. Technological innovation is less miraculous than it seems: It responds to need, and we’re an aging country with more people who need help and fewer people to do the helping, including driving us around.
All this was once foreseen by Alan Greenspan, the Federal Reserve chairman in the 1990s, who pointed out a corollary to the giant unfunded long-term liabilities of Social Security and Medicare. Not only does an aging population mean fewer workers to pay for the oldsters’ benefits. It means fewer workers to actually produce the goods and services that idle oldsters will want to consume. The corollary to an entitlement-spending crisis is, by definition, a labor shortage.
Robots are coming because robots are needed. In 2013, we can already see the appetite in the transportation sector. Aviation analyst Kit Darby figures the industry will need 65,000 new pilots in the next eight years to cover expected retirements. One reason for the millions Google has been spending to develop a driverless car is to meet anticipated market demand from America’s growing elderly population.
Or take another example, arising in Baltimore, where a local entrepreneur, following the logic of need, invested seven years and $30 million developing a robotic system for packaging prescription drugs for long-term patients in nursing homes and hospitals.
In a conversation last year, inventor Michael Bronfein told me if he’d known what it would cost him in time and money, he might never have started. How many entrepreneurs say the same? Probably all of them. But Mr. Bronfein saw a need and the power of technology to meet it, and the result was the Paxit automated medication dispensing system.
He saw workers spending hours under the old system sticking pills in monthly blister packs known as “bingo cards,” a process expensive and error-prone. He saw nurses on the receiving end then spending time to pluck the pills out of blister packs and into paper cups, to create the proper daily drug regimen for each patient. (By one study, the 40 million Americans over 65 take an average of eight drugs a day.)
He saw that the bingo-card system was not just wasteful of labor. When a patient died or was moved to a new facility or had his prescription changed, a month’s worth of drugs might have to be thrown out too.
He followed the economic logic that indicated that all the people involved in the old system were becoming too valuable to have their time wasted by the old system. Backed by his company, Remedi SeniorCare, Paxit—in which a robot packages, labels and dispatches a daily round of medicines for each patient—is spreading across the mid-Atlantic and Midwest and winning plaudits from medical-care providers.
Writ small here is an answer to our entitlement morass, when more of us will be living off our savings (or transfers) and fewer of us will be contributing our labor to society. Robots aren’t the only solution. We will still need better incentives for younger baby boomers to save for their own retirement and depend less on Uncle Sam. We still need better incentives for Americans of all ages to supply labor rather than leaving it to someone else to be productive (which means revisiting our massive expansion of unemployment and disability subsidies over the past four years).
We need to preserve the incentive for investors to bring us the robots that will make the future bearable, rather than burying entrepreneurs in taxes in a vain attempt to seize the returns of investments before those investments are made.
None of these matters, of course, has been allowed to intrude in the empty theatrics that President Obama, primarily responsible, has ordained should be the substance of the fiscal-cliff war. But even from the perspective of the fiscal cliff, let’s welcome the new year by envisioning a future that won’t be so bad, where modest entitlement reform and proper incentives for robot builders will save us from the Soylent Green solution to an aging society.
Make no mistake: The alternative is not a pretty future. It’s a future in which older people receive Social Security checks but still go hungry, in which Medicare is a paper entitlement because doctors and hospitals can’t be found to provide services for what Medicare is willing to pay. If we weren’t still in a New Year’s mood, we’d say the latter future is the more likely one.
A version of this article appeared Jan. 9, 2013, on page A11 in some U.S. editions of The Wall Street Journal, with the headline: Robots to the Rescue?.