Automation and robotics are the buzzwords in industry right now.  While robotics has been around in manufacturing, white-collar jobs are now starting to be automated.  Financial services firms in Australia want to take out cost, improve quality and reduce risk using automation.

For the ordinary person on the street, the question is whether they and their children will have jobs in the future.  Or will the introduction of robotics and automation allow us to stop doing the mundane parts of our jobs and focus on the interesting parts such as creation, socialisation, etc?

What does it mean for the investor?  Robotics have allowed companies to produce more, at better quality, and at a lower cost.  While some businesses and industries did not survive, investors (and society) have benefited through productivity gains.

This suggests that the upcoming wave of automation and robotics should also benefit investors.  Robots tilt the balance toward capital and away from labour.  Or is it less straight forward?

1. If robots become more capable and cheaper (as we have seen with other areas of technology), then this allows smaller businesses to use robots and automation.  Examples of how automation can reduce cost at smaller scales include automated vehicles that remove the need for expensive conveyors, while CNC or 3D printers allow for production of small unit runs(1).  If this is the case, investors need to identify the businesses that understand consumer preferences and quickly bring products to market.
2. If the technology underpinning robotics and automation is concentrated in the hands of a few key producers, and the barrier to entry are high, then this could lead to oligopolistic markets.  These producers will then price to extract the maximum return at the cost of smaller players and ultimately society.  For investors it means identifying who will be the next major providers of the platforms and capabilities.

The latter scenario points to a dystopian view where the access to factors of production is concentrated in the hands of a few.  What is most probable is that there will be a mixture of the two above.  A few companies will offer the platforms that incorporate data, processing, AI, etc. to deploy automation.  On the other end of the spectrum there will a range of smaller businesses that will be adept at leveraging those technologies to help meet the needs of consumers.  I am always interested in whether the automation will simply be an extension of the current economic paradigm, or whether it will fundamentally change the economic landscape.