Realist, not conformist analysis of the latest financial, business and political news

Automating The NHS Means We Can Have More Diversity Advisers – Huzzah!

It looks like the robots will be able to take on some goodly portion of the NHS care burden. Ain’t that great? It means we can now afford more diversity advisers. Of course, it might be that we don’t decide to have more diversity advisers, we might decide to have something useful instead like hemorrhoids (no, not cures for, people who cure, just hemorrhoids, still more useful than diversity advisers) but just the very fact that we could have more does mean that we’re richer through this automation:

Bedside robots could do swathes of the work now done by doctors and nurses, saving the NHS almost £13bn a year – a tenth of its budget – a major report says today.

The controversial study led by surgeon and former health minister Lord Darzi calls for the “full automation” of health and social services, claiming it would give staff “time to care” for patients.

Almost one third of the tasks now done by nurses, and nearly one quarter of that done by hospital doctors could be done by robots and artificial intelligence systems, it says.

And the widespread use of such methods could save the NHS almost 10 per cent of its annual running costs, the report says, while “carebots” in homes and care homes could take on 30 per cent of the workload now done by humans.

The theoretical background here is Baumol’s Cost Disease. Wages are determined by the general level of labour productivity in the economy, the higher it is the higher wages are in general. But it’s much easier to increase labour productivity in manufacturing than it is in services. Thus services, given the cost of their embedded labour, become more expensive relative to manufactures over time. The services of a lady of negotiable affection cost about the same as a multiple of the hourly wage today as when such was calculated in sestertii. The cost of a bucket, to the extent that the function is different, is very much lower. The price of a shag relative to that of a bucket has risen substantially over the millennia.

Health care is still largely a service, the cost rises relative to other things. This is why the NHS budget keeps growing as a portion of the economy. It’s also what leads to Wagner’s Law, that government – assuming we gain our services through government – will become an ever larger part of the economy. This is whether the bureaucracy just decides to get ever more fat and happy at our expense or not. The way out of this is to automate those services so that we can reduce the cost of them. Get that labour saving bit, productivity improvement bit, of manufacturing working for us here.

Which is exactly what is being talked about. Great.

But to really grasp this it’s necessary to understand why this makes us richer. Sure, we could do what is there in that quote, we could by automating some stuff give those staff more time to do the human bit. Better health care that is. But that’s not what really produces the gobsmacking riches of the modern world. That we get to fire people is.

Consider – there’re 7 billion people out there. There are still some human desires and wants that can be assuaged, even sated, by human labour left unmet. Thus human labour is a scarce economic resource. If we can replace some of it with a machine then we can use some of that newly freed labour to meet some other human desire or want, even a need perhaps. And how those machines make us richer is not that we get our health care better or cheaper. It’s that we can move some of that current health care labour off over into meeting that other need.

That is, robots in the NHS means we can have more diversity advisers. OK, so that’s not that much richer. Or we’ve got the people to pick lobsters out of Jane Mansfield’s ars….or we can have more librarians, ballet dancers, musicians, white line painters for the roads. That is, we can have more civilisation by devoting less human labour to health care. This is also the way we have civilisation at all, those machines meaning that we don’t all have to stand around in muddy fields growing the food.

So, yes, stick the robots in there and let’s get this civilisation thing going then, eh?

Oh, one more thing. How do we decide what that newly freed labour should do? As William Baumol pointed out, market experimentation does that best. And how do we decide which labour is to be displaced by the robots? As William Baumol pointed out, market experimentation does that best. So, to reap the benefits of automating the NHS we need more markets in both it and society, don’t we? And the greater the coming technological change, the more we need them.

Markets don’t solve everything but it’s remarkable how many things they do.

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Quentin Vole
Quentin Vole
5 years ago

A pendant writes: Jayne Mansfield. Tut, tut.

5 years ago
Reply to  Quentin Vole

One does not wish to be pedantic but…

5 years ago

“But it’s much easier to increase labour productivity in manufacturing than it is in services.” I guess that is true but how much easier? I had a ride in a stagecoach last year. Good fun. Once moving people around took someone driving and someone else on shotgun. They needed way stations every 12 to 15 miles maintaining fresh teams of horses and small restaurants. All to that move half a dozen passengers per coach (which did not justify the business model but exorbitant mail contracts did). A bus line or aircraft moves more passengers with perhaps fewer people, or certainly… Read more »

John Davis
John Davis
5 years ago

Maybe I’m just a pessimist, but the thought of the Mighty Machinery of Government setting out to automate the NHS…

5 years ago

I don’t put much stock in old Baumol. Any business enterprise combines labor, materials, capital, and management. Is the labor portion of assembling automobiles less flexible? Not really; even short of robots, you eventually design parts to snap together rather than be welded or screwed together, and with 3D printing, a lot more of the car can be a single part. Likewise in medicine (and, horrors! even education). We learn to work faster. Now, the NHS? Given that the service already loses patients on gurneys to die of thirst in the hallways, do we really want it operated with fewer… Read more »

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