Human ATMs

27 June 2007 at 11:30 pm Peter G. Klein 2 comments

| Peter Klein |

As economies grow they tend to substitute capital for labor. Hence the literature on the social effects of technological change focuses on labor displacement and absorption. But what happens when a capital-intensive process appears in a developing economy where labor is cheap?

Here’s a fascinating example of labor displacing capital: a Ugandan financial institution has created an ATM network without ATMs. The machines are too expensive to put in rural areas, so the bank contracts with local shopkeepers who receive and disburse currency using inexpensive smart-card readers linked wirelessly to a central database. (HT: Timbuktu Chronicles)

If this catches on, will we see despondent ATM terminals wandering the streets like that poor robot in the GM Super Bowl commercial?

Entry filed under: - Klein -, Entrepreneurship, Institutions.

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2 Comments Add your own

1. O Insurgente » Blog Archive » Uma solução de mercado | 28 June 2007 at 7:50 am

[…] Organizations and Markets As economies grow they tend to substitute capital for labor. Hence the literature on the social […]
2. REW | 28 June 2007 at 3:16 pm

It may not just be a function of cost. Several years ago, I consulted with a firm in Houston that manufactures heat exchanging equipment for the petrochemical industry (and other BIG carbon-footprint clients). They had just fired two shifts of sheetmetal workers and replaced them with robots (neat toys — all the top mgt team are engineers). On my next visit, the humans were back and there was a magnificent pile of twisted robotic limbs in the lot behind the factory. It was a very uplifting sight. It served both as a monument to craft vs. programming and as a place for the workers to urinate during breaks.