Seems to me that the conundrum can be summarised as follows:
1. When systems are working 100%, fully automated aircraft are generally safer
2. However, when automation fails, lack of practiced manual flying proficiency by crews can lead to errors
3. Addressing the lack of proficiency requires increased manual flying which, inherently, and for 99% of the time, is less safe than using automatics
In other words, and if the statement in point 1 is accepted, in order to guard against adverse consequences of failures of automated systems, it is necessary to accept a greater amount of manual flying which is inherently less safe than automated flying - Catch 22.