Reader Peter is concerned about the future of jobs, living wages, and displaced workers in a robotic society.
Specifically, Peter asks “how do you think the evolution of robotics will play out?”
Hello Mish
At dinner with friends last evening, we discussed the idealistic thought that robots could one day serve the needs of mankind, allowing us to pursue our interests as we want, without the heavy constraint of having to work to sustain our existence.
I cannot imagine myself not wanting to build and achieve things. But it sure would be enabling if I could choose where I put my efforts based on my personal set of priorities.
While discussing this topic, I realized that as robotics enter our society, socialism would probably be friendlier as to what happens to displaced workers than would capitalism.
What happens if jobs that provide a living wage shrink faster than population growth? Is that a realistic and likely possibility?
I can only imagine that the profits reaped by robotics in a capitalistic system would have no intrinsic vested interest in what happens to these people.
There are strong forces in our capitalistic society that do not welcome the idea and/or cost of a broad social safety net, especially if it were to provide the equivalent of a living wage.
I don’t see a natural path in capitalism where robots working for mankind would free us to pursue our personal interests.
How do you think the evolution of robotics will play out?
Peter
Hello Peter.
No one knows how this will play out.
Regardless, paying people to do nothing, so that people can pursue personal interests is certainly not the answer.
Such actions would encourage people to have more kids for which there are no jobs. That’s clearly an unsustainable model.
If technology does not create jobs, then war is a distinct possibility.
But over the long haul, technology has always created jobs. Why is it different this time?
Unbridled Capitalism Not the Problem
Unbridled capitalism is not the problem. Some will even ask “when has it been tried?”
Yet, the advances in technology that capitalism has provided gives us more leisure time than ever before, despite increasing government interference in the free markets.
We can do more things in more places than any generation in history. We can fly or drive to the Grand Canyon to hike; we can communicate with nearly anyone in the world using Skype, for free; we live longer despite eating unhealthy.
All of these things are because of capitalism, not communism, not socialism.
Living Wages and Inflation
If you hand out a living wage for doing nothing, the amount it takes will escalate rapidly.
Central bank actions are the key problem. They are hell bent on inflation.
Technology is inherently deflationary. People benefit from falling prices, not rising prices.
Thanks to the increased productivity that stems from technology (which in turn stems from capitalism), people today live like kings compared to a few generations ago.
Not only that, but US citizens live twice as long as they did in 1850.
US Life Expectancy 1850-1911 White Males
Notes
* Massachusetts only, white and nonwhite combined (1870 extrapolated by Mish)
** Original death registration states
*** Death registration states 1920
**** Preliminary
Source: InfoPlease
Forced minimum wage hikes and central banks actions fight overwhelming technological forces.
- Hundreds of affordable housing programs did anything but make houses more affordable.
- Student loan programs made debt slaves out of students while increasing the cost of education.
- Things would cost a lot less and there would be a lot less debt were it nor for the Fed and governments.
- Virtually everything government touches increases costs.
The “living wage” would be much, much lower if government and the Fed got out of the way!
Is Mish a Socialist?
Amusingly, and in reference to the Khan Academy’s free education policy, a reader actually asked: Is Mish a Socialist?
The Khan Academy is an unbridled capitalist solution, not a socialist one! Khan gets money from donations, not government, not taxes, not union coercion.
“The Khan Academy is a 501(c)(3) not-for-profit organization, now with significant backing from the Bill & Melinda Gates Foundation, The Broad Foundation, Google, the O’Sullivan Foundation, Skoll Foundation, and other philanthropic organizations.”
Everything government touches drives up costs. And the Fed comes along and wants to drive up costs further. It’s no wonder that “living wages” keep rising.
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The problems we face are not the result of free market capitalism, nor the result of robots.
Rather the problems we face are the direct result of Fed sponsored inflation, corporate and military fascism, government interference in the free markets, and socialist-sponsored wealth redistribution schemes.
If we let things be, “unbridled” capitalism would take care of things, if not quite nicely, then certainly better than any socialistic or government-sponsored solution.
Mike “Mish” Shedlock
It would seem to me that if your job is being taken over by a robot, you should start learning robot repair. All things mechanical break and being able to fix them will pay GOOD
Agree, to a point. This is exactly the fallacy between the minimum wage fight. Jobs that build tech that automates minimum wage jobs will replace the minimum wage jobs. People will need to get training and education. Robot repair is a part of that
Then will come cybernetics, where we all get little mechanical enhancements just as soon as they are invented and covered by insurance. Each wave will be better than the last and eventually we will be semi to highly mechanical creatures with biological components.
Or, as I postulated a couple of days ago, the advanced robots will murder us in the robot wars and the robots doing the menial tasks will be shut down as resource consumers. Robots that flip hamburgers won’t be needed since robots don’t eat hamburgers. You can’t do that with people so, in a manner of speaking, the robots win a point on this. The survivors will spend their time contemplating their rivets and bossing around maintenance drones. Even robots need a ruling class and drones to wait on them.
Earlier, I had considered that the new robot ruling class might reinvent biological life to replace the maintenance drones. This later proved to be highly unlikely, except possibly as a science experiment for robots who tire of thinking new big thoughts. As an ant farm, yes, people might see life again, but not in the flesh. A virtual reality would create the same end result and consume minimal resources. Reinventing humanity would consume resources that are far more valuable than the humanity created as the end product.
Or perhaps this has already happened?
the problem with your idea is that the robot needs ONE repair tech but puts 10 people out of work.
in the past, technology created jobs – the industrial revolution. today technology is being developed to replace all those workers. so it is different this time
to suggest unbridled capitalism will take care of things is simplistic and some what naïve.
it will never be allowed to play out politically in a sustainable way(even though it could be the least long term cost option)
structural adjustment costs are typically concentrated regionally and in specific socio-economic segments (as distinct from benefits which tend to be more diffused – technology,free trade are good examples).
without intervention to facilitate adjustment social upheaval and political extremism are inevitable -history is replete with examples as are current global political differences and dydfunctionality.
the adjustment to and distribution of the benefits of technology are probably the major sleeper issues going forward.
If we choose a pure set of parameters , then what will happen is that the new unemployed will be closed out of access to the benefit of robotic production , while the entrepreneurial owners will slowly capitalize on their profits and move towards buying up literally everything that has a price on it, and more besides . This would be the trade off for the ‘nearly free’ production offered at highly deflated prices .
In other words the robotic produce would be exchanged for all else of value in society because society cannot compete with it .
However societies are self regulating in many respects , so you may find they understand that to give up a job to a robot is to deny another person any income . They might reject a social coupon that entitles them to reliance on robotic produce , and instead choose to produce for themselves . The public might move towards participating in ownership of the new enterprises , and hence the profits are distributed to society quite evenly under a capitalistic framework .
Nationalization/socialization might try to do that politically – simply ascribe a part of all profit to the public , be it a universal wage or percent ownership of produce etc. , or to a lesser degree by offering a socialist safety net while the rest evolves as it does . These two however are by forceful imposition and subsequently may be considered as counter incentives to productive evolution , as well as avenues to corruption by the capitalistic major holders of production .
There will always be moral dilemmas , if there were a simple answer to it all … what would we be doing… and why are we not doing that now ?
Here is your moral dilema :
You have enough food for yourself and to spare. Someone comes along starving hungry.
Do you share your food because…
It is customary.
He might later help you.
You will feel good about it.
Etc.
Or do you not share your food because…
You will have less reserves.
He might compete with you later in spite of your help.
You don’t like the look of the person.
He may keep asking you.
Etc.
The answer is that ‘it depends’, unless you would rather someone decided for you, of course, but then you will live by doctrine and without your own reasoning you will be as reliant as the person who asks you for food.
The solution is both socialistic AND capitalistic in that for the people to survive the people must OWN the means of production. This is socialistic on the face of it as it has always been the goal of socialism…indirectly….the collective ownership of the means of production…except, the collective is NOT the people, it is their proxy that “pretends” to own it for the people yet it still only benefits the “owners” OF the people.
Capitalism is based on the notion of private ownership, utilizing that ownership as a means of production. The problem is not with the system, but with the people, in their desire for short term gains rather than long term. This is why so many prefer employment to owning their own business, and government full well knows this, as all they do is sell the notion of security over one of independence and liberty.
A world full of independent business people, each owning their means of production would prevent wholesale economic dependency and failure. In an open and honest economic society, we would not be creating debt and redistributing wealth as a means to conceal our loss of liberty. We have surrendered our choices in this by ignoring the reality of what has been happening, and worse, fully participating in our own demise. Technology would have NO ability to displace workers IF those displaced workers could no longer afford to BUY he production from the robots that replaced them. Instead we loan or simply give people the money with which to buy what they otherwise never could.
If WE individually owned this technology, these robots, our means of production, we would have nothing to fear….but we don’t and we have plenty to fear. It matters not now if we do or don’t lose our jobs to technology, as this is a short term issue. The real issue is that our economy and society have been hollowed out by this opaque madness and we have no means or WILL to produce, only stand with our hands out demanding that government lie cheat, and steal to make their impossible promises come true. From a nation of producers to a ill-defined conglomerate of disparate and divided beggars and thieves.
We know how it will play out because this process has been happening since the dawn of the industrial revolution. A robot is a machine–a sophisticated machine, but a machine nontheless. Machines make humans more productive and therefore wealthier. As robots become more prevalent in the economy, living standards will go up. This isn’t to say that some jobs won’t disappear, but other opportunities will arise as the obsolete jobs disappear. The net effect will be more opportunity, more wealth, and rising standard of living for everyone.
Yes !!!
The power loom will put thousands of weavers out of work. Whatever shall they do?!?!
The automobile will put thousands of farriers out of work – we must help them!!,
The tractor is causing thousands to lose their farms – the government must fix this!!!!!!!
Robots will cause millions to lose their jobs – we need more socialism to address this!!!
Billions of jobs created. Billions more to come.
Precisely
But WHO owned the weavers and automobiles and tractors? Regular people did. The cost was affordable enough to where people could acquire these assets and simple enough so that they could quickly learn to operate them. Today millions are using phones that they don’t own… they rent, and have no idea how they work. I have owned CNC machinery for years and only did so because I saw the writing on the wall, but it was difficult…and still is. I just spent $5k for three days of tech service on one machine. Not many can afford that. Simply look at labor numbers and how small and mid size businesses are shrinking. This is moving from self employment to JOBS and those JOBS are going away. So what is left? Jobs are DEPENDENCY on the owners of the means of production. In the past, labor was required to operate most tech advances, machine operators and the like. Jobs that could be learned relatively quickly…not now. Now n=machines are making machines…and writing blogs. People can no longer afford to own their means of production and the one thing they always thought they owned of value was their own means of production…their labor. Now they find it has become nearly valueless and redundant.
And I will repeat, historically, how much of our tech advancement was supported by debt? How many jobs were eliminated and the unemployed became permanent dependents of the state. If our current tech trend was sustainable, would we see this level of redistribution, debt, and unemployment? I don’t think so. Technology has been allowed to outpace job creation, and this has been done by debt and theft…neither sustainable.
Of course. Luddites aside. Robots= increased production= higher standard of living. The only caveat in this is, as Mish stated, .gov,,,the world’s largest insatiable consumer, moves in for a cut, diminishing productivity gains.
Parasites are like that.
If anything, mechanical robotics will move productivity back to our shores, and away from human robotics in places like China. As it stands now, the labor arbitrage equation makes conversion more productive in high cost areas, so they will have more incentive to make the conversion first, leading to a sort of, as much as I dislike the term, ” leveling” of the labor input field, of economic output.
After all, is it not less profitable to automate in a low labor cost environment?
It’s not rocket science. As a matter of fact, it’s all here,
https://mises.org/system/tdf/thelaw.pdf?file=1&type=document
@madashellowell You are assuming the price of robotics is going to be relatively constant. This is most certainly not the case. The cost of these devices will drop, and have already been getting cheaper all the time. The most obvious recent example is of course Moore’s law, but the same thing happened with Steel (Carnegie and Schwab), automobiles (Ford), Electricity production and even to some extent airplanes. Along the way, as prices dropped and fortunes were to be had, new designs and ideas led to even better economies of scale and improved products. That’s the way the free markets work. Unfortunately there will be bad ideas that fail (and a few ideas that might do more harm than good), but in an active marketplace with open and fair communication about products advances will happen, and can happen quite quickly.
Your example of a CNC machine is a good one. The price of a CNC mill is extremely prohibitive. If you wanted to make a small object using CNC milling the cost would have been far too expensive to be worth it, unless you wanted to produce hundreds or thousands of the same object. But today there are manufacturers producing “desktop CNC mills” that are able to produce objects a few inches in diameter. They can be had for under $5000. I have a 3D printer (similar tech) that I picked up for < $500. They can't make custom 19" rims for you car, but they can make things like jewelry molds and printed circuit boards. It's highly likely these small machine manufacturers will begin to scale up their products to be able to produce larger objects and will eventually overtake the expensive proprietary (these are usually using open source controllers and code) systems.
People will own robots. Sure, they might have to seek out capital and bank loans to buy them, but they will get cheap enough for small shops to own them. There are a lot of small business owners out there, even now, who would love to have an extra pair of hands around but can't get reliable people for what they can afford to pay. Like all technology, it will simply be a force multiplier.
technology is displacing jobs at an ever faster rate. A rate far greater than reeducation or labor reallocation can keep up with. Further, these advances are funded with debt….debt that is a claim on future earnings that are decreasing. If this were working as you suggest it has done historically, why do we have so many people not working? If people are not utilized in the work force, if they are not productive in any way, are you suggesting that large corporations are simply going to produce goods and services from the goodness of their hearts…or will we simply apply recent methodologies of printing more money and increasing debt. How has THAT worked out historically?
Jay is correct in a system of free enterprise and minimal government bureaucracy. It will not move to balance perfectly smoothly. (Some will lose their jobs and not adjust.)
However, as long as human beings have desires, there will be business opportunities in a fee market. For every desire, their is a potential business. In a developed robotic society, the service society could expand rapidly.
Of course new jobs will appear, but will they be suited to a 50-55 year old person? I doubt it. They will likely be more suited to the person’s children of perhaps grandchildren. The headline numbers will show that twice as many jobs were created as lost but won’t reflect the number of “older” workers who likely don’t possess the required skills to work in this new world. What of them. It seems ironic to me that just as older workers are realizing that they will have to work longer than they had planned there may be no job for them. What will happen to younger workers who for whatever reason are unable to acquire the appropriate skills? We are likely talking about many millions of people. It will be and interesting problem to solve.
Change always poses that problem.
Change is happening at a faster pace now it seems. Best thing for people to do is be aware of it. Complaining about change or pretending it won’t happen is not a solution. Taxi and truck drivers better be thinking about “Plan B”.
Mish
Most service jobs do not require a high decree of technological ability.
jay
you are correct provided the income and wealth distribution effects are benign and not heavily skewed.
the four major techonological waves we have had roughly fitted this model over vthe longer term
the forthcoming robotic wave is more problematical.
suppose that the benefits accrue to the top 1/3 and costs to the bottom 2/3.
the politics of envy and redistribution calls will be overwhelming.
And you don’t reckon that the reason the four previous waves fitted the model, is because those in the bottom 2/3rds used their inherent flexibility as humans to position themselves to benefit?
After 4 for 4, doesn’t that sound more likely than “it just happened to work out in the past, but thiiiiiis tiiiime, iiis diiiiiferent! Now, we need to empower governments and bankers, otherwise it will be baaaad!”
When we talk about life expectancy, are we factoring in infant and child death rates? In other words are people really living twice as long as they did in 1850, or are there just far fewer childhood and infant deaths skewing the average?
Hi from Oz. I agree Jay, I have worked in electronics and IT for over 50 years, and have seen little evidence of technology ‘putting people out of work’, except at the simplest level of analysis. For example, in the late ’60s I knew a guy my age who was trained for 3 years to repair typewriters (!). I bet he hasn’t been doing that for a while, but I doubt that he has been unemployed since the 1970s. Technology creates new jobs – robots have to be designed, manufactured, sold and serviced, and many more people still are employed or re-deployed to figure out how to transition the workplace to make use of the new technology (think fax machines, desktop computers, email, mobile phones, robots or whatever). Luddism (smashing the machines to protect the jobs of manual workers) is not the answer. Britain became the wealthiest nation in the world through the new technology of the Industrial revolution – the steam engine, the Spinning Jenny, weaving machines, railways, etc. Humans invent stuff, always have, always will. Many new inventions make our lives better and make our nations (and us) wealthier overall. IMHO new technology is to be embraced, not feared. I know, because I have witnessed it.
Embrace technology all you want….as long as you can pay for it. Technology has lots of up front costs and typically is not implemented until labor costs rise to make it viable. Once the technology is implemented, volume lowers its relative cost driving even more jobs from the market. Government arbitrarily increases all manners of labor costs and is a significant driver especially considering their role in credit expansion and inflation. All of this is direct manipulation that allows tech to grow faster than the labor market can absorb. It is not being a Luddite to simply suggest that a balance must be maintained, and WOULD be maintained if not for the influence of government manipulations.
Such unbridled optimism about a future where every job is handled by a robot! Yet he thinks that this will create untold millions of jobs. Is that what is happening? NO. What is happening is a shrinking labor force with more and more people living on the dole because there are NO JOBS. Do you think everyone is going to be blogging? More likely everyone will be web camming for tips out of desperation. The future is going to be very grim indeed.
Or writing blogs.
Of course the future will be grim if people continue to let government dictate it.
Government hinders wealth creation and at the same time creates massive wealth inequalities. It cripples the progress of medical technologies and also causes it to be priced out of the reach of many. It pours trillions into so-called defense while more acceptable spending on research, education, and infrastructure languishes. If you include death by regulation, government killed about 400 million people in the 20th century. The 21st century will probably not be that lucky.
So yes, grim, but because of government, not technology.
I will draw upon the wisdom of Ringo Starr: Everything government touches turns to crap.
Including the future.
Bingo!
As long as human beings have desires, there will be business opportunities in a fee market. For every desire, their is a potential business. In a developed robotic society, the service society could expand rapidly.
@ David A
In an Astronomy magazine article years ago the writer called the culmination of man’s various ages as the Charm Age, where the service sector dominates. In a sense, vocations are gone and are replaced by avocations.
As technology wrings the remaining inefficiencies out of the Agricultural, Industrial, and Information Ages – and hoping that government dies a long overdue death – most things in life should become incredibility cheap. Cheap on the order of nature’s costs to produce what she produces.
Man’s technology is basically an interpretation of nature’s technology but he has the imagination to go far beyond nature’s commitment to itself.
Are all these people really sitting at home because there are no jobs? Why is it that if I try to find help, I can’t get any qualified applicants? People are sitting at home in many cases because welfare is like a roach motel, or like the Hotel California… they can enter, but they can never leave. Once they get started, they are worse off to take a job, unless it’s a really good job. But of course, as an unemployed person they aren’t qualified for the really good jobs, only the entry level ones.
We are losing jobs to automation and those new jobs that technology creates are quickly absorbed by young people fresh from education specific to these job needs. Someone laid off from a job hasn’t got a chance if they must be reeducated to even qualify, while still expecting wages similar to what they lost. People don’t adapt that easily, especially in a world where they are told they shouldn’t have to try that hard in the first place, and with entitlements in place to soften the blow even more, many simply give up. Social policies that refuse to allow consequences to befall people will only assure more of it. We can subsidize or delusions through debt, cheap imports, low wage immigrants and automation, But eventually, when you earn NOTHING, no price is low enough, especially if you are still paying for what you consumed three years ago.
Our problem is not technology or automation, it is delusion that allows us to believe that just because it has worked so far, it will work tomorrow.
http://nscnc.com/mira-x5/ is a desktop CNC mill that is being marketed to the jewelry business. Custom rings and other jewelry. Nice work, very high margin I’m sure. Oh, you can’t make jewelry? What about all the DJs making real dollars by looping canned music loops? No talent needed.
How about this: buy a bunch of automatic lawn mowers (which cost $2000 each, a little cost prohibitive for many homeowners) and use them en masse to mow lawns in a few minutes instead of hours? Or plop one into a customer’s yard and pick it up later, making the rounds. A riding mower can cost thousands of dollars, and you’ll need a trailer (registered) and all that associated maintenance. Bulk buy a few robotic lawn mowers, get a Transit minivan to haul them from job to job, turn ’em loose and pick them up later. If one breaks, well, you still have the others. If your riding mower breaks you’re out of business. And if you want to expand you’ll need to hire more people, buy more mowers and more trailers, meaning you won’t expand for a long time. If you want to expand your robotic mower business you can just buy another one. If you end up with so many that they won’t fit in your van, well, then maybe you’ll have enough revenue to buy a bigger one or another one. Sure, you won’t be hiring flunky the immigrant to mow someone’s lawn, but you’ll also be able to get more business from people who wouldn’t otherwise be able to afford a lawn service. And I’d much rather have 10,000 people paying me a dollar a week than 10 people paying me $1000.
Do you have any idea how many low wage people are in the lawn care business? What do you think will happen to their jobs? Part of our problem now is that we have pushed more and more people into these low wage jobs, and now even they are under pressure by automation. Your local lawn guy is NOT going to get reeducated as a high tech service agent.Have you ever tried to run a business, hire employees and pay for everything needed to make it happen? Look at the major job growth statistics of the last ten years….bartenders, waitresses, low wage service people. These were people, many of which, who were making reasonably good professional wages, and some have not even been lucky enough to realize the dreams of their high cost education.
Well, it’s gonna happen. Better to see the writing on the wall and embrace change (be one of the guys with the lawn mowers) than to be a “lawn care specialist” or whatever they are called.
And what employees? You just said the robots are going to take away all those jobs. Either you’re going to employ people or your not. I say small businesses aren’t going to be hiring anyone, but the cost of entry to automation is dropping like a stone, so there will be a net increase in the number of businesses started.
Unless robots start consuming products, this will end with big corporations dwindling out of business.
Good. Corporations are a spawn of government.
A corporation is a legal entity created under state law that can open a bank account, purchase property, enter into contracts and operate a business. One of the most important features of a corporation is that its owners are generally not personally liable for the debts of the corporation. – Google
Then it becomes its own perpetual motion machine and exists for no reason. I’d love to see the banking industry do exactly that to itself and leave us alone.
Then corporations will sell by debt, the population will owe for everything they ‘buy’, one way or another. Loyalty to government subsidy or loyalty to bank credit, but definately loyalty to the cheapest producer, in this case a corporate one … maybe all three are the same anyway, which should make people wary as the political arm might move the nation by owning the demand to.
By the list of donors to the Khan academy , a tinfoiler might believe our masters are out to take over a good substitute for public skool edumacashun.
Right now there are 95 million Americans over 16 not in the workforce. Most people still seem to have a roof over their heads and 3 squares a day. Look on the positive side. We still have more fat people in the U.S. per capita than the rest of the world. Everyone has a cell phone. So what’s another measely 40 million added to the ‘not in the workforce’ rolls. That just means we’ll need more workers to process the EBT cards, MediCaid claims and hand out free government cell phones…..until we can’t anymore.
“…capitalism would take care of things…”
In free market capitalism, ‘things’, that is, people, would take care of themselves and their families on an individual basis. If someone loses his job to a robot, for example, he may have to take a seemingly meaningless job of picking up broken robots and taking them back to the factor or service center. His new job might pay fewer dollars but the dollars would ultimately go much further.
Many doubt this but the fact is that, if people are to poor to buy the things they need, the businesses that sell those things will have to cut their prices or go out of business. If, on the other hand, a socialist government gives or loans people the money to buy the things they need (after taking them from someone else), the sellers of those things will raise their prices and the buyers will pay the same out of pocket while the sellers get all the money the socialist doles out.
Free market capitalism, which does not exist today (if it ever did), is not something imposed on citizens. It’s just a declaration of citizens’ rights to control their own property which they acquire through creativity, intelligence and work.
Peter, you were just born in the wrong era. You missed the heyday of caring socialist governments: The Soviet Union has fractured and Eastern Europe has gone over to the dark side. Thatcher ruined the UK socialist paradise, and the caring Greek socialist paradise seems to be going down the drain. Even the Castro brothers have gotten old, and have allowed back such capitalist evils as privately owned restaurants (forget living wage there). Perhaps Venezuela offers the purer compassionate socialist experience. Until you visit a socialist paradise and experience it for yourself, it will all be wine-soaked abstractions and devoid of true understanding.
But maybe Bernie-care or Hilary-care will work better than Obama-care. Somehow caring socialism, wanting us all to have the same health care plan as members of Congress, morphed into something else, as is usually the case with socialist solutions implemented by governments. Socialism is a great idea. Too bad it does not work. And of course without capitalism there is nothing to socialize. Kill capitalism, and all you have left is equal distribution of poverty. Plus less freedom.
Without capitalism there can be no socialism, and you will live in medieval style serfdom and be a slave; but a well-cared for slave if your master values your labor. Best find a means of earning a living that a fast-food robot cannot do better. Depending upon government, rather than yourself, for the solutions is a risky business, even under socialist governments (historical fact).
I will never find myself doing nothing. I love to create and build things and would welcome the opportunity to set my own priorities for what this would be, while my body is still healthy.
But as robots displace work as we know it, what if the pool of future jobs providing a living wage shrinks faster than the number of displaced people needing to support their family? I am not in favor of a big, invasive government. But also I don’t believe that an effective social safety net and capitalism are mutually exclusive.
Please note that the question I posed was not simply about people out of work. What if the overall efficiencies in a robotic evolution become such that most people don’t have to work to sustain our society? This would be a profoundly challenging adjustment that has seemed like science fiction for so long, but doesn’t seem so far-fetched to me anymore.
The assumption that there will always be enough living wage jobs in a world undergoing this profound paradigm shift seems optimistic. Some examples of future jobs in the comments above are not compelling. For example, robots can be serviced, repaired, and recycled by other robots. Certainly the designers of robots would stay human for a while, but I wouldn’t be surprised to see technologies such as neural network learning systems (with some kind of random creativity catalyst technology) maturing to design new robots. Many people who have lost good paying work in the last 10 years have found work paying less; often in the food service industry. But this is not likely to be a safe haven for work seekers; we already see stories hitting the headlines about robots in fast food franchises.
Peter, I think you are very smart and will have no problem in a world with more robotics. At one time most labor went into agriculture, and no one could have imagined today’s economy. The future is uncharted territory, but people learn and adapt. I see no reason why robotics will be any different than the mechanization of agriculture, which freed people from tilling the soil.
Smashing the looms was a doomed solution to mechanization of work, which is what computers and robotics are. I went to school with a woman whose life goal achieved early was to have a job with lifetime security as a telephone operator at AT&T. That went by the wayside quickly with automated switchboards to route telephone calls. People found other things to do.
My only worry is that as robots get more intelligent and perhaps achieve consciousness, that the robots will demand “human rights,” including the right to vote. Socialism for robots will mean a lifetime of doctoring and free lube jobs.
I will never find myself doing nothing. I love to create and build things and would welcome the opportunity to set my own priorities for what this would be, while my body is still healthy.
But as robots displace work as we know it, what if the pool of future jobs providing a living wage shrinks faster than the number of displaced people needing to support their family? I am not in favor of a big, invasive government. But also I don’t believe that an effective social safety net and capitalism are mutually exclusive.
Please note that the question I posed was not simply about people out of work. What if the overall efficiency in a robotic evolution becomes such that most people don’t have to work to sustain our society? This would be a profoundly challenging adjustment that has seemed like science fiction for so long, but doesn’t seem so far-fetched to me anymore.
The assumption that there will always be enough living wage jobs in a world undergoing this profound paradigm shift seems optimistic. Some examples of future jobs in the comments above are not compelling. For example, robots can be serviced, repaired, and recycled by other robots. Certainly the designers of robots would stay human for a while, but I wouldn’t be surprised to see technologies such as neural network learning systems (with some kind of random creativity catalyst technology) maturing to design new robots. Many people who have lost good paying work in the last 10 years have found work paying less; often in the food service industry. But this is not likely to be a safe haven for work seekers; we already see stories hitting the headlines about robots in fast food franchises.
Bank inflation is the primary problem. We need a gold standard.
Neo liberalism is a total failure,it is neither new nor liberal and has destroyed democracy, it has to be replaced before an age of robotics replaces millions of jobs. The harsh reality we are facing as a species is severe, in short, mass depopulation, a culling of the herd, the current crop of ruling elites will not take the alternative route. If you think they will suddenly become all benevolent and democratic on us, you are sadly mistaken, we are dealing with psychopaths not human beings.
Capitalism / Socialism leads to over consumption which results in debt. The west is over consuming and living better than the rest of the world. The world is beginning to normalize. Robotics will speed that along. As technology advances look for the overall standard of living to fall for many. Debt and overconsumption must hit the wall eventually.
No, debt market manipulation leads to over consumption. Before Fannie and Freddie real estate was relatively expensive, yes, but most people had what is today a 5 year ARM. At the end of 5 years, if you had kept up the payments, the bank would renew your mortgage. This was in line with where most capital for mortgages came from, the CD. Very few people would buy a 30 year CD, so FDR created F&F to offer to buy out the bank mortgages and securitize them. This led to the long housing boom that should have busted in the 1970s, but was pushed off until the 2000s. People bought more house than they could realistically afford, figuring that because everything that happened yesterday happened today it would also happen tomorrow too. When it didn’t, well we all know what happened.
If there ever comes a point in time where the majority of jobs are replaced with robots, humans will have to change along with their governments. Some state a culling of the human race will happen and others do not know and even others state a living wage.
No one knows until that point is reached. Personally I think governments ant their people on the government teat. The majority of the people will be handed a minimum tiff to live on and housing will be included. Otherwise there will indeed be a culling of people. If there are basically no jobs for the majority of people something will have to give. I hope people can change but alas most of the time the herd follows their leaders.
There will always be jobs for those that choose to produce something needed in the community. They will live better then the rest.
Actually, it is mostly (only?) those who disproportionally appropriate the resources of the earth to themselves who advocate “culling of the herd”. Otherwise, there are plenty of resources on the earth to provide for all.
Joel Salatin, for one, points this out regarding food at one point this podcast –
http://www.peakprosperity.com/podcast/97339/joel-salatin-promise-regenerative-farming
I know others have also made this point.
One thing many people could do is to provide for their own food needs, for example (if uber-wealthy people and/or government didn’t own all of the land).
Another idea, as stated in the above comment, would be to serve one another’s needs (people’s needs are endless and some individuals are uniquely gifted in providing for other’s needs … be they health / home / family care or otherwise).
And, some people are uniquely gifted in other areas such as arts and crafts. I believe that almost all people are uniquely gifted in some creative way that could provide for themselves.
Unfortunately, in order to afford the services and / or products produced by others, a decent return on one’s own efforts is required. Certainly enough to spare beyond providing for basic necessities.
However, the corrupt / crony capitalist / corporatocracy that actually controls most of the world is intent on providing the absolute minimum wage for the maximum effort on the part of their completely captivated (not to say slave) laborers.
A corporation is inherently sociopathic, attempting to maximize profits and externalizing all costs, as seen in this documentary –
https://www.youtube.com/watch?v=KMNZXV7jOG0
Since the uber-wealthy own most corporations, their growth corresponds to the ever increasing negative affects on society.
Proof of this is seen in the increasingly diminished ranks (and wealth) of middle class peoples everywhere and ever increasing ranks of the impoverished.
I’m not sure what can be done to change the system.
Although, I do recall hearing Charles Hugh Smith some time ago (http://oftwominds.com/), who has some ideas, and perhaps they may be worth looking into –
https://www.youtube.com/watch?v=FWALBQ26g34
He wrote a book about it –
https://www.amazon.com/Radically-Beneficial-World-Automation-Technology-ebook/dp/B0178MQI1M?ie=UTF8&camp=1789&creative=9325&creativeASIN=B0178MQI1M&linkCode=as2&linkId=CGXPIKGVST4OBTXU&redirect=true&ref_=as_li_tl&tag=charleshughsm-20
Jobs have never been the problem. Income has always been the problem.
Self-sufficiency without a job becomes more difficult when the individual faces more burdens in the form of tribute or taxes (e.g. on property). A plot of productive land is no longer enough.
Jobs are just a means to generate income. Reduce your needs/wants, and you may only need a job to pay property taxes and health care ACA taxes. If you are wealthy (e.g. inherited, big corporate or gov’t pension, rents, income-generating business), then you may not need a “job” to provide income. Charity and government or religious social doles are income sans regular 9-5 jobs; and seem to be a way of life for some.
Mind you, people may be better off with jobs or work for non-economic reasons. Being free of the necessity for a job, even if one chooses to work, should be a liberating experience akin to freedom.
I have been fascinated with this idea since I was in high school. A Futurist named Jaques Fresco has thought deeply about this topic for decades. He came up with a kind of socialist economy he calls a resource based economy, which reminds me more of how the Earth of Star Trek economy might function. Of course, we all know that human nature doesn’t function well under any form of socialism. Maybe if we all somehow became more loving, honest, and spiritually evolved, but let’s be realistic here!
His website is https://www.thevenusproject.com/resource-based-economy/
Fun to think about and explore for econ nerds like me
(btw, I, like many Mish readers, follow Austrian economics. I just have an open mind and love discussion. I am a very long time reader, but this is my first comment here.)
Also, Michael Tellinger’s Ubuntu movement, which is similar, is picking up steam in South Africa, which was inspired by more ancient tribal socioeconomic systems of Africa and other cultures around the world. Interesting, one thinker looking to the future and one looking to the past both going the same direction.
The problem with the Star Trek economy is that it really was about massive amounts of free energy. Energy has always been scarce. As we moved into the fossil fuel age it became cheap and plentiful, much more so than human and animal muscle energy. Eventually human and animal muscle energy became very expensive.
Nuclear energy in the 1960s was viewed much like that massive amount of free energy, for better or worse. Of course this wasn’t true, but it was the first real competitor to fossil fuel to come along in 100 years. The governments of the world want to keep nuclear to themselves, the incumbent fossil fuel industry wants to keep it away from the market place. Together they do a pretty good job of overtly and covertly keeping it from being a force change in the world.
Image if nuclear electricity production were unleashed from the prison of government control. No, you won’t get energy too cheap to meter, but perhaps we’d have a lot more money in our pockets after heating and cooling our homes, powering our infrastructure, and alternatives to gasoline in our transportation. No, we won’t have replicators, but we might have massive greenhouses that can produce food locally all year around. No, we won’t have starships, but we might have cargo ships that refuel once every 10 years…
A few more facts about Emma Maersk:
Running at her rated 80 Mw, her main engines burn 14 tons of residual fuel each hour. Annually, that’s 97,400 tons of fuel. Her auxiliaries, delivering their full 30 Mw, burn an additional 6.6 tons/hour, for a total fuel burn of 20.6 tons/hour. Given 290 steaming days/year (80% capacity factor, which is conservative), this yields a total annual usage of 143,400 tons or about $64.5 million in annual fuel costs.
http://forums.anandtech.com/showthread.php?t=2104482
$64 million annually in fuel consumption? Figuring a 20 year lifespan, that’s $2.5 Billion in fuel, assuming a 10 year fuel cycle (the military ships can go from 5 to 20 years between refueling). That’s a pretty big chunk of cash that Exxon Mobil would like to not lose. But they don’t have a thing to worry about.
Up until this point the thing that has separated us from the machines has been our mind – thus every other technological invention up until this point has simply been an extension of that mind. This will not be the case in the future.
The problem is that once technology builds minds that are as good and better than ours, there is NOTHING we will bring to the table from an economic standpoint. What many don’t seem to realize is that WE are biological robots – just as an old phone can’t compete with a newer one because it’s better and cheaper, there is no way that we could compete with robots with advanced AI..
From an economic standpoint our purpose is to provide output of some value to the system in exchange money and goods. When there are entities out there that can not only out-compete us physically but mentally there will be no use for us in the system at all.
I think this is what religion has always been about, the non-material, the not strictly economic aspects of life that we define as part of human nature. Perhaps we have reached that plateau of economic/material well being, where socialistic schemes to slice and dice and divide up the wealth differently and give everybody a free cell phone and a mandate to buy health insurance will not produce happiness.
What we define as poverty in the USA today would be middle class or upper class in most places in most of human history. Even the old kings of England did not have the luxuries we have: no sports cars, no airplanes, no cell phones, drafty palaces lacking window glass, unventilated smoky kitchens, chamber pots instead of flush toilets, no computers, divorces hard to come by (needing papal approval), etc. With half the USA on food stamps and/or some form of government dole, the basic needs for staying alive are met most of the time for most people, though not all the time for all people.
We are probably maxxed out on socialism in the USA, unless we want to go the full progressive/Bolshevik route and emulate the failed Soviet and Eastern European systems with their lack of individual freedom in the name of achieving equality and the worker’s paradise. With Obamacare, the socialist mandates are now decidedly totalitarian in their removal of individual choice/freedom to achieve the same domestic goals as the former Soviet and Eastern Europe communist states. That is by definition tyranny. When we stop inflicting domestic tyrannies upon ourselves, we might stop inflicting them abroad too.
I honestly do not know what will happen in the future. Past is prologue, however. I believe the owners of capital (I.E. the robots) will use the robots to maximize their profits. Human nature is callous and insensitive. The owners of the robots would otherwise enslave humanity (I.E. the movie Elysium), except human consumption is needed or there would be no need for the robots or the owners of the robots. Hence, a tax transfer from the profits of robotic ownership will be created by producers and consumers to maintain demand and a general standard of living. The political system will have a fun time sorting this one out, but it will occur. Another alternative would be to set the human minimum wage at $1,000 per hour. As Mish points out, the robots will lower the costs of everything. Since bonds, mortgage and credit cards are all fixed obligations there will be mass defaults as deflation really sets in. I think most people will work at part-time jobs – many of which require human interaction. Goal-oriented living may cease to exist for many. Why bother. Many would be free to seek artistic endeavors. Elementary education will need to be replaced with a computer interface that directly and wirelessly inputs data into the human brain over the course of years and causes neuro-pathways to develop without pedagogy. In a sense, we will be born old. There will be no public elementary education in 100 years. Such an “education” will become compulsory because it will significantly reduce costs, helps humanity keep up with the machines and will generate HUGH benefits. Once a mature adults sensibilities are implanted in to younger persons as a part of their education, the indiscretions of youth will be eliminated. That famous expression of, “If I knew then what I know now” will become a reality. The human population will shrink (naturally) because in a world of plenty and luxury writ large,a small nuclear family will become the established norm, it is also ecologically more sound.
If the owners of this technology are able to produce ALL of their needs without human labor, why on earth would they care if there are any consumers besides themselves? Prior owners of centuries past were not concerned so much about commerce, but minions waiting on their every need, plus providing manpower for defense.
Would not Utopia look like a society with relatively few people, all of which living very well and “saving the planet” as a bonus. We are being warned daily of our very existence as a threat to our world.
FFS! When all the crumbling infrastructure, collapsing medical & education systems, filthy cities and all the other problems out there have been dealt with THEN I might start worrying about robots taking ‘our jobs’.
What we have now is crisis of government meddling preventing ‘our jobs’ through well engineered perverse incentives and unintended consequences.
Meanwhile everyone chases their own tails in MSM informed debate.
Robots are only a response to this meddling, as is illegal immigration and “free trade” which allows cheap goods to flood into our economy.
[What happens if jobs that provide a living wage shrink faster than population growth? Is that a realistic and likely possibility?]
It is VERY realistic and this happens every time there is a recession/depression. Violence, be it within society or between nations, erupts as a survival mechanism. The individual places their own survival needs ahead of another and fights for resources. One perspective is the welfare system is a form of bribery to avoid civil unrest due to jobs decreasing faster than population growth.
People who think in terms of either Capitalism or Socialism being the best humans can do are making some huge assumptions based on junk thinking. Management and Planning is management and planning regardless of who pays the bean counters and analysts. Black and White / either – or thinking is generally a symptom of a cognitive deficiency. Probably the only real advantage the system we call “capitalism” is that there are supposedly “competing managers” and all the economic eggs are not in one basket. Of course the winners end up with more eggs, and pretty soon they succeed in increasingly controlling virtually everything – including public opinion. There doesn’t seem to be any more moral basis for the decisions of communist dictators or fascist dictators or corporate boards of directors, or Monarchs. One thing they all have in common is that they need a system to keep functioning at a basic level or they lose their position – and they will all enlist the aid of propagandists to try to keep an adequate number of people on their side. America is successful and dominant for a lot more reasons than “Capitalism”. I’m probably closer to being an anarchist or libertarian than a socialist or capitalist – and in my younger years, I used to wonder why, if what we call “capitalism” was such a great system, people all over the world didn’t automatically flock to adopt it and support it ? Why is it necessary to bomb countries and subvert governments to impose this wondrous system by force ? I think I’ve got a pretty good idea how what we call “capitalism” has transformed other nations, and I think the same transformation is being turned on the US and the EU (privatization, lower wages, re-distribution of income upward) and tension is increasing around the world rather than decreasing. World-wide, people are feeling less safe and secure and hopeful. Robots are an inevitable part of the progression.
Never underestimate the power of persuasive snake oil salesmen on the weak minded.
People don’t like change and are particularly defensive of their lifestyle, which is why those in govt will protect theirs at the expense of everyone else’s – even if it results in destroying the country and potentially breaking up the USA, which TX Republicans are taking very seriously -https://www.armstrongeconomics.com/armstrongeconomics101/basic-concepts/us-breakup-becoming-more-mainstream/.
Since a large majority of investors, financial advisors, and fund managers fail to beat the S&P 500 and often lose money because they succumb to their emotions, and rationalize their losses with faulty theories, like random walk, it’s past time for these people to be replaced by smart AI models. Luckily, the solution is becoming available, now -https://www.armstrongeconomics.com/socrates/.
Socrates is also better suited for making political decisions that are in the best interest of society, as politicians can only pretend to influence the cycles of the invisible hand, wasting lives and treasure in the process.
Ha Ha…AI – HFT – algorithms – once so called mechanized “trading” is in place, the profits will be distributed how ? and the costs of trading will plummet due to the “efficiency”?, and the financial sector’s increased “share” of the economy will diminish? and people who actually work for a living will all be better off? and the ass-hats that defend their lifestyle as “traders” can all go to work at Starbucks – until they too are replaced by robots.. Good think they don’t have robots to walk dogs, clean houses, or run day-care facilities..
My HFT algorithm vs your HFT algorithm vs Goldman Sach’s HFT algorithm. Pretty soon everyone will have one, and once again the field will be leveled.
If you read about Socrates, and the $100’s of millions that went into the data and validation, you will quickly learn that what I am talking about is SO far beyond HFT and quants it’s laughable. The next four years will prove how little the so-called experts know, and the poor people that rely on them will become truly poor.
There are probably families that went into antiques so they could keep selling buggies whips, but most people either adapt or die. After continuously repeating history and making the same mistakes, maybe a society will some day figure out there must be a better way. Until then, I guess we will have to continue to listen to politicians sell socialist ideas that claim govt has the answers.
The central issue of our time is patent abuse. There’s good reason for that, and I call it the Shaun White phenomena. You might chose to call it the Tony Hawk phenomena. Shaun White is a professional snowboarder. Many of the tricks he does are considered the most difficult ever attempted, even considered impossible. But once he performs it, the next season everyone is doing it. Once someone comes up with a fancy new computer program, everyone else sees it and quickly comes up with something that does the same thing. Then the lawyers get involved.
So yea, I’m sure there’s some revolutionary new AI that will do incredible things. And 6 months from now someone else will have something that does the same thing. If they’re lucky the first guys won’t sue because then they’d have to reveal the “secret sauce,” and maybe they won’t want to do that. If not, game on and I’ll see you in court.
And one more thing: all these programmers go to the same schools, use the same programming tools and attend the same conferences. I’m pretty sure they all are rowing in the same direction.
It isn’t different this time either. I don’t think human wants can ever be satisfied, and if they can’t, people won’t ever run out of things for which to strive. Peter is just the same kind of person who made the same kind of arguments 100 years ago as people on family farms were being marginalized by automation. Technology deflates the real costs of goods and services still wanted today. The nature of labor will adjust as that technology advances (perhaps 100 years from now the average work day will only be 2 hours). The only thing one really needs to ensure is that the development of productive capital not be hindered. That is the danger from people like Peter.
Real people weren’t worried about the lost opportunity on the family farm, they were already headed to the city to make some money and meet girls.
More laissez faire capitalist fairy tales…
Beginning with the life expectancy BS… almost all of the recent gains (to the “average”) are the result of massive changes in infant mortality (the reason the “from birth” figures are used in this Fairy Tale).
List of religious figures who lived > 100 years…
https://en.wikipedia.org/wiki/List_of_centenarians_(religious_figures)
Facts can be such a bitch, can’t they!
@David,
“(Some will lose their jobs and not adjust.)”
Exactly, but to the good. Creative destruction is a necessary ingredient of evolution
Creative destruction has been temporarily suspended. People who are losing their jobs are being sustained by debt and redistribution, neither of which are long term sustainable
The final step – Robotic cell phones will take their own selfies and eliminate the need for millennials.
Mish, you argued that deflation would be a good thing, but complained that the fed continues policies explicitly to fight deflation. For a moment, let’s assume robotics and automation lead to lower wages and lower prices; That a stagnant or falling wage is more than offset due to a stable or increasing purchasing power. Not only TV sets, but most other prodicts and services fall in price. There’s a problem with that.
In an economy where money is created only via bank loans (debt), all kinds of financialized loans have to be paid. School bonds, road repairs, pensions, etc. To pay these debts without defaulting on them requires tax collection, typically from income and sales receipts. If wages fall, and prices fall across the board, defaults increase as their is not enough revenue collected to service the enormous debt load. Hence, the central banks of the world continue to bring about inflation at all costs.
To solve this problem it seems to me somebody would need to develop a different kind offinancial system. Neither capitalism nor socialism is the answer to the dilemma.
debt, especially central bank sponsored debt is the problem. The solution is to get rid of the Fed
No new economic system required
…but a new political system is needed. One that is based on true Democracy, or short term limits where so-called Representatives are forced to live by the laws they pass. The problem is Congress, which believes they can continuously deficit spend without any intention of paying anything back. The anti-establishment movement across the globe is proof that the problems start with govt largess.
“What will happen when a Robot takes your job?” Just like has happened before … you are unemployed, period, adrift, you may or may not qualify for government food, housing, etc. Much depends on your through knowledge of the system. Right now people who really know the system and use it, live without work, free to pursue their pleasure (making babies to increase income) and a few bucks here and there from protesting.
To the dismay of establishment politicians and the gullible people that believe their BS, the system they sell and you describe is coming to an end. NOTHING keeps moving in the same direction forever, as everyone will realize in the few years, with the popping of the govt debt bubble.
Venezuela is a population of redundant slaves devoted to eating government free stuff and making babies. Watch and learn.
Why not just watch Chicago?
Obviously they need more robots. Or Obamacare. Remember that Pelosi told us that people would no longer need jobs simply to provide for their healthcare and could pursue music and art rather than the tedium of a JOB.
so if tech is so great mish, then why are you bitchin about the driverless truck? shouldn’t the driverless truck create thousands of more jobs than it eliminates? if so, the autonomous vehicles are booyah and stop complaining about them. if they are a problem, then your tech is booyah spouting in this article is BS. your talking out of both sides of your face
How is it possible for you to be so completely obtuse? Mish doesn’t COMPLAIN about self-driving trucks, he EXPLAINS that self-driving trucks are inevitable, desirable for productivity, efficiency and safety and will result in the disappearance of millions of truck-driving jobs. Mish has never to my knowledge made a judgment about this trend. You are just another shallow mind who conflates explanation with endorsement or condemnation.
As a regular reader I would swear Mish is pro driverless truck, cotton gin, cotton picker, automatic elevators, and the horseless carriage.
Precisely when did I complain about driverless trucks?
Actually I welcome them – should lower costs – to the benefit of everyone except those who want to drive a truck! Mostly, I point out the trends. Regardless of what anyone wants, they are coming. The side effect is millions of truck driver jobs will vanish. That’s not a complaint, it’s a statement of fact. Here’s another one: Millennials don’t seem to like driving trucks. They are having a damn hard time finding new, young drivers.
– If young drivers are no where to be found then one should pay higher wages, right ?
Yep – thus the push for robots
Lower cost is to the benefit of everyone but the truck drivers
There will always be jobs, many of the existing jobs will vanish, but we will create new jobs and new experiences. I m not worried about technology taking jobs away, but I worry about the people not being able to learn new trades fast enough to change their career. We have to keep on learning or we fall behind and can’t find high paying jobs.
No that actually isn’t the pattern of history. Go back to a hunter-gathering society, everyone had jobs. Maybe there were a few sick and old people who were supported by the tribe who didn’t do anything, but that was a very brief state of affairs. After the industrial revolution, leisure time expanded and we started creating social classes who didn’t have jobs…’retired’ people, ‘homemakers’ (ok housewives work but the Victorians had an upper class of housewives who had servants)…in modern times we have adult kids bumming off parents, ‘hangers on’ that attach themselves to rich people (think Cato Cailyn just hanging at OJ Simpsons house). If technology advances chances are the # of jobs overall will likely continue to decrease.
If/When robots take our jobs then demand will drop as well. Unless we see an increase of the population of a country or a (sharp) rise in debt. But US population doesn’t grow that fast any more, the “family spending cycle” (think Harry S. Dent) spending has peaked and debt growth is tepid (at best).
Robots also will increase income inequality and that leads to the next finiancial crisis. (Never read Steve Keen & Michael Pettis ?).
I’m not seeing the need for an increase in debt. If robots are owned by people, then their income would be taxed either as individuals or corporations. If robots are not owned by people then presumably they would still be taxed on the income they would earn making and selling stuff to people. Either way your debt ‘problem’ would be solved with higher revenue.
Or you could solve it by printing money. At the end of the day if robots keep increasing you wouldn’t have an inflation problem since they could just keep producing more goods to chase the increased quantity of money.
But why, then, do robots care so much about getting money? Are they simply controlled by us? If so money can simply be a way of allocating the winnings of the bounty of robots. The gov’t distributing a universal income would actually not be unprecedented. After the Louisanna Purchase, Congress essentially passed out free plots of land. If you wanted one you could have it. People who had income already mostly didn’t bother but those who didn’t staked out their claim. An army of robots is a bit like scoring a massive land purchase for next to nothing in that regard.
If the robots do need something from us, however, then the money they earn would come back when they purchase from humans whatever they need from humans. Robots would simply be a trading partner.
I think Mish is wrong on this, which is rare so I admit I’m sticking my neck out here. We have already locked horns via email on the ‘universal living wage’ (ULW) idea, which he ridicules. I think that for the first time, really, robots are a major problem w.r.t. employment … so in other words it’s actually different this time. The main reason is that robots will soon(ish) be at least equivalent to humans, in most respects. So why would you ever employ a human? The major problem I see with the ULW is that politicians will always pitch it too high. It should be set at about 50% of minimum wage … which may or may not be feasible. What will happen? Robot taxes, perhaps, to fund a ULW. Or communism. Mish – I think you should re-visit this topic from time to time. Reader Peter has asked a very good question, and I think your view on it is complacent (don’t worry it’ll be OK cos it’s always been OK). The repercussions of (at least) human-equivalent robots on a world of 7 billion humans with exponentially increasing lifespans and as yet few birth limits … it’s either communism or Armageddon (or both) unless someone truly brilliant takes the helm to steer humanity through this. That’ll be Donald, then ;O) .
Problem is that a ULW is set by force (law), and what is set by law is adjustable by law, hence open to endless manipulation. It is an ethical question – should everyone be in public debt ( hence at mercy of gov.) so that government can distribute to everyone?
If you said to me ‘ let’s scrap all benefits, pay out revenue equally to all, and fix taxes at 10% ‘ I might think it was in the right direction… but then what happens when a majority want 20%, 30%…? If you had subscribed to the initial idea you no longer have any moral defence.
I think no-one is more able to defend their interests than a person himself, that is the way communities and societies are formed, by direct interaction, not mandate, so the more you move towards a central authority, the weaker society will be.
Government, on the other hand, has a problem on its hands – millions of discontent adherents looking to it for a solution that it does not have but will try to invent, and probably look to profit by itself.
Communism was always capitalism, one where you capitalize on the work of others and by contributing the least in return. Maybe it would work where people were expected to provide nothing in return, but it would have to be renamed to something like celebrism.
“If you hand out a living wage for doing nothing, the amount it takes will escalate rapidly…Central bank actions are the key problem. They are hell bent on inflation.”
This is incoherent. The ‘robot revolution idea’ is essentially that robots take over being both labor and capital and resources. Robots both make stuff for us to consume and they also make/repair other robots and also mine resources needed leaving no need for human intervention.
This leads to the question of how robots will know what to make? How will they know we will want UHD TV’s next year as opposed to a new type of iPhone? The answer would be how do we answer that question now? Markets, robots would be trying to make a profit. When they miscalculate shortages will cause prices of favored goods to go up and unwanted goods would go down. Initially robots would probably be owned by people so they would get very rich but over time independent robots would probably become very good at predicting tastes and they would reap larger profits.
At this point IMO you have a very good chance of achieving a post-scarcity society. That is the point where goods are so cheap to produce that you start to get humans to satiation point. Think of how they make food on Star Trek, you tell the computer what you want and the dish is ‘beamed’ out at you. There is no shortage problem because the ship can easily supply as much food as people can eat without any real dent in resources. That wouldn’t be socialism or capitalism but simply post economics as economics is about how to allocate scarce resources. Human consumption is not in fact infinite. There’s a finite limit to the stuff we can consume. Super rich people often end up being savers because they literally cannot consume their wealth. If you start buying mansions, yachts and private airplanes you actually get to a point where you’re just investing in assets rather than actually consuming. Throw in super-hd virtual reality and it isn’t impossible that we could get to such a point.
What if we don’t have a ‘post scarcity’ environment? The robots are able to do all the jobs but they are not able to produce Star Trek like levels of infinite goods then I would say the critical question is “do the robots need anything from us?”
If they do then we still have jobs, the jobs would be producing whatever the robots need from us. We would just have a new trading partner. If they don’t, then the big question is why are the robots doing all this work for us? So we retain ultimate control?
Hypothetical future world:
In future world Facebook creates an army of robots and 3-d printers that can produce products for next to nothing. In that world ‘content’ becomes the main good produced. Just like with phone apps, it costs nothing to actually have the product, you only pay if you want a particular design. Just like with phone apps, you can live more or less forever on the free stuff. For example, you can have a roll of toilet paper for free that has digital ink on it that constantly shows you ads. If you want to spend $0.50, the owner of the tp design will give you an ad free version.
I would say in this world, most people would not have jobs but then most people would not want them. Those seeking status might work in order to buy the ‘best’ of everything.You would still have money, saving, taxing and borrowing but the actual measured economy might be much smaller.
The law of comparative advantage might also still hold. You may recall the analogy of the world’s greatest lawyer who is also the world’s greatest typist. It makes sense for him to hire an assistant to type his briefs even though he will be a slower typist because it’s better for him to spend an hour billing at his high rate and use that to hire an average typist for 8 hours a day than loose even an hour of time typing. Even if robots do every job better than people, it would still make sense for people to do the job they are least better at so robots could center on what they do best.