19th January 2013
Martin Ford sounds the alarm.
I think there is a fundamental problem with this way of thinking: as jobs and incomes are relentlessly automated away, the bulk of consumers will lack the income necessary to drive the demand that is critical to economic growth.
Consider farms. Used to be, 90% of Americans worked on the land. Nowadays that’s less than 5%. All those jobs went away, and people didn’t have any money to buy food with, so everybody starved. Makes perfect sense.
This point here is that a worker is also a consumer (and may support other consumers). These people drive final demand. When a worker is replaced by a machine, that machine does not go out and consume. The machine may use energy, resources and spare parts, but again, those are business inputs—not final demand. If there is no one to buy what the machine is producing, it will get shut down. Think of on industrial robot being used by an auto manufacturer. The robot will not continue running if no one is buying cars.
Yeah, just look at what happened when robots replaced humans on the auto assembly lines. Everybody starved again. Makes perfect sense.
So what is the solution? In the long run, I think there will be no alternative except to implement direct redistribution of income. One possibility is a guaranteed minimum income funded by more progressive taxes (on the robot owners), and possibly by other sources (for example, a carbon tax).
I knew he’d get around to that sooner or later. Nothing can be done, so the government must step in, because we’ve all seen how well the government does stuff that people can’t be depended on to do themselves. Right.
Chicken Little here is asking the right questions but getting the wrong answers, because (like most fascists) he thinks that people won’t — or can’t — adjust to changing conditions. Is it a concern? Of course. Is it time to panic? Not yet. (And don’t take off your shoes.)