I was watching Keiser Report here. They had Robert W. McChesney on saying how Capitalism had no answer to robots taking everyone’s job.
Here are the videos, the interview was over two episodes.
Part 1. Skip to 12.30
I dont agree with a lot of what he says, but maybe he has a point.
Will robots take everyone’s job? And what will happen if they do?
First we must understand why robots would be used in the first place.
Because they are cheaper than humans.
Technology being what it is, the price of robots will continue to drop.
So what will happen?
The price of things will drop. Things will become cheaper.
But why are robots cheaper than humans?
This is an example of McChesney’s lack of understanding. Taxes and regulations are making people uneconomic to employ, at least for low skilled work. The rules and regulations are coming from government, not capitalism.
OK, going back a step,things become cheaper, what effect will this have?
Number one effect, people will not need to work as much or earn as much to maintain the same quality of life.
With more robotisation, wages will inevitable drop alongside the price of everything.
What is the biggest problem with this picture?
In a word, government and the cost of running a government
In Europe at least the burden of government at today’s prices is 40% of total GDP.
There is no way the cost of government will drop at anywhere near the speed of the drop in prices of products and services.
And the reality is , there is nothing to believe that the cost of government will reduce at all.
What will happen if the price of government does not drop inline with prices?
As people are having to spend less and are getting paid less, taxes will inevitably increase in order for government to continue bringing in the same amount of revenue.
As taxes increase, the speed at which prices drop will be severely limited but at the same time people will be getting paid less due to robotisation.
We are looking at a scenario where people will be working harder, for less wages just to support their government.
The biggest obstacle facing mankind in the face of robotisation will be governments.
If governments do not reduce their cost on the population at the same rate as the cost of goods and services are reducing, the people will have a lower quality of life than they do now.
People will be working harder for a lot less money, assuming they will be able to find work at all.
Imagine today, a person earning 30,000 GBP a year gives where 12,000 GBP a year to the government. Now imagine the future where the price of everything came down by 90% and the price of wages also came down by 90% and yet the government still demands 12,000 GBP a year from the same person, who is earning less, so the government can continue to function.
The maths do not add up.
Governments around the world are imposing minimum wages or increasing the levels of the minimum wages they already have.
This is a recipe for mass unemployment.
The more people that are unemployed the less money the population has which in turn feeds more unemployment.
The minimum wage coupled to governments increasing their burden on the working population in an environment where the cost of production is decreasing and where the cost of automation is decreasing is a recipe for a massive and permanent recession.
The cost of government must reduce in line with the cost of products and services
If it does not, it will only accelerate the speed of automation which will amplify the problems caused by governments not reducing in size.
The cost of taxes and the cost of wages must reduce at the same speed as the cost of everything else .
It is reasonable to believe that with robotisiation, the cost of goods and services will reduce by 50%.
This will mean a 50% reduction in tax revenues for government
The issue is, I do not see any government reducing in size, the opposite.
Governments are increasing their payroll and paying higher salaries. This is not a situation that can continue.
Robotisation has the potential to massively increase the amount of free time people have.
The single biggest threat to this is the size of governments, if they do not reduce their costs at the same speed as the rest of the economy it has the potential to invert the benefits of robotisation with mass unemployment and massively stunted technological progress.