Friday, January 27, 2017

An Economic Model that Restores Jobs, Wages, and Profits in the Robotics Age

In response to inquiries, I have been inspired to dig deeper to further clarify thoughts I've expressed before but have never detailed through numbers. So following is an economic model that I've devised that returns and supports pre-robotics hiring and salary levels, as well as traditional corporate profit levels and that provides a reasonable and sensible model for the transition to the robotics future of little work. The major problem faced in most economic systems of all political philosophies is to glorify greed by concentrating wealth in the hands of a few. In Canada, for example, the two richest Canadians are wealthier than the bottom 30%. The rich and powerful are concentrating wealth by replacing workers with robotics, who neither get paid nor consume the product they make. Without acknowledging that in the end this slows down consumption ultimately resulting in the bankrupting of their companies as well as in helping to bring down the entire economy. The solution lies in evaluating merit of continuing the historical rules and ideas that are no longer working...Everything we know about economies and economic rules must change to alleviate the economic problems that we have to avoid upcoming revolution. In this case, historical practice and beliefs is a giant inert rock that is perpetuating a failing economy for most people. Change may require full-fledged revolution or international war but my hopeful wish is that change will come voluntarily and peacefully when all the rich corporate guys start recognizing their ensuing bankruptcy when robotics steals most jobs resulting in few product sales. A wise intermediate step would be to significantly cut work hours to retain nearly full employment with pay tied to productivity rather than hours worked. For example GM Oshawa used to employ 30,000 workers but now robotics has resulted in increased production with only 2000 workers, and huge corporate profits generated by cost savings from the decreased workforce. So GM could afford to hire the former 30,000 40 hr/week workers for 3 hr/week at the traditional old salaries based on productivity and not hours of work while maintaining traditional profit levels. Right now, the former salaries of the 28000 laid off employees is going to executive salaries and bonuses and record GM profits and investor dividends. Robotics will continue to deflate employment to near zero in the future. Lock step with this is the hope that common sense will prevail to insure that necessary change and revision occurs as needed to insure both sustainable economic health and a peaceful social future. Without voluntary and peaceful change to more fairness in the distribution of the proceeds of our North American economies, the revolutions in China and Egypt will be repeated here. Please note ---All figures quoted here are guestimates for illustrative purposes only---but principles used in their generation apply to the real situation.

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