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.

Computerized Technology and Robotics Have Ushered In A New Era

The Intellectualist' magazine published the following table showing a shap change in economic performance in 1980---and someone asked me to account for the change.

January 2 at 11:27am · 

The Intellectualist

December 27, 2016 at 2:52pm · 

"The Great Regression" - Do you notice where the change occurred? (Credit: The New York Times)

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And so I responded!

Apple computers were invented in 1976, and in 1977, my employer purchased 12 and provided me with one of the 12. My secretary had a very user-unfriendly IBM wordprocesser at the time where a lengthy address had to be inputted to find and access files

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Apple used a menu of icons to easily find and access files, a system Microsoft copied in producing its windows operating system, which then became the norm for office computing and sparked similar ease-of-operation systems in the development of computerized mechanization of manufacturing technology.

 
All this happened starting in about 1980 to exponentially increase productivity, lower prices, and foster high employment and wage gains during the transition.

 
The reverse is true now with growing unemployment as robotics and other computerized technology steals most jobs which will usher in a new era when few work and sparking new rules about how we keep consumption necessary to keep the economy afloat for the new world.

Stephen Hawkins says, "This is the most dangerous time for our planet!"

Change is necessary to avoid revolutions of the kind experienced in both China and Egypt, the conditions of severe economic inequality and lack of opportunity for a decent life that i was able to witness first hand shortly before their uprisings.

Brexit and Trump's election, along with massive job losses via robotics, are early signs that revolution is near, something i have been writing about on this site since 2006.

Massive change in our thinking of how we cope with precarious part time, contract, and casual work, job losses due to technology, and in fairer sharing of the wealth and opportunity in our society is necessary to avoid revolution, rebellion, and impending gloom.

But don't take my word for it...see Stephen Hawkins ideas in this article i discovered today.

The Next Technology Revolution Will Drive Abundance And Income Disparity

The new technology revolution will result in dramatically increasing productivity and abundance but the process of getting there raises all sorts of questions about the changing nature of work and the likely increase in income disparity.

With less need for human labor and judgment, labor will be devalued relative to capital and even more so relative to ideas and machine learning technology. 

In an era of abundance and increasing income disparity, we will need a new version of capitalism that is focused on more than just efficient production but one that also places greater prioritization on the less desirable side effects of capitalism---such as a fair distribution of the riches of the economy in light of few jobs.

Read what Vinad Khosla, Co-founder of Sun Microsystems, says about this!

The Day Of Reckoning Is Near!

Here is yet another explanation of big scale economic changes taking place in the “developed world”----the concentration of wealth in the hands of a few as technology replaces workers.

While productivity continues to grow exponentially, worker’s employment and share of the growing profits and employment continues to fall! 

The day of reckoning is near!

Who is going to consume all the output from those machines when few people work?

Is anyone thinking of how to keep the economy working when few people have disposable income, consumption falls, and all those companies without sales shutter their doors because of lack of business?

If not!  Revolution is at hand!

And here is the full story why Canadian Workers should be angry enough to drive that revolution!

Shangra Lai is near!

The best of our world's future Shangra Lai is near, when robotics and computerized technology will replace most human work, and unchain us all from the imprisonment of work---replacing what we have to do with what we want to do.   

Paid work is a recent phenomenon in human history only arising in the last 200-300 years, while unpaid slavery started in our earliest civilizations and co-exists with paid work in some societies even today.  Before work was paid, it was mostly individual or group subsistence in a sharing society. 

The challenge in the new future will be for humanity to adjust to productive use of leisure time,  

I do believe that without human jobs, a fairer sharing of economic wealth will result through guaranteed income plans which will necessarily arise to keep the economy afloat.  This will result in a greater equity and higher living standards for all and poverty, greed, crime, war, disease, etc. all will be eliminated...all part of our future "civilized" Shangra Lai.

As a transition to a jobless world, I believe that the work week, which hasn't been adjusted downward in 60 years from 40 hours per week despite the arrival of computerized technology and robotics, should be reduced to a level, perhaps full time work of 20 hours per week, to reduce growing unemployment levels and to allow all to job-share and profit from the new technology as well as to provide all learning opportunity to adjust to more leisure time.  Also the increased productivity of the computer age should allow pay to be tied to productivity rather than hours worked.

I am pleased that Elon Musk has recently stated that he too agrees that some form of guaranteed income is inevitable as technology steals most jobs.  

Musk states he is not sure of funding mechanisms for the universal guaranteed income plans but this is a topic I have given thought to, and a post on this site of my thoughts and ideas on the topic is being prepared for an upcoming posting.

Ontario proposes major test of guaranteed minimal annual income plan

Ontario is poised to become ground zero for what may be the largest pilot project yet to test the notion of a basic income in North America.

In a discussion paper released Thursday, Ontario’s special adviser on basic income suggests topping up incomes of the working poor and replacing the province’s meagre and rule-bound social assistance program with a monthly payment of at least $1,320 for a single person, or about 75 per cent of the poverty line.

I see this as a trial study of economic systems that will be forced to emerge widely in the near future to supply consumption to keep economies afloat as most workers are replaced by robotics and other computerized technology.