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Will Automation Lead to Economic Collapse?

Most of the agriculture and industrial jobs are already phased out by machines. Over 70% of jobs and labor is currently to find in the service sector, but also this sector is being phased out and replaced by automation which means decreased purchasing power of the general public. Just take a look at this: http://www.thefiscaltimes.com/Articles/2012/08/20/Will-Robots-Cause-Mass-Unemployment-in-China.aspx#page1

Let's make an example as well. What exactly happens when people get automated by machines? They loose their jobs and need welfare to support themselves until they get a new job, if they ever do. But, where does welfare come from? It comes from tax payers. And do people on welfare pay taxes? They don't. So, what happens when everybody is on welfare due to automation and nobody pays taxes? This example is the reality in Michigan and the government there have been on the brink of shutting down due this exact issue. And we are beginning to see this never-ending spiral go out of control in the rest of the world. The trends are definitely there, but where's the solutions?

Is an economic collapse, in fact, an imminent event and a mathematical certainty, looking at the trends in Michigan and China? And is there a way out of this, looking at it in an economical perspective?

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    Sep 9 2012: I see 2 main problems with increased automation.

    One is runaway productivity, as Tres English explained earlier in the thread.

    The other is centralization of wealth. Excessive wealth centralization is dangerous for the economy. People often argue that jobs will move to the service industry, but if all the wealth is moved to a tiny fraction of the population, how many jobs could there possible be to serve them? I don't see any solution to the dilemma. Technology was supposed to make our lives easier, but over the last 40 years people have had to work more and more to get by. There was a time when a single income family could own there own home and raise 4 kids. Now both parents have to work, people put in more overtime, go into student debt just to get a job and are no farther ahead.

    Something needs to change so that when robots do the work for us we can celebrate and relax, instead of having to work harder to get by.
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      Sep 9 2012: today we have bill gates. but walmarts and tescos all around the world does not sit tight waiting for bill gates to finally walk in. people cooperate with each other, work for each other.

      you have a total unrealistic view of the world or of the future. wealth does not concentrate in few hands. maybe it does in percentage. but the total sum of wealth in poor people's hands also increasing. that is the direct consequence of markets: in an exchange, both parties benefit. in a capitalist future, there might be some super rich that makes trillions of dollars. but the average fella also will have more than today.
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        Sep 9 2012: I'm glad you brought up Walmart, since it is a perfect example of my point. People who work at walmart don't make enough money to support their families. Poor people in north america are not better off than they were 40 years ago. They are poorer if you account for inflation and have to work more to survive.
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        Sep 9 2012: I know someone who works at walmart, he makes just over 10 dollars an hour in Kelowna, British Columbia, Canada.
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        Sep 9 2012: I don't know what the cost of living is in budapest.

        Let me ask you this, could you support a wife, 2 children, buy a home, pay for the kids education and have enough to retire? That's what my father did with a grade 12 education. This is what I mean when I say that the middle class is in fact not richer than a generation ago.
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          Sep 9 2012: now wait a second. nobody said you are richer than a generation ago. i said the free markets bring progress. you don't have that now. not since the "progressive" era gradually destroyed it. this fall in real wages is a very nice example why we don't need government interventions. you will see more of it.
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      Sep 9 2012: The state of affairs reminds me of a turn of the 20th century communist prescription to capitalism's future. "You can't fix a problem with thinking that allowed the problems to start."" New evils must be fought with new innovation" Who are you, Krisztian, to say someone has a total unrealistic view of the world? How does wealth justify the suffering and injustices classes of wealth creates? People's whole value system and goals in life have a dollar sign attached or some material object to be cyclically consumed and not the real intrinsic value of quality, thoughtful consideration to posterity, and self-fulfillment we all owe ourselves before we die. The average fella is gonna keep taking whatever the government will give him as he's getting workied more and more to maintain profits in the face of automation until we experience economic meltdown or continued wars from failure to adapt.
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        Sep 9 2012: it is kind of a pity that these false statements are around for 150 years refuted. so what do i do? give up, for if 150 years was not enough, we have no hope? depressing. or should i just open up any web page refuting marxism, and copy-and-paste stock answers to these stock questions? or should, as i used to, try to find some entertainment value for myself in trying new ways to shine light on things. but i find less and less satisfaction in it.
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          Sep 9 2012: "but i find less and less satisfaction in it."

          Tired of talking to yourself?

          Me thinks that some are awake and most ain't...
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          Sep 9 2012: Only a couple problems with your history lesson. The internet wasn't available until recently. Since change in technology is happening exponetially, the current economic model can't keep up. I'm all for free enterprise and capitalism but it's current condition is riddled with corruption and in the fact can't keep up with the imbalance of collapsing demand due to the death of competition.
    • l aresu

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      Sep 10 2012: i do agree so much with you scott, and your fears are mine and many many million people around the world. if you don't have read it already have a look at jeremy rifkin's "the end of work" that deals exactly with this topic and gives a gleam of hope. i'm worried as you're about an excess of automation as i don't believe that there is a solution with mass-employment in view of the loss of so many working places. my parents have greatly enhanced their living conditions compared to the condition of my grandparents. they'd got better salary, incredibly more rights (as payed vacation, they were payed if they got ill ecc..) while i belong to a generation that's swimming in a swamp, with little or no guaranties at all, nor for working conditions nor for retirement, it's the first generation since many decades where the sons get it worse than their parents.

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