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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 11 2012: This is a question I raised with my friend early last year. The following ideas I suggested probably related to your questions.
    First of all, we have already heard the recent development of automation and robotics in manufacturing as well as in other fields such as education and health care. There is bound to be effects on the demand of labor force and the skill requirement of workers. For the developed countries, we will have much higher productivity in industrial products, thus the unit cost will be cheaper. So as long as we could manufacture consumer products to satisfy our needs, (except few things we could trades between countries.) there should not be serious consequence for all the people. In other word, as soon as most citizens of the countries could make comfortable lives with fewer workers by automation, then everybody can survive with perhaps more leisure times.
    I also would like to make a suggestion for the "life after automation". Since huam life span becomes longer which causes population aging problem. So there would be less productive worker and more dependent elderly groups. So, we could make available a condominium system with elderly in one wing on a floor together with able-bodied young couple with children in the other wing on the same floor, The younger residents will "adopt" one or more "adopted parent(s) or grandparent(s)" to care for the elderly. The arrangement will also use the developed automation and robotics to mechanize and automate lots of care facilities so that most of the caring would be done by robots operated by a push of a few buttons which, of course, could be quickly learned by the teenager adopted grandchildren after a brief training. The young couples (mostly unemployed) could be the managers, bookkeepers, cooks, etc. for the condominium or the building complex maintenance system. This system would be beneficial for both the children and the elderly because the human relationships could be beneficial to both sides

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