The Impact of Robotics on the Economy.

For years, robots in industry have automated simple work. So far that has not led to higher unemployment, but the claim is that this will change.

The additional prosperity will therefore end up with a few people, the owners and managers of (large) companies. Initially the gap between rich and poor will therefore widen further. First, lower-skilled workers will lose their jobs and there will be no replacements for them. In the Netherlands they will end up in the safety net of unemployment benefits and social assistance. In other countries like the USA this will lead much more quickly to severe poverty. It is not hard to imagine that this could lead to massive discontent and possibly even revolutions. Hopefully that will only be an interim period during which policymakers make adjustments so everyone can benefit from increased prosperity. Designing and implementing effective policy is crucial to shaping this transition.

But ultimately this development cannot be stopped, simply because it is possible and a lot of money and power can be gained from AI and robotization.

Redistribution of wealth

If eventually higher-educated people are also forced into unemployment by artificial intelligence, the government will be compelled to intervene. This can be done by redistributing wealth between the (by then) super-rich and the unemployed. Because national governments will no longer have sufficient influence over multinationals, this will require cooperation. Let us assume the optimistic outcome and that this is ultimately achieved. We would then live with much freedom, leisure time and prosperity until the moment the last job is replaced by smarter robots. At that moment, or just before it, the economy as we know it disappears and everything becomes free. Robots produce everything, including the extraction of raw materials, and because they do not demand compensation they do it at no cost, 24 hours a day, 365 days a year. The prices of goods and services therefore keep falling until they eventually reach zero.

And then?

The economy has disappeared; being rich no longer makes sense because everything is free.

Will a shadow economy then arise, like the one that already exists between the underworld and the upper world, or will we try to distinguish ourselves in other ways? I don't know at the moment; what I do know is that the scenario above is realistic and that we must be prepared both for the period between now and the disappearance of the economy and for the period afterward.

But if we handle it well, we can actually achieve precisely what we have always wanted: more free time and enough income to live a good and dignified life. I therefore believe this idea is worth continuing to invest in innovation.

Recently Economou shared his view on what must and will happen if AI becomes more efficient than humans in many areas.