Over the course of history productivity has increased. We’ve moved from a primarily agrarian society to one clustered in cities, working in factories and communicating electronically. The rate of change, of new innovations and of productivity has increased geometrically. By geometrically, I mean it has been increasing at a constantly faster rate of change and this is likely to continue into the future.
The increases in productivity in my lifetime has been amazing. The amount of work one could accomplish 50 years ago pales in comparison with today’s world with its advanced computer and communication tools. This might have led to people spending less time working, having more earning power and enjoying the spoils of this increased productivity. Instead it has resulted in a relatively small number of people becoming obscenely rich. Yes, obscenely is the right word.
It has been much easier to make money with money than to earn it. There are structures in place that make this happen. If you invest money and earn income that increase (and only the increase) is taxed at favorable capital gains rates. These rates are typically half of what the average earner pays on their income. This is supposed to keep the wealthy investing their money, as though there were other options.
What does the future look like? If productivity continues to increase (and it will) there would theoretically come a day when people wouldn’t have to work at all and food would still be grown and delivered to your home, products would be made and sold, and the government will continue to run – all with robots and the like. Theoretically, anyway. Perhaps in real life this will be an impossible goal to achieve but.
In the next few decades it is highly likely that driverless cars will become the norm. Think of all the jobs that innovation will replace. No truck drivers, no cab drivers, no trash collectors, no UPS or Fedex. Eventually no postmen – and I say eventually because government agencies are the last to innovate. Jobs that will just disappear. Robots are already replacing humans in the manufacturing sector and as much as the politicians want to rebuild a manufacturing capability in the US we know this is a futile fight.
When these jobs disappear where will the new jobs come from? Well there will continue to be jobs in science, technology, and innovation. There may be new jobs created in the leisure industry assuming that people have more free time and the money to enjoy it.
But what if jobs disappear at a faster rate than they are gained which I think is highly likely. Higher unemployment and more competition for the jobs that are left. More competition for the jobs that are left means a great gap between earners and investors (or the poor and the wealthy). As the poorer class grows from unemployment increasing and wages decreasing, a dangerous social situation will arise.
The greater gap between the rich and the poor will lead to more crime, social unrest and perhaps even revolution. Possible answers to this is to find a way to fund a welfare state, create unnecessary or optional jobs, artificially inflate wages for lower level positions, lock up a significant portion of the population thereby taking them out of the equation, or find another ways to redistribute the wealth. Or a combination of the above. I’m sure this list is not totally inclusive and I would be interested in your ideas about how this potential problem might be averted.