4 ms·

> If you have a job that pays $20,000/year and you lose it to a robot, the silver lining is that the automation reduces the cost of living by $1000/year I thin

> If you have a job that pays $20,000/year and you lose it to a robot, the silver lining is that the automation reduces the cost of living by $1000/year I think that is a highly unlikely scenario. Automation is being introduced to reduce costs and so increase profits. There should be no expectation that these savings will be passed on to consumers. Even with competition, businesses are loathed to lower prices and instead will offer a better product or service for the same price. As a result the cost of living may not go down unless there is simply no market at that price. When that happens the outcome is not so clear. The company may adapt or simply go out of business.

fuzz4lyfe 7y ago
All these consumers now with lower incomes, why wouldn't you buy one of these robots yourself and capture this new untapped market? I hope firms will be stupid enough to do as you describe I'd love to be rich someday. The only possible reason why you wouldn't is regulation. If the government makes it difficult or impossible for you to buy the same robot that Walmart buys then I can see a point but that is exactly why there needs to be less regulation and taxes around automation.
AnthonyMouse 7y ago
> Automation is being introduced to reduce costs and so increase profits. You're ignoring the possibility of increasing profits by increasing volume. If you have $9 in costs on a $10 item and automation reduces your costs to $6, you can make a $4 margin on your existing volume, but that isn't as profitable as making a $2 margin on 5X your existing volume by undercutting all of your competitors and taking their customers. So you do, and prices fall from $10 to $8. Until your competitors realize they can get back all their lost business and then some by automating too and then charging $7. The only way this doesn't happen is a lack of effective competition. > Even with competition, businesses are loathed to lower prices and instead will offer a better product or service for the same price. You may want to familiarize yourself with Walmart's business model.

fuzz4lyfe 7y ago

All these consumers now with lower incomes, why wouldn't you buy one of these robots yourself and capture this new untapped market? I hope firms will be stupid enough to do as you describe I'd love to be rich someday. The only possible reason why you wouldn't is regulation. If the government makes it difficult or impossible for you to buy the same robot that Walmart buys then I can see a point but that is exactly why there needs to be less regulation and taxes around automation.

AnthonyMouse 7y ago

> Automation is being introduced to reduce costs and so increase profits. You're ignoring the possibility of increasing profits by increasing volume. If you have $9 in costs on a $10 item and automation reduces your costs to $6, you can make a $4 margin on your existing volume, but that isn't as profitable as making a $2 margin on 5X your existing volume by undercutting all of your competitors and taking their customers. So you do, and prices fall from $10 to $8. Until your competitors realize they can get back all their lost business and then some by automating too and then charging $7. The only way this doesn't happen is a lack of effective competition. > Even with competition, businesses are loathed to lower prices and instead will offer a better product or service for the same price. You may want to familiarize yourself with Walmart's business model.