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Does lower cost of living due to automation compensate for jobs lost?
For example, I'm a construction worker building houses. Then let's say a technology completely replaces my job because it's 10x less expensive than hiring me. I've lost my job. However, as companies compete using that technology to build houses more and more efficiently, the cost of housing would theoretically go down.
So my questions are:
1.Does automation actually reduce cost of living? (in an economy where competition is allowed)
2.Is the cost of living reduced enough to compensate for the people losing their jobs?
3.How much does the PACE of automation play a factor relative to other possible factors?
Interested to find any economic theories or concepts pertaining to this, whether relating to present day, or future.
- lukaszwojtow 4y agoDoes a digger replace a shovel? 1. Yes 2. Yes 3. Huge. IMVHO we need serious government involved to help people transition. AI is just a tool, just like a digger that made some things possible/cost effective (that weren't before).
- deleted 4y ago[deleted]
- PaulHoule 4y agohttps://hbr.org/2021/11/automation-doesnt-just-create-or-destroy-jobs-it-transforms-them https://hbr.org/2021/11/automation-doesnt-just-create-or-des... I'd point to the analogy with free trade. There's an argument, which holds up most of the time, that the benefits of free trade are so large that almost everyone benefits. (which seems to have been the case most of the time when people have been worried about automation and job losses) It turned out not be the case, however, for workers in the US when trade was opened with China in the 1990s because the magnitude of that change was so vast. Another case to look at is the mechanization of agriculture which tends to be associated with a "demographic transition" which is frequently associated with population displacement, genocide and democide. Why did American blacks, for instance, move to northern cities in the mid 20th century? I think it was because the mechanization of agriculture eliminated jobs. Before then there was discrimination but blacks had a place in the rural south. When the jobs went away there was pressure in the south to drive the unemployed out. The social conflicts caused by the mechanization of agriculture were severe in the Soviet Union and Maoist China and one could make the case that the associated demographic changes had a lot to do with what went down in WWI and WWII.
- incomingpain 4y agoUnemployment today in the USA is 3.7%. Practically speaking this is near the bottom. It's literally not possible to get to 0%. We have had decades, if not more, of automation and there's no affect on employment. So there are no jobs lost so far due to automation. So why exactly would I expect this trend to change? >For example, I'm a construction worker building houses. Then let's say a technology completely replaces my job because it's 10x less expensive than hiring me. I've lost my job. However, as companies compete using that technology to build houses more and more efficiently, the cost of housing would theoretically go down. The cost to construct a house is nowhere near the value of a house. >1.Does automation actually reduce cost of living? (in an economy where competition is allowed) What is the cost of living in an inflationary environment. Cost of living won't ever go down, the purchasing power of your time will go up. Imagine living in san francisco and detroit. You can live in detroit, have your mortgage paid off on a detached home with garage and pool. You can go eat whatever you want. You can sign up for any service. You can buy any gadget. To do the same in SF would require a salary whole orders of magnitude different compared to detroit. >2.Is the cost of living reduced enough to compensate for the people losing their jobs? If someone is automated out of their job. They go find a new job. So far we haven't run out of jobs. Yes the stableboys and horse trainers are out of a job today. >3.How much does the PACE of automation play a factor relative to other possible factors? The world is a big place. You can imagine the fastest rate of automation using automation and tesla's new humanoid robots and boston dynamics robots. No matter how good all that is... you can never automate many other jobs. Artisans, artists, etc.