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The increase in efficiency adds to the economy: taking a taxi example, the taxi company doesn't have to pay workers anymore, so those resources are freed. The g
by darkmighty 12y ago
The increase in efficiency adds to the economy: taking a taxi example, the taxi company doesn't have to pay workers anymore, so those resources are freed. The government could simply tax a large part of that freed income (but not all of it of course) and use that to train the workers. The government doesn't even need to tax the resources directly, it can confidently pay assistance to the workers by increasing taxes anywhere since the economy essentially increased in value "globally".
- abakker 12y agoAn increase in efficiency only leads to an economic benefit if the aggregate demand can go up...freed resources would be a balancing act in this case. Is the marginal reduction in cost of a taxi worth the loss of all the earnings and expenditure of that person? Probably not, since not every dollar saved ever gets spent, while a person has a necessary level of consumption. Things have to be significantly more efficient to offset the loss of jobs. The worker after all is suddenly saddled with being negatively valuable, in that he has to continue to meet his living expenses, and has to be retrained, either at the cost of his employer, himself, or the government OR he can go on welfare.
- darkmighty 12y agoNote that this argument only applies to skilled workers; taxi divers are not highly skilled.