The idea that automation creates unemployment is ancient, and has been debunked over and over. How is it that people don't at least wonder why cars, manufacturing robots, computers etc. etc, haven't lead to mass systemic unemployment, but future technologies will?
The reason technology doesn't create systemic unemployment is that people don't just shrivel up and die when they lose their job. If someone is replaced with a piece of software they don't just say "oh well, I'm just gonna sit here and starve." They either find a job in a sector that requires minimal training, or they re-train. They have no choice!
The basic premise is this: there is no limit on the amount of work that needs to be done - there is always room for more human labour (either in servicing other humans or creating goods for them, or whatever.) This is just another way of stating Say's Law (Wikipedia link: http://bit.ly/pvD9Hz) which is that goods are paid for with other goods. If $x is saved in one area, it just gets pumped into another part of the economy, creating demand/jobs there. The net effect of technological progress is: the same number of people producing more goods and services.
You don't even have to believe me - just look around! this is exactly what's been happening for thousands of years. Technology has never resulted in systemic unemployment - only temporary frictional unemployment as people re-train.
How is it that people don't at least wonder why cars...haven't lead to mass systemic unemployment...
They have. At one time, there were millions of horses employed in the transportation sector. As technology advanced, they were unable to retrain in other fields because no matter how bright, a horse is fundamentally not as useful as a car. This hasn't happened for humans yet. That doesn't mean it never will.
Technology is improving. People are not. The fact that an increasing line has not yet crossed a flat line is not evidence it never will.
Your reply misses the point. Regardless of how horses were classified, there came a point where 99% of what a horse can do could be done better, faster, and cheaper by a machine.
What happens when we develop technology which can do 99% of what a human can do better, faster, and cheaper?
With previous innovations, there was always something else that a displaced human worker could find to do. What happens when 99% of human jobs are gone?
This holds even for the scenario of AI becoming a very close substitute for humans. The economic pressure, however, is to develop AI in directions that are complementary to human abilities.
You making a distinction between labor and capital which does not exist. Contemporary economists view both labor and capital as inputs to production. If Input A and Input B are substitutes, then producers will choose the cheaper one.
I've never heard of any well-known economist arguing labor and capital are the same; got any reference? While labor and capital are indeed factors of production, they are quite distinct. Capital is the accretion of past labor and serves to augment the effects of the current.
If and when the robot dream is finally realized, it would be novel insofar as it involves the unprecedented production of laborers through an economic process. The debate over the effects of bringing new workers into the economy has, however, been played out many times. (E.g. regarding cheap robots for unskilled work cf. Chinese immigration in the 19th century.)
I've never heard of any well-known economist arguing labor and capital are the same; got any reference?
I'm not sure why you ask me for a reference for a claim I didn't make. I claimed that labor and capital are substitutes as inputs to production. I also claimed that an inferior or more expensive substitute may go unused when a better alternative becomes available.
Regardless of whether we apply the post-fact label "capital" or "labor",
the point that a species can become no longer useful and that we have precedent for this phenomenon is still both valid and scary.
Your argument is the common objection to this idea and it's all well and good up to the part where you say that technology only creates frictional unemployment "as people re-train". Here's the problem as I see it. Technology is advancing, rapidly, to the point that humans are not able to compete in a general sense and in a number of fields.
If you're edged out of a job as a human it's getting more and more difficult to re-train. If it were easy to re-train in a lot of cases it would be automated already.
Ok let's say they don't re-train. Let's say they just go out and try to find a job as phone sales people (yes, every single person replaced by technology decides to become a sales rep. Bare with me.)
What would that do?
It would drive down the salaries of sales reps by 2%. That's it. That's the magic of the market economy. That money saved by replacing people with software goes back into the economy and creates demand for more goods (which needs to be pushed by sales reps, for example.)
And by the way, I would argue that electrification and the industrial revolution were far more disruptive (and happened damn fast) than online shopping and bookkeeping software.
>> Technology is advancing, rapidly, to the point that humans are not able to compete in a general sense and in a number of fields. If you're edged out of a job as a human it's getting more and more difficult to re-train.
> Ok let's say they don't re-train. Let's say they just go out and try to find a job as
No, the point is what if: 1) The easy to do and train for jobs are all automated away. 2) The available jobs require PhD level expertise to do.
If I've studied for 8 years to get my quantum physics PhD to get my job as a technician at Quantum World, then it's going to be damn hard to retrain for 8 more years to get a PhD in Natural Language Processing to work phone support at AutonomaTech.
People are becoming increasingly specialized. If automation eliminates the easy to learn jobs, it gets harder to jump from one specialization to another.
That just moves the problem into the future. What happens when we can build a machine with the mental abilities of a human being for the price of a supercomputer? Then what happens when it falls to the price of a smartphone?
But a lot of companies don't need phone sales representatives anymore. They can do nearly the same thing with Adwords account and a decent landing page. Both of which can be setup for less than a days pay of a phone representative.
Pick another position that scales with production or demand and you'll invariably find similar automation that has been introduced in the past ten years.
As I look around, I see mass, systemic unemployment taking hold.
This ever increasing march of technology may result in more goods being created, but due to the nature of our capitalist society, it tends to pool the capital in those who have capital to begin with.
The huge disparity between the rich and the poor in the US is not due to "technology" but it is not being helped by it either.
Technology creates efficiencies, but there is no natural way for those efficiencies to benefit those whom it puts out of work.
"As I look around, I see mass, systemic unemployment taking hold."
Only because we are paying people to not work, and because fair pay is illegal under a certain rate. Consequence is that work worth less than minimum wage cannot, by law, be given to people - and so automation moves in.
Stop paying people to not work and they'll find or make work. (There is a difference between a safety net and making lack of arbitrary wealth illegal.)
And "the poor", for most practical purposes, does not exist in the US. If you are living on more - a lot more - than the world median income, if you are flushing your toilet with drinking water, if you have a TV & car & cell phone & AC & thermostat heating & >1000 sq ft housing & ..., if you have over $1/meal/person/day[1], and etc you're not poor.
You're forgetting that many of the people who have those things you describe can only actually 'afford' them in the US because of cheap credit. If they were to sell all those things at the price they bought them, they would still be in debt, and thus are, in fact, poor.
Cheap credit is a luxury. You're ignoring a host of mitigating factors.
If your choice is 850 days of food vs. a TV, and you opt for the TV, you're not poor. (Derived from [1] above.) With over two years of energy literally under your belt, paying off that cheap loan and earning far more, even under adverse conditions, leverages you well outside poverty.
"Poor on paper" is unconvincing, given the opportunity for wise choices.
What if traditional brick-and-mortars business eventually turn to business models we frequently see on the web? What if robots drive costs down so low that you can have free hamburgers sponsored by some luxury product? Once you cut down human labor costs entirely, all that is left is natural resources costs. I'm just throwing out some ideas, perhaps someone with a better understanding of economics can elaborate or criticize...
It seems likely to me that for today, the mass unemployment is more likely a result of failures in the economic policy arena. Automation simply hasn't advanced far enough yet, there are still far too many human-only jobs for the technology argument to fly. We don't really need wild explanations to explain where we are today, rather simple business cycle theory can take a pretty good run at explaining it. (I even saw people using business cycle theory to predict it in advance, including the fact that we've still got years of a down economy to go through yet.)
I really don't expect mass unemployment due to technology to be a problem until we get a lot more jobs disappearing to robotics. When you see a purely-robotic McDonalds, start wondering.
The history of the world is full of catastrophes, devastating wars, famines and so on. In the "first world" we seem pretty shielded from that at the moment, but I don't think we are really safe. A lot of big, cosy empires have faltered before our time.
Some of those wars might well have been the result of changing economics.
It depends on whether the amount of work available is constrained by the demand for goods or by the supply of raw materials. In the past, we've answered automation by increasing the rate at which we produce goods and, hence, consume raw materials. Just because we've always been able to do that doesn't mean we should assume we always will.
I think it's time for the HN Automation Thread Template:
P: Robots are taking our jobs!
~P: No, because of:
{{ lump_sum_of_labor_fallacy }}
or
{{ luddite_fallacy }}
or
{{ they've been saying this forever and they've always been wrong }}
P: {{ various responses; invoke Martin Ford or Marshall Brain }}
~P: These guys don't know economics...
while(1):
P: hand wave, generalize from anecdotes,
speculate in the absence of empirical evidence
~P: hand wave, generalize from anecdotes,
speculate in the absence of empirical evidence
When you think of the phenomenal potential of the human mind to feel, explore and create (at whatever level the individual is capable of) the idea that most of us should spend most of our time doing things we dislike is pretty ridiculous.
My least favourite modern concept is the idea that everyone must have a job, and that the most mind-numbing job is better than any alternative.
The most dull and incapable human is still able to feel joy, wonder and excitement as powerfully as anyone else. Not all of us could spend our technologically-driven retirement writing like Shakespeare, painting like Monet and exploring like Richard Branson, but our average quality of life has a very long way to go.
There's some residual puritanical disgust at the idea of living mostly without work, but it's clearly going to become technologically possible in some number of years. This post-scarcity world is when we're going to really be able to shine as a species, even if our society will be radically restructured in the process. Radical restructuring can be a positive thing - think of how much the life of a woman has changed in the past 100 years.
Being a (rational) software developer gives you an interesting edge un understanding this stuff. I've been involved in the automation of a number of things that have directly eliminated the need for human involvement and so it's something I think about often as kind of a modern Loom builder.
It's chilling to think that even if the state of technology would stop today that the level of automation would continue to rise rapidly. Every time I go out of the house I'm struck by the how many humans are not really needed and could be replaced with off the shelf technology that existed several years ago.
I don't think that we need to get to the point of extremely advanced AI before this starts making a dent in the economy.
I'm not clear on why, as a rational software developer, you find this chilling. If our economic system of choice depends on there being work for everyone, our economic system will need to be changed. This can be as gradual a process as anything else, but it is already happening. Welfare didn't exist in the US 100 years ago. Far fewer people went through higher education, and there was less spare money for scholarships.
Our efficiency as a species is increasing. This means that we will produce the same amount of work with less effort. If our distribution methods mean that this will cause poverty, we need to fix our distribution methods.
Automation is already cannibalizing the manufacturing sector. Productivity is up yet employment is down dramatically. The assembly line worker is being phased out forever.
Will new jobs in robotics/automation account for the old ones? Not nearly enough. Aside from a few technicians on the shop floor, I think we'll increasingly see robots building and designing other robots. Any humans that will be involved in the process will be highly skilled and able to do so by remote location.
Bottom line: if you're in the manufacturing industry, you're now in the robotics industry.
In a sense the age of robotics has arrived in entertainment a long time earlier.
While nearly all machines in manufacturing required human operators until recently, radio and TV are machines that provide their services directly to the end user.
The short version is that once we automate away all the manual labor, our cultural, economic, and educational priorities will shift to creative work and curating civilization's creative output.
It's a question of wealth distribution. Jobs have traditionally been a relatively fair way of doing this. I put in effort to produce something in the economy, my effort is acknowledged through some money, and I can trade that in for the fruits of some of your labor.
The question in the article is phrased as "what about when people can't find jobs?" However, when we get to that point, perhaps the question should in fact be "what about when people don't need to find jobs."
If automation and technology in general continues to increase like this, at some point we should be able to produce the equivalent of today's standard of living with very little human input. Hence, our current framework that incentivizes everyone to work becomes less necessary.
Should people be rewarded with a comfortable standard of living simply for being human, even if they don't do anything, in such a scenario? I tend to think yes.
Here's my proposal: We implement a Basic Income Guarantee as a fraction of GDP. It can be so small as to be negligible right now, but as human capacity to produce increases, everyone reaps the rewards.
When we're so technically proficient that the Basic Income Guarantee is enough to sustain yourself with a meager lifestyle, some may just not work and live on it. Lucky them, for living in such an era, but that's something of a reward that humans could have earned through increasing technology.
I wonder if it would be healthy for the individuals and the society. Maybe the problem is not how to keep people alive and well, but putting them to do productive work. So I find the proposed solution of creating phony jobs backwards.
The article makes an interesting, but flawed point: The US is freaking out simply at the mention of socialized healthcare, socialized work would be dead on arrival...Ford’s solution requires that the wealthy consent to (or that the public impose) increased taxes to avoid economic ruin.
The flaw is the assumption that taxes would need to be increased. In the hypothetical world being described, humans have been more or less completely replaced by robots. This is a world of staggeringly high productivity.
It's likely that in such a world tax rates could be extremely low, and nevertheless the "virtual jobs" could provide enough revenue for all the virtual job holders to have very high standards of living.
Similarly, the 2011 USA could easily provide large numbers of people with a 1911 standard of living even if tax rates were much lower than they are today.
Possibly but economic collapse might be necessary to rebalance our economy and society to accommodate the newly freed labor. The labor force freed up from factory work needs to be redistributed to some other industry; not necessarily directly. We still educate people to be human robots but now we have real robots so we don't need people for factory work anymore. What we need are innovative and creative people for the cultural revolution. Ideally it would be nice if this transition didn't require economic collapse but our society is reactive not proactive.
The point of the book is that the jobs that are likely to disappear next are at the top end of the economic spectrum rather then the bottom. Think Radiologists who will probably be replaced by software within a decade as opposed to nurses who actually work with humans and are much harder to replace.
It's time that this book is being discussed more here on HN. A lot of topics show up from time to time which discuss aspects of Ford's thesis. Typically people who react in the affirmative that there is a problem are being dismissed as neo luddites. Everyone who read Ford's book knows that it's not that easy.
Even if this book is wrong, and I haven't found any good rebuttals, it's important that as many smart people and current and future employers are aware of the line of argument so that they can add the effect to their thinking patterns.
I've been wondering how we ended up having relatively low unemployment at all, and have come up with a theory: it is because of automatic population control. When people have good jobs, they tend to have more children. These children are being born into a reasonably good economy. Sure, sometimes entire job sectors broke away, but they average out (people in all job sectors do the population control thing).
This could stop working in the future, because technological cycles become so much shorter - much shorter than the change of human generations. Therefore the reaction time of human birth cycles is too slow.
Also, in some countries social wellfare is messing with it.
Think about from the other direction: would the world support an arbitrary number of humans? If 10 billion more humans would be dumped on earth tomorrow, would we find jobs for them? I think we would struggle at least a bit.
I think the job of the future might be playing characters in MMORPGs. When all physical needs are taken care of, people might resort to just playing games. However, it will be entirely voluntary to offer jobs to people - there certainly is no guarantee.
I used to be more optimistic because I thought the masses would stage a revolt if their situation would become too bad. But I forgot that the rich will probably also build fighting robots (self-shooting guns for building protection are the first stage). So the masses might not have a chance anymore.
Imagine that you bought a robot that, using no energy and no raw materials, could produce all the shoes needed in the world, out of thin air. What price could you ask for those shoes? Also imagine that your neighbor could buy the same robot for the same price you paid it, let's say the equivalent of 1,000 times the price you wanted to sell your shoes at. What would happen?
Robots don't get paid for their "work"; it's their owners and their operators that get the money. Moreover, robots don't vote, but workers do. Between (imperfect) market competition and (imperfect) democracy, goods that are created with very little human work and that aren't very rare will always command very little prices compared to work-intensive goods, if the system is given enough time to adapt.
So we could end up in a world where one massage by a (human) masseuse will be worth 1,000 shoes. That wouldn't be such a big problem. The real issue is how fast we get there: People need time to adapt, to retrain, to give different relative values to different things.
What is really disrupting is a change that is too fast. But in the long run, even if we'll all be dead, as Keynes said, it won't be automation that will create world misery. On the other hand it could be a lack of energy to power all those automatons, or of raw materials to build them, or of storage to put away all the wastes they create...
Markets (and jobs) are driven by scarcity: I have something that you want. We trade something or another so that you can have it.
This does not imply that I have something of tremendous value, or that is necessary for you to stay alive, or that is cherished by all. Simply that you want it, and I have it. It doesn't even have to be a tangible thing.
One of many huge philosophical problems I had with Star Trek: The Next Generation was a future that was imagined without money. Best I could figure, the idea being that once we reach some level, scarcity is no longer relevant.
This is ludicrous. Or, if it's not ludicrous, it supposes that we will reach some state that has never before existed in any complex market system that we've ever explored: a state of zero leverage. That is, even in a world where you can snap your fingers and get anything, people are going to value those who can think up the coolest things to make, right? In any world you can imagine, there are always trades to make. That is, there are always markets. To imagine otherwise would be to imagine a state of human existence that is perpetually happy and never wants anything novel. Does that exist outside of drug abusers and stagnant societies? Would we even wish such a life on our progeny?
I wouldn't.
Don't get me wrong: I think we have many hurdles ahead, and the road is going to get bumpy. In my future, mankind creates a new set of morals around what it means to be human. Do I really want my every thought shared with the collective? Every piece of data about my life to be available to everyone? Fuck that noise. But to each his own. I think this decision about the role of technology in our lives is going to be the turning point. Note that I'm all for trans-humanism: bring on the nanotech and augmented bodies. Just never take away my identity and value my own existence independently as something worthwhile to all of us. We need billions of independently-acting free agents. Not one hive mind.
But worst of all for this libertarian was where we ended up with in this article: the same old bullshit of "Find a problem. Find an academic. Describe the problem. Exaggerate a bit. Suggest some master plan for salvation." I have seen this pattern of article so many times somebody needs to come up with a name for it.
...we should take money from automating industries to fund a state guided program that gives money to consumers in exchange for working at bettering themselves. Sounds like a decent plan. Never gonna happen....
Underline: we do not know how all of this is going to turn out. The entire purpose of writing books like he has (and writing comments like I am) is to explore the problem, not get magic wands out and speculate on solutions. I don't think we're anywhere near understanding what the problems are, much less coming up with centralized systems for fixing them. And this is true in a lot more areas that futuristic fear-mongering. It's wonderful that he took the time to come up with some kind of socialized fix for a particular imagined future-world, but the fix is a little bit too predictable for me [insert long, drawn-out argument over the problems with these kinds of fixes]. I wish he would have just left it off.
In Voyage from Yesteryear, the author (James P. Hogan) describes a post-scarcity society. Quote from a summary of the book:
Since the availability of power from fusion reactors and cheap automated labor has enabled them to develop a post-scarcity economy, they do not use money as a means of exchange, nor do they recognize material possessions as symbols of status. Instead, competence and talent are considered symbolic of one's social standing – resources that cannot be counterfeited or hoarded, and must be put to use if they are to be acknowledged. As a result, the competitive drive that fuels capitalist financial systems has filled the colony with the products of decades of incredible artistic and technical talent, and there are no widespread hierarchies. No one person or group of people can know everything, so no one person or group of people is expected to speak for all. They have no centralized authorities; some would say they have no government at all.
Ouch. Did this author ever watch a gaggle of teenage girls purchase things? "competence and talent" have very little to do with it.
That's why I mentioned the importance of not becoming a hive mind -- much purchasing (and trading) is done as the result of social pressure, not some futuristic idea of a meritocracy or even need. In the real world, with real people, if we don't keep our minds separate, we'll end up in this huge common mind where each little whim is judged socially, promoted socially, then manufacturing and trading decisions are made for everybody at one time, then on to the next thing. But even then, even in that terribly-imagined future, immediacy becomes a tradeable commodity. You just can't get away from trading.
Quite frankly, it's easy for somebody who fancies themselves an expert (and even I fit this category by pontificating here) to imagine some type of meritocracy, usually with their own values as universal. Plato started it, so he's in good company. But this is foolish in the extreme -- it assumes some ultimate value system shared by all mankind, it assumes some metric for that value system, and it assumes each individual would evaluate that metric the same way at all times. This is just too much. Way too much. If anything, if we continue to interconnect, it'll be social proof all the way down. Creativity and competence will have nothing to do with anything.
At some point, no matter who you are, you need to expose yourself and your ideas to those outside your little clique. Hence the importance of continuing to discuss these types of problems. These ideas strike me as highly provincial.
I think the argument is slightly more convoluted, so it survives your criticisms.
Let's imagine a society where there is one thing which everybody wants (say, food) which is controlled by one big corporation (say, monsanto) with few owners. There very well can be a parallel economy between people, but for the economy to function the few owners of this big corporation must want stuff from random people just as much as people want food. The moment this small number of people control something which far more people want than they want anything you will have an infinite sink; that is, each year a certain supply of everybody's wealth will be "eaten up" by the corporation without anything flowing back in return. With technology you can conceivably have a few of these (say, Larry Page or Mark Zuckerberg can't possibly want enough things to not be effectively huge money sinks in the short term), and if you have enough of these you will have a crippled economy.
> Let's imagine a society where there is one thing which everybody wants (say, food) which is controlled by one big corporation (say, monsanto) with few owners.
Why imagine that and not unicorns that fart gold bricks?
Yes, unicorns don't exist, but your scenario doesn't exist without significant govt intervention, intervention that doesn't have to occur.
Econ 101 says "Incentives matter." In this case, if we remove the incentives to pursue careers in fields capable of being automatized (through automation), we will see a rise in demand for and pursuit of careers not easily changed.
For instance, you might see less traditional blue collar workers and more "robot maintenance" workers responsible for performing diagnostics and repair on malfunctioning automatons. You would also see an increase in the number of software engineers writing robot control software, not only out of demand, but also as a fail safe to keep humans in the loop.
The economy wouldn't collapse, it would shift and adjust.
Count me in the boat that says thinking about this now is too little, too late. Will automation lead to economic collapse? What do you think led to the present economic collapse? The economy as a whole has bounced back, like it does. Why can't the people who were laid off find jobs?
You hear a lot of talk about welfare "paying people not to work"— I think that neglects the fact that, in the United States, jobs are welfare. The farmer who "grows" your corn gets paid to sit in an automated combine all day doing nothing. The factory worker gets paid to watch the robots all day to make sure they're doing it right, and most of the time, they are. Even the computerized desk jobs which are supposed to be the manual labor of our era: how many times have you worked with someone whose job was to sit there all day copying rows from one Excel sheet into another? How many times have you, as a programmer, written a ten-line perl script which makes an entire division obsolete, and watched as that division is tasked with the new job of running the perl script?
There isn't going to be another revolution; we're only incremental steps away from these people having literally nothing to do. The farmer isn't going to get a job designing combines. The factory worker isn't going to get a job designing robots. The old lady in the office is never going to learn Perl, and no one is going to get a job flipping burgers or washing dishes or stocking shelves.
They're going to go on welfare, or, if we haven't got our heads out of our asses by then, they are going to starve to death.
Unless there's a country where widespread automation has effectively replaced all forms of physical labor, I'm not sure what you mean. Care to elaborate?
I was responding to "The economy as a whole has bounced back, like it does. Why can't the people who were laid off find jobs?"
There are other countries that also had a recession recently and don't have such an unemployment problem, now. And there other episodes with long lasting unemployed in other countries, too, without technology being to blame in the way your post did.
So I don't think the current level of unemployment in the US says much about technology.
Your argument about jobs being welfare is independent of that. I recommend getting some hard data to see how prevalent that is.
So we do have enough resources to provide those goods right now. And if technology marches on, like we are speculating here, it will take less of an effort by the remaining tax payers. So it should be doable even with US levels of taxation.
You would need to reorganize your public spending to make it much more efficient, though.
(And I don't really think that level of welfare is necessary anyway, because unemployment won't reach 80%.)
I'm curious but would not the move to automated factories in the long term negate any cost benefit of making it in China and move the emphasis to cost of transportation, energy and materials ?
With the rapid increase of wages in china and move towards more automation there if automation is bad for the west imagine the havoc it will cause in china.
When Chinese labor becomes too expensive, (some of) it will be outsourced to Africa. Chinese economy seems to be in pretty good shape for this, but political instability could ruin it.
Jobs moved to China are likely to be lost forever. Automation is still far from autonomous: some human interaction is required.
Factory automation was a trend long before China become "capitalist". If other costs are more important for some indistry, they wouldn't move to China in the first place. Besides, for most production transportation costs using container ships are neglible.
That's a theory I see a lot of people having but I'm not sure it will happen. Africa does not have the stable governance of Asia nor the infrastructure to support the rapid industrialization that China went through.
When it comes to transportation cost it would depend on oil prices going forward.
I would guess that China will provide infrastructure to some african countries in exchange for raw materials. Political stability will also improve as China will support the regimes regardless of lack of democracy.
> The US is freaking out simply at the mention of socialized healthcare
Mass media and ensurance companies certainly are, But i don't think the majority of population is. Besides, US is not the whole world yet, and the book, afaiu, talks about the global economy.
Our ability to overproduce seems nothing compared to our ability to overspend. The great dilemma of our time lies in the debt relationships between us and the ability to re-balance them of which automation might play a role.
From my analysis below, especially on simple math about taxation and the nature of democracy, it seems Martin Ford is wrong.
Suppose that the production of almost everything (clothes, furniture, etc.) and most services is automated to the degree that the process itself costs almost nothing, but still requires raw materials to produce. The scarce factors would be raw materials, energy, and key human resources (product designers, system engineers, roboticists, venture capitalists, etc.). (There will remain certain services that are not automated, but these require only a small fraction of the population to provide.) The main earners would be those key people and the owners of raw materials and energy resources. We can suppose they make up a small fraction of the population. These people will earn huge income and can afford many luxuries of life. Some portions of their income will be taxed and distributed to the mass.
Since much of the production and distribution costs will be eliminated, more and better products/services can be provided. Let's say four times more or better than in the current world. Even though the rest of the population receive only a fraction (say 25%) of the income through governmental distributive scheme, this could be equal to the total amount that the current production creates. In a democratic country, political pressure will mount to distribute enough income for everyone to be fairly satisfied with their material well-being and something like 25% is a rate that the riches will likely accept. Since the riches will comprise a small fraction of the population, they will be pampered in a lot of ways, not unlike in the current world. The key difference is that the middle class and the poor will become one and the same since the jobs of most current middle-class would have been automated away. (We are talking about the economic aspect, there might still be differences among these two classes based on education, family background, for example).
Overall, this would be a world where say 5% of the population designs, analyses, manages, and faciliates automation, 10% provides services that are not yet replaced by automation, 3% owns raw materials, 2% governs, and the rest lives pretty well-off at least for non-competitive products. The 80% might not get to own beach-front properties or products designed exactly to their personal tastes (which require work from good designers), but they will live materially better than most of us now. How they choose to spend free time would be an interesting issue to explore. I am optimistic though that the world where most people are free to pursue their own interests without needing to work on things they don't enjoy will be a better world. I’d love to see this actually happening sooner than later.
In conclusion, if the automation is significant enough to put the majority of the population out of work, it will also likely create such a large surplus that people will be materially better off through reasonable tax rates on the productive workers and capital owners. A caveat that might ruin this utopian scenario is in the case we and supercomputers in the future cannot find a way to live sustainably given the raw materials and energy resources we have access to from this earth (or other planets).
- In 20 years, 80% of the people in will be kept alive by welfare, supplemented by their hourly job. Enough to get a small apartment, utilities, cell phone, cheap but unhealthy food, and shopping at the dollar store. And free tv/movie/music/book/sports entertainment via the internet.
- 15% will be the middlemen, extracting value from the others via service or thievery. They will be the new middle class. They can afford the sometimes luxury.
- the other 5.5% will be specialized knowledge workers. They will be the one maintaining the software/hardware to make sure nothing goes wrong. They can afford lots of luxury, but will be taxed heavily, as they are the only workhorse left in the society.
- 0.1% will be entertainers. They will make sure that people are entertained well enough not to riot.
I'd guess that the material welfare of the 80% will be far better than what you described. Just their access to positional goods (e.g. social status,sea front property) that is good where being better than somebody else is part of their allure, will be scarce for them.
I would say that's too optimistic. What I am describing of the 80% is simply what is going on with the unemployed/underemployed (~16% today), the people on food stamps (12% today) and the retired collecting SS without savings (~3% today). I don't see why in 20 years, these people would have their welfare increased to such a level that they can live a middle class life (a house, nice car, good school for their kids, money to travel, visit to good restaurants)
Unless you're saying the 80% kidnaps the government and made the rich and the middle class give them more money. Which I can't see without massive civil upheavel and the population reduction of those 80%.
If, and that's a big if, you aren't a spendthrift you can live relatively comfortably on European levels of welfare. That means living in a modern apartment, car that gets you there (or public transport, which is actually feasible in Europe), some travel. Schooling is provided by the government mostly, and good schooling is not that much more costly to provide than bad schooling. Move to Finland or Sweden, if that's your priority.
The food in good restaurants is not really better than in adequate restaurants. Visiting a fancy restaurant is more of a positional good to show and enjoy your social status.
Oh, and before I forget: Those central and northern Europeans countries are not the countries that are currently in agonizing debt.
Most European countries (just like the US) have been living beyond their means, so I only could see a decreasing living standard from here on out. Look at what happened to inner cities London as a precursor to most European cities.
As for the few rich central/northern European countries, I do agree that those on welfare will live nicely compared to anywhere else in the world. Sadly, its quite hard for normal people to emigrate to those countries. And they won't be immune to the collapse if they keep propping up the other failing countries.
I would say the fancy food phenomenon is only specific to US; good food can be found anywhere in Asia and Europe. In US, the difference would be between Denny's and a michelin starred restaurant.
The reason technology doesn't create systemic unemployment is that people don't just shrivel up and die when they lose their job. If someone is replaced with a piece of software they don't just say "oh well, I'm just gonna sit here and starve." They either find a job in a sector that requires minimal training, or they re-train. They have no choice!
The basic premise is this: there is no limit on the amount of work that needs to be done - there is always room for more human labour (either in servicing other humans or creating goods for them, or whatever.) This is just another way of stating Say's Law (Wikipedia link: http://bit.ly/pvD9Hz) which is that goods are paid for with other goods. If $x is saved in one area, it just gets pumped into another part of the economy, creating demand/jobs there. The net effect of technological progress is: the same number of people producing more goods and services.
You don't even have to believe me - just look around! this is exactly what's been happening for thousands of years. Technology has never resulted in systemic unemployment - only temporary frictional unemployment as people re-train.