The Impact of Robotics on the Economy

For years, robots in industry have automated simple tasks. So far that has not led to higher unemployment, but the claim is that this will change.

The additional wealth will therefore end up with a few people, the owners and managers of (large) companies. Initially, the gap between rich and poor will widen further. Lower-skilled workers will be the first to lose their jobs, and there will be no replacements for them. In the Netherlands they will end up in the safety net of unemployment benefits and social assistance. In other countries like the USA this will much more quickly lead to severe poverty. It is not hard to imagine that this could cause enormous unrest and perhaps even revolutions. Hopefully this will only be a transitional period during which policymakers make adjustments so everyone can benefit from increased prosperity. Designing and implementing effective policy is crucial to shape this transition.

But ultimately this development cannot be stopped, simply because it is possible and because AI and robotics can generate enormous amounts of money and power.

Redistribution of wealth

If in the end even higher-educated people are forced into unemployment by artificial intelligence, governments will be obliged to intervene. They can do this by redistributing wealth between the (by then) super-rich and the unemployed. Because national governments will no longer have sufficient influence over multinationals, this will require cooperation. Let us assume the optimistic scenario in which this is eventually achieved. We would then live with much freedom, leisure time and prosperity until the moment the last job is replaced by smarter robots. At that moment, or just before it, the economy as we know it disappears and everything becomes free. Robots produce everything, including the extraction of raw materials, and because they demand no compensation they do it at no cost, 24 hours a day, 365 days a year. Prices of goods and services therefore fall further and further until they ultimately reach zero.

And then?

The economy has disappeared; being rich is meaningless because everything is free.

Will a shadow economy then arise, as exists today between the underworld and the upper world, or will we try to distinguish ourselves in other ways? I do not know at the moment; what I do know is that the scenario above is realistic and that we must prepare both for the period between now and the disappearance of the economy and for the period after.

But if we handle it well, we can achieve exactly what we have always wanted: more free time and enough income to lead a good and fulfilling life. I therefore believe this idea is worth continuing to invest in innovation.

Recently, Economou shared his view on what must and will happen if AI becomes more efficient than humans in many areas.