Robot Macroeconomics: What can theory and economic history teach us?
Yes, that&#x27;s the conventional wisdom from economists.<p>The real problem is simple: there are a lot of people now, and more in the future, who cannot generate enough value by working to be self-supporting, let alone have a good life. They&#x27;re competing with machines which are better than they are.<p>The conventional wisdom used to be that more education would fix this. That failed. Unemployment and underemployment of college graduates is high and growing. Trade schools like ITT, which went out of business yesterday, were even less effective. The number of educated people needed is limited, and we have more than enough.<p>There was the assumption that new kinds of jobs would appear. They did, but not in large numbers. Information technology is only 1.8% of US employment, down from 2.2% ten years before. The only big growth area is health care and social assistance, which is a consequence of an aging population.<p>Where this takes us, under standard economic assumptions, is the favela model - giant slums where most people are just surviving, with a small core group that&#x27;s doing well.  This is what many third world countries look like.  The US is headed there, but is more spread out - the decaying slums are far from the successful cities.  (That&#x27;s where Trump voters come from. They&#x27;re angry, and they found a demagogue. That&#x27;s common worldwide, and seldom ends well.)<p>Remember, capitalism is not optimizing for individual income.  The fitness function is return on capital.<p>Alternatives?  Welfare was tried from 1960 to the mid-1980s; it ended up with third generation welfare mothers in giant housing projects.  Having a large non-working group of poor people leads to a dysfunctional society. Higher minimum wage? Worth a try; the places that are doing it now should be monitored to see who gets laid off. Basic income? Same problem as 60s welfare. WPA-style government as employer of last resort?  Maybe; Saudi Arabia does that, and they have a massive number of useless workers.<p>Somebody had better think of something.