The Daily Dex 07/16/2019: How Demographic Decline Leads To Robber Baron War

+“In Praise of Demographic Decline” | Project Syndicate | Adair Turner 

“In a world of rapidly expanding automation potential, demographic shrinkage is largely a boon, not a threat. Our expanding ability to automate human work across all sectors – agriculture, industry, and services – makes an ever-growing workforce increasingly irrelevant to improvements in human welfare. Conversely, automation makes it impossible to achieve full employment in countries still facing rapid population growth.

India’s overall fertility rate has now fallen to 2.24, and is below two in all of the country’s more economically successful states such as Gujarat, Maharashtra, and Kerala, with the national average only kept above two by much higher rates in the poor states of Uttar Pradesh and Bihar. But high past fertility rates mean that India’s population, currently 1.38 billion, will probably reach stability, at around 1.65 billion, only in the 2050s. And for several decades its working-age population will continue to grow by some ten million per year.

Rapid growth, often hailed as a welcome demographic dividend, is in fact one of India’s major economic problems. Although annual GDP growth has averaged around 7% for the last five years, it has been powered by leading companies deploying state-of-the-art technology. The expansion has created almost no new jobs, and an increasing share of India’s population is either unemployed or underemployed in the country’s huge low-productivity informal sector. China and Japan by contrast, which now face significant declines in the working-age population, are far better placed to embrace automation without fearing the employment consequences.” 

→Taxed wages from human labor support entitlements and what’s left of social safety nets in developed countries. (Taxes don’t actually pay for entitlements. They pay the interest on the national debt, which is then paid to bond holders.) As automation displaces more and more human workers, what process will generate the tax revenue needed to pay interest debt (and support entitlements) in the future? Thus far the answer seems to be something like “new jobs in which humans who once produced widgets will write code for widget-producing machines,” because on this one we so sorely need the future to look like the past. However, if this were true in any significant way we’d see more of it. We don’t. (Remember when Bill Clinton urged factory workers, longshoremen, and long-haul truckers to re-train for the “new economy?” We’ve been doing this over and over for 25 years with poor results.) It’s just as likely that new “jobs” produced by automation will themselves be automated by hardware, or they’ll be tasks performed by software. These are the seeds of considerably greater wealth disparities (“neo-feudalism”) than we see today. As workers are replaced, the future will (almost literally) be owned by owners. Then even the owners will be disrupted. I foresee a great battle among tech barons looming as those who own machines and robots and are heavily taxed to keep the entitlements spigot flowing declare war on those who own software and algorithms and are hardly taxed at all. Think of what an intellectual property war waged by a Tony Stark (Iron Man of The Avengers, hardware) on Reed Richards (Mr. Fantastic of The Fantastic Four, software) will look like, then place a bet because you’ll have a pretty good idea of what the future looks like.

Read more:

+“Robotics Improves the Fate of Demographic Decline in Japan” | Brink | John West

+“What Goes up: Are Predictions of a Population Crisis Wrong?” | The Guardian | Darrell Bricker

+“Demographics and Automation” | National Bureau of Economic Research Working Paper Series | Daron Acemoglu & Pascual Restrepo

+“Labor 2030: The Collision of Demographics, Automation and Inequality” | Bain & Company | Karen Harris, Austin Kimson & Andrew Schwedel 

@ProjectDeX

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