Everybody from pointy-headed think tankers to my father talks about the social upheaval on the horizon when technology makes work obsolete. In a recent American Interest essay on the topic, Diane Francis quotes the late Stephen Hawking voicing one angle:
The late physicist Stephen Hawking warned that this would result in income disparity and chaos. “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality,” he wrote.
Francis goes on to convey the similar views of others. Lots of smart people think like this, so I shudder to admit that my opinion is: Why is this so difficult? I’d humbly suggest that in the excitement of prognostication, they’re missing a central economic principle — namely, that the free market is the greatest form of wealth redistribution.
Consider a simplified scenario: In some way or another, a company makes the screens on which we all receive our content. Technology and AI revolutionize the factory so that it hardly needs any human workers to accomplish that task. The cost of production goes down. Now, the first urge of the company owners will be to keep the price the same, but all that takes is for some other company to come along and take advantage of the available technology to undercut its price.
The power of competition will only get stronger as automation reduces the amount of available work and people have less money, on average. Companies have to sell their products to make money, and as the jobs evaporate, the incentive to produce increases. As production becomes cheaper, the value of mass production could decrease, relatively. Theoretically, technology could become such that we return to something like an artisan-driven economy, with a lot of self-employed people providing goods and services to each other. I don’t know if things will play out that way, but somewhere is an equilibrium.
Looked at in this way, it is clear that the better path forward is to reduce central planning and the ability of powerful interests to leverage government for their benefit. Reform patents. Don’t dread deflation. The more control we try to grab out of fear, the more ability powerful people will have to direct the economy in a way that primarily benefits them.