On multiple levels, in both the Third World and the developed world.
It doesn’t have to be a catastrophe, however, since Western governments can implement a large-scale industrial policy to bring back manufacturing and reverse the trend of de-industrialisation.
The mass unemployment that will result must be solved by government programs to create socially and economically useful work for decent wages, and maintenance of aggregate demand by fiscal policy.
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I think Friedman's proposal for a guaranteed minimum income program back in the 1970s would have been well placed to fight the mass unemployment that would have resulted from this digitized and robotized economy.
ReplyDeleteBill mitchel's job guarantee which will create meaningful job will be better as macroeconomic stablizer and as giving people something meaningful to do.
DeleteAnd of course i will mention my idea of subsidizing labour by central bank until full employment achieved by giving on every sallary dollar targeted sum of money to the worker for example 20 cents 30 cents 10 cents on every salary dollar (the rate of subsidy will dependence on how much subsidy needed to avlchieve full emplpyment).
For example if a person earn annually 10000 dollars and the subsidy rate is 10 cents for each dollar he will earn 11000 annually instead of 10000.
The 10000 dollars he will get from the employer and 1000 dollars from the central bank.
Now how the central bank will able to control the interest rate?
By central bank bonds this bonds will be used to soak back money in case its want to target specific interest rate.
Why this system is better?
1.Because it will create a situatiom where there will be balance between investments in not automated capital and fully automated capital.
In this case automation and robots will be complementary to human workforce not an alternative.
2.borrowing subsidy (pure interest targeting) is benefitcial for capitaliats and rentiers but its working against labour.
A trade off between (interest targeting and labour subsidies)
Will create the balance needed in the system.