The economic recessions and periods of slow recovery that began with the 2000 crash of the IT Bubble has kept real incomes stagnant. For much of the period of the late 1990’s through today the blame for this has been the increasingly globalization of countries rich and poor forcing wages down. But now there is a new specter that may be more difficult to deal with — labor saving, intelligent, technology capable of replacing skilled as well as unskilled labor.
As the October 4th 2014 Economist Magazine editorial “Wealth without workers, workers without wealth” argues computers can increasingly do more complex jobs including some work that formerly required highly educated professionals (lawyers, doctors and accountants beware). The disruption began at the lower end of the wage spectrum, but it is increasingly beginning to penetrate into the higher ranks of the employed. Wealth creation is increasingly concentrated in companies with few employees but stratospheric stock valuations. Technology is replacing outsourcing as the problem to be solved if we are to insure the survival of functioning economies. Unfortunately, sentient machines can’t go shopping, rarely consume food, wear clothing, or take vacations to the South of France. Unless the circular flow of money is maintained at levels and speeds faster than today, then economic progress will ground to a halt.
The Economist sums up the problem ending its editorial by saying:
“As technology progresses and disrupts more jobs, more workers will be employable only at lower wages. The modest earnings of the generation that technology leaves behind will need to be topped up with tax credits or wage subsidies.”
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