Automation and Anarchy

I’ve been thinking about this for a while, particularly the $15 minimum wage idea, because of old Sniffing Joe Biden.  A $15 minimum wage is appealing to folks who don’t take into account different levels of economic activity, cost of living, or any other real factors in different parts of the country.  To most, it’s simply the knee jerk reaction that “if it sounds good for poor people, it must be so.”

Some people have accurately pointed out that the costs of goods have risen though wages have not.  This is true in three main areas: housing, healthcare, and education (all three of which may be due to increasing demands over time).  This is not surprising.  Inflation causes the dollar to roughly lose half its value every twenty years.  As the dollar loses value, the costs for any business go up, so the prices the business charge go up.  Raising wages would be an additional cost, which would eat into profits or possibly cause prices to rise too much, so wages don’t go up in an equivalent way.  Additionally, mass immigration means there is a surplus of labor (we’ll also see that under Biden), so there’s no business reason for the employers to pay higher wages.  Thus, people demand the government to artificially impose a higher minimum wage, but this just creates a demand for more automation.

Tucker Carlson has stated several times, including in debates with Ben Shapiro and Charlie Kirk, that there are perils with increased technology.  He stated that he wouldn’t allow automation to get rid of truck drivers because it’s the highest employer for high school educated men in the U.S.  There are various other issues attached to this, such as increase in drug use, single family households, etc, but the core concept is basically that people need to have jobs for society to function.  Interestingly, Klaus Schwab’s The Great Reset, talks about this as well.  Schwab tries to do the old Lockean argument that the economy as a whole will improve and that total joblessness will go down in the long term, but he acknowledges that it won’t be a smooth transition. 

This goes to the theorized inherent paradox of automation: automation causes more wealth for the society at large in the long term but you have short term unemployment and unrest.  If you take out 10 million jobs tomorrow (which is Tucker’s estimate) you end up with millions of people either on welfare or unable to feed themselves and their families.  There’s also the issue that as unemployment rises in some sectors, spending in others decreases, which means fewer transactions so more businesses suffer. This can then slow down overall economic growth and even cause wider economic collapse. All of this gets theoretical and complicated in a butterfly effect kind of way, so it’s best just to keep in mind that the economy is fragile and one big shift causes other big shifts.

However, Tucker’s concerns pale in comparison with Schwab’s predictions.  Schwab asserted that by 2035, automation could get rid of up to 86% of restaurant jobs, 75% of retail jobs, and 59% of entertainment jobs.  Because of the way most developed countries’ economies are structured, this is a problem that will not just harm America.  Interestingly, this fits with Jordan Peterson’s video about IQ and jobs.  As technology and artificial intelligence gets better, more and more areas of the economy can be automated.

Rather than raising minimum wage, perhaps legislation could be introduced to put a cap on corporate net profits (so that above a certain level, it has to go towards employee salaries exclusively) but this would also discourage investment and would cause problems to our financialized economy.  We could try to decouple the financial sector from the economy at large (it already is disconnected from how many experience the economy, like how markets were up when employment was down), but that also would entail a period of hardship.  It seems unlikely that the young leftists (who demand free college, free abortion, and free housing) or the old boomers (who demand young people pay into the Social Security Ponzi scheme) are willing to suffer through that.

There’s also a concern that the U.S. dollar will stop being the global reserve currency in the near future, as our economy begins to become less stable.  This will, in turn, make the economy even less stable.  Between automation, COVID putting massive strain on social security, and the loss of the U.S. dollar in global prominence, we are going to experience a greater loss of jobs than since the Great Depression.  If you think America is divided now, add the millions of extra starving people to the mix. 

Schwab pointed out in his book that over the past 2 years there have been over 100 significant anti-government protests worldwide (84).  When all these rise in tension, combined with an even greater rise in unemployment, the governments of the developed world, and particularly America, have a disaster on their hands.  We’ve already seen people putting guillotines outside the homes of the rich and at protests.  If we have millions more unemployed people, you can guarantee the guillotines will stop being for show.