With the money saved with the automated, the retailer may choose to cut prices, or reinvest in their business. If they cut prices, consumers now have money to invest in other industries, the demand spawning new positions. If they reinvest in their business, these positions, not previously open, will also be available.

If they simply take their savings, and pay it out to share holders / keep it in the bank, this allows more capital for investment.

The more steps that are automated, the more abundantly we will all live. It is a great thing in terms of material desires.

Now society should become more productive, but many of the workers are going to fall into more general and less useful professions. EX: We don't need vary many farmers today, yet we produce far more food than ever. IMO, this suggests the introduction of basic welfare state funded by the increased prosperity. But we can also just waste the extra productivity with a huge military, increased litigation, and a truly massive prison system.

The extra value created here can be traded for things that would have previously been unattainable, which in turn grows other industries and markets. A good example is the relatively recently materialized cell phone industry, which was viewed as a luxury not but 15 years ago, and is now practically ubiquitous. This has added $40-$100/mo to the average functional adults expenditures. While it may have replaced the $50/mo spent on the home phone line, you're replacing that with $40-$100/mo for each person in the home. Mobile phones increase our productivity by saving time and nowadays allow us to make more informed decisions on the spot.

This example continues because there was a fundamental shift in the type of labor employed by these mobile phone companies. In the early days of the industry, specialized salespeople pulled large salaries selling expensive phones and highly trained technical people answered technical support calls. Now that costs have dropped massively and reliability has drastically improved, these people have been replaced by relatively low wage employees (customer service reps and salespeople), and opportunity has opened at the "bottom."

I do agree that we waste a ridiculous amount of our capital on societal "overhead" that could otherwise be put to good use.

I like many people on HN are at the extreme edge of the bell curve and can easily find work. My point is simply that the need for a highly skilled workforce seems to be shrinking. Starbucks could probably replace 1/2 their workforce with automation and produce better coffee. They don't do this for several reasons, but mostly because there is such little demand for their workers.

I'd suggest education would be a preferable alternative to either of those.

In other words, automation and technology are tools in human's hands, and we still have to fight for our material/educationnal/environmental/human desires.

That's the way it's worked out in the real world. About 1% of the population produces all our food. And that frees the rest of us up to make movies. And write novels. And organize the world's information. And allow people to live 30 miles from their jobs. And let them cross the country or travel the world on a whim. And live in climate-controlled boxes with nice furniture.

That's also the long-term solution to unemployment. Eventually, somebody figures out something else that the rest of the population would like to have, and puts all of those out-of-work workers to work doing it. The computer industry didn't even exist 50 years ago. The automobile and household appliance industries didn't exist 50 years before that. The oil, railroad, middle management, engineering, and office worker industries didn't exist 50 years before that. These have all been born out of workers being freed up from previous shrinking industries (eg. manufacturing, domestic servants, farming, textiles) and put to use in new emerging ones.

You didn't include it in your comment, however it is important to note how much each producer is producing. With economies of scale, it is likely both producers create enough goods to exceed the demand of either consumer. Rationale being if "food producer" became efficient enough to put all other food producers out of business, they likely can feed more than just the clothing producer.

The reason why competing food manufacturing would be impossible to start in the era of absolute automation is that you need the machines to do that, in other words you need the capital. Who in their right mind would provide capital to manufacture food for people who have nothing to offer in return?

I'm stretching the argument here, but only to illustrate the problem that I see - automation satisfies needs and thus destroys jobs tied to satisfying those needs. I see only two ways out of this - create new needs (which we've been doing successfully so far) or exert the power of the state to take the products from producers (progressively heavier taxation).

You're implying that, in this (dis)utopian future, luxury goods don't exist?

Once you have those three things, you have an entire economy. Heck, arguably clothes are a luxury good, so all you need are food and luxury goods.

Not if companies own most of the arable land and IP on harvesting machinery.

Intellectual property laws are based on the concept that ideas and goods are scarce. If automation makes physical production as cost-free as digital production is now, then all IP laws (not just copyright and software patent laws) will have to be revised to accommodate the fundamental change in the nature and abundance of goods and ideas.

Plus, as they say, there's more than one way to skin a cat. Someone can design a harvester based on old technology, or a radically different design.

So it will be a group of people who own resources, one guy who makes food and one guy who makes clothing. These are the only people who will get to eat.

So-called "unemployment benefits" are taxed as income meaning you are actually self-employed while receiving them. It's a matter of perspective. Where does your income come from and how much is it?

I'm an optimist. I believe growth in the production and movement of goods and services (the economy) will come from millions of people acting in their own self-interest. A massive collection of interconnected garages, basements, home-offices, libraries, schools, etc. -- all making stuff.

Government can stimulate all it wants, but the heart and soul of our success has always come from individual initiative.

Edit can the person who down-voted this please explain why?

Agreed. It would seem then that it would make the most sense for government to focus on minimizing the overhead for formalizing those "individual initiatives" into businesses, rather than inefficiently allocate capital through stimulus (save all of the issues of how much of that stimulus capital is dissipated to essentially non-productive ends).

There was a discussion here on HN a few weeks back about automating and simplifying taxes http://news.ycombinator.com/item?id=1072955

Automating and simplifying certainly seems like the right thing to do - but lots of people would lose jobs. On the other hand, they would be free to do something more productive (in the larger sense, producing value instead of papering over the cracks) and certainly more interesting!

Why can't we just automate away the boring stuff, and just work less? I'd be interested to see if it were possible to open source more than software. (Open source organic farming, anyone?) I know, I know, this is utopian and unrealistic and probably plain silly.

I'm not trying to suggest that we should all go create a hippie commune and get rid of money, but not solving a problem right because of some legalese or pure profit just seems wrong to me!

Another thing that I find perplexing is that the depression doesn't only put people with automatable jobs out of work. My father is an extremely talented craftsman. He builds traditional log cabins, wooden boats, furniture, beautiful houses... Right now he is living in a van, and not-quite eeking out a living picking fruit. He sells a couple hundred lbs of fruit a few days a week. He also shoots deer every once in a while which provides protein.

He's this great resource, but hasn't had a job for well over 2 years. If he didn't have to worry about food, he'd work for the sheer pleasure of creating something useful and beautiful. The thing that confuses and frustrates me is that my father would be delighted to work for free provided that his needs were met (seriously! Food, a beautiful view, a sauna, and some poetry. Seems simple enough, right?)

He loves to build beautiful things, and certainly there are people who need houses (even small log cabins would be an upgrade for many). I don't know what the solution is (obviously). It just seems strange that legal tender or lack thereof could get in the way of creating real value.

In the same vein, railing against profit is ridiculous; Profit is the difference between your inputs and your outputs. If you don't create a profit doing something, you are again destroying value. (It's perfectly legitimate to have a profit in non-monetary terms, though. In that case it's you who is making the decision to trade more resources for less, because the process or result has value to you; You decide on its worth, and pay the price.)

It's really pathetic.

Until the younger generation combines their voting power (if they'll start voting at all), they will not be listened to and will continue to suffer. With even 10% pooled voting power, they can control the outcome of nearly every election in the nation, local and national.

If all people aged 18 to 35 vote for the same person, that person will win. If a person caters to that demographic and listens to them and makes the future of America and the world better for them then it will be better also for the older generation.

But the older generation votes and the younger generation does not.

"The research of Till Von Wachter, the economist at Columbia University, suggests that not all people graduating into a recession see their life chances dimmed: those with degrees from elite universities catch up fairly quickly to where they otherwise would have been if they’d graduated in better times; it’s the masses beneath them that are left behind. Princeton’s 2009 graduating class found more jobs in financial services than in any other industry. According to Princeton’s career-services director, Beverly Hamilton-Chandler, campus visits and hiring by the big investment banks have been down, but that decline has been partly offset by an uptick in recruiting by hedge funds and boutique financial firms."

This might become a basic nature of the economy as automation becomes more rapid. some might even say it's already happening.

I think we would need to optimize economies for well being , instead of GDP to solve this.

That's not as bad as it sounds. Every event has to happen for a first time. But you should realize that you are making a very extreme claim based on nothing more than speculation.

Sure, when the singularity comes things may be different. But if that is his case, then he should make the argument. The parent comment is just noise.

Full text here: http://jim.com/econ/

I think it should be required reading for everyone during high school. This chapter is relevant:

"The Curse of Machinery" - http://jim.com/econ/chap07p1.html

Long story very short? We'll be okay. It's been a worry for a long time, and it's always been false. But the chapter of the book says it much better than me, and it's a short read. Actually, I'm going to submit this now as a separate submission. Really, highly recommended, very insightful stuff.

Edit: Submitted here if you'd like to discuss: http://news.ycombinator.com/item?id=1127345

And therefore it will always be false?

William Felkin, in his History of the Machine-Wrought Hosiery Manufactures (1867), tells us (though the statement seems implausible) that the larger part of the 50,000 English stocking knitters and their families did not fully emerge from the hunger and misery entailed by the introduction of the machine for the next forty years.

If this is true it is a big deal. Suppose you invent a device that will double economic output while putting half the population out of work. There's no question the device needs to be put to use, but something needs to be done about all these displaced people as well. Much of the surplus in productivity borne of your invention will need to be used to help those people switch to other work, allow them to retire early, etc. In other words you will be taxed heavily, something which is very hard to do these days in the States. So the American worker seems especially vulnerable to displacement by automation, and you get this scapegoating of machinery. If you don't like it, next time you hear some jerk on the radio bleating about high taxes and socialism, think about where that money might be going, and vote accordingly.

The conventional wisdom says that the economy will create 50 million new jobs to absorb all the unemployed people, but that raises two important questions:

What will those new jobs be? They won't be in manufacturing -- robots will hold all the manufacturing jobs. They won't be in the service sector (where most new jobs are now) -- robots will work in all the restaurants and retail stores. They won't be in transportation -- robots will be driving everything. They won't be in security (robotic police, robotic firefighters), the military (robotic soldiers), entertainment (robotic actors), medicine (robotic doctors, nurses, pharmacists, counselors), construction (robotic construction workers), aviation (robotic pilots, robotic air traffic controllers), office work (robotic receptionists, call centers and managers), research (robotic scientists), education (robotic teachers and computer-based training), programming or engineering (outsourced to India at one-tenth the cost), farming (robotic agricultural machinery), etc. We are assuming that the economy is going to invent an entirely new category of employment that will absorb half of the working population.

Why isn't the economy creating those new jobs now? Today there are millions of unemployed people. There are also tens of millions of people who would gladly abandon their minimum wage jobs scrubbing toilets, flipping burgers, driving trucks and shelving inventory for something better. This imaginary new category of employment does not hinge on technology -- it is going to employ people, after all, in massive numbers -- it is going to employ half of today's working population. Why don't we see any evidence of this new category of jobs today?

I don't find some of his examples (robotic scientists?) particularly persuasive, but the idea that many low skilled jobs will be destroyed while few high skill jobs created... seems at least plausible to me. That this has never happened before isn't a particularly good argument why it couldn't happen in the future.

We don't need to wait for robot scientists to see the consequences of automation -- it's happening right now. Smaller numbers of skilled laborers are replacing larger numbers of unskilled laborers. To make the argumentative leap that this is a sustainable process, you have to prove that somehow, we will dramatically reduce the number of people who depend on unskilled labor to to make a living. I have yet to see a convincing proof that this is occurring. At best, we seem to keep shifting the kind of unskilled labor that we need, and paying less for it.

My (imaginary) farming and livestock-holding greatgrandfather probably didn't ever imagine someone could make a living out of Search Engine Optimization. Still, despite machines ploughing our fields, we still have jobs. So we probably will have jobs in 100 years time. We just have no idea which ones.

So, ATMS... would you replace them with human bank tellers? Would that be a net benefit to the economy?

I know Marx is beyond dated, and that it's only permitted to speak of him using hushed tones in serious conversation, however, in Das Kapital one of his fundamental arguments was that the long-run problem Capitalism is destined to face and ultimately lose to will be the problem of over-production. Which sounds counter-intuitive, as how could over-production possibly be bad? His argument is interesting and worth studying for itself, even if it is mostly outdated.

Over-production results in a general glut. http://en.wikipedia.org/wiki/General_glut

Real demand is still present, but the lack of liquidity in a general glut artificially depresses demand. Fed chairman Ben Bernanke explains:

but the story that captivated Bernanke involved a town full of shoe factories that closed during the Depression, leaving the community so poor that its children went barefoot. "I kept asking, Why didn't they just open the factories and make the kids shoes?

The reason is because the community didn't have anything to offer the factory owners. The factory owners know that the community doesn't have money to pay for shoes, but on the other hand the community would have money if these factories paid them instead of closing the factories.

These problems would go away if anyone could own a factory and have access to the materials, which many people above have said. However, this goes against the tenets of a capitalist free market: where someone is free to own much of the resources/land/factories/IP, which sets the barrier to entry beyond what most people can pay.

One of these things doesn't belong.

If people (again majority) had common sense as most on HN seem to have then America would be fine.

The second major reason IMO that America is going to be jobless is because the overhead cost of everything is far to high, especially in government. It takes so many people to sign off for anything that it will end up costing way more then it should. Take a look at large government states vs small government states and tell me which is doing better. (ie Cali vs Texas) Cali has to raise taxes to pay for all the overhead which causes business owners to pay more which causes them to not hire more people.. Pretty easy to see what needs to happen.

Like, say, houses? Or a college education?

The problem isn't debt, per se - it's reaching a level of debt that can't be easily serviced by future earnings. Debt/credit is useful to invest in assets that return benefits to you over the period of paying the debt off. The ability to make these investments are a cornerstone of why the West has been so successful over the past 3-400 years.

I agree that some debt it unavoidable and did not mean to come across that ALL debt is bad and should be avoided because well some of it cannot (ie the house). However buying many of these sub 3k items that are not needed then paying them off over 3 years is crazy. Thats more what I was getting at.

In terms of needless consumer goods that return little value, however, right on. The problem, then, is you either have to ruin credit for everyone (good or bad) or you need to find a way to reduce "bad" borrowing.. which is seemingly next to impossible.

A worker who does not work a day never gains that day of work back. Debt allows workers to perform their tasks fully allocated as there is always work available, whether or not work has already been done in return for them.

Ie if there was no debt, everyone would have to wait for a task to be finished before they could perform a service in return, causing lost work that can never be made up for.

The only time this system falls flat is if everyone decides they need services all at once, which historically is not common.

I've felt for a while that high unemployment (20-30%) is the normal state of affairs. 20% of folks should probably be engaged in some sort of sustenance living. It wouldn't really have to be that bad, like digging in dumpsters or anything, but just living in a commune, farming, and building their own debt-free shelter.

Regardless, there's a reason you seldom hear "comfortable" and "subsistence farming" in the same sentence. Growing enough food to feed yourself is a full-time job, even with modern agricultural tech. Yeah, there could be a singularity-style event that makes traditional farming obsolete, but RepRaps and Roombas ain't it.

He had me until the end, where Edmund Phelps declares innovation in America is "limited". HAH. Watch our smoke, Ed!

The US may be "hostile" to newcomers -- you're right, we do have stupid patent laws and some of the business taxes can seem ridiculous -- but then again, most countries have stupid patent laws (see the WIPO) and many many countries tax business at much more aggressive rates.

Even more importantly, if we're talking about technology: Silicon Valley has never been replicated full-scale. Yes, there are pockets. But what draws people to Northern California -- aside from the unique culture, natural beauty, and the weather -- is that there has been an innovation pow-wow going on since Hewlett and Packard took to the garage. People want in on that, especially if they're into innovation themselves.

There are more startups starting up right now, especially here in CA, than I've seen in years. Not all will innovate, but many will, and at least some of that innovation will stick and maybe even change the world.

No innovation? Really? Has this guy seen the frickin' iPod? Oh, and heard of Twitter? (Just to name some easy examples.)

And they're not all moving to one place, and of course there's evidence both ways, but smart people typically want to educate their kids well. Our schools have been slipping a lot for quite a while. Meanwhile, the rest of the world is catching up rapidly for the first time in who knows how long. How much you equate to coincidence and how much to causes A-ZZ varies by person, of course, but I really do think this is part of it.

What definition of "our" are we using?

Are Palo Alto's public schools slipping? Are the private schools in the valley slipping?

Or, are you talking about universities? How many countries have 4 schools that would be considered top 50 in the US? How about 10?

Spot on. Also, they want to take advantage of the downturn -- history has shown that if you make a successful startup in a downturn, when the economy comes back, it brings the company with it. Google's an example.