When I read about some of the arguments regarding robots replacing people, and creating more unemployment, I shake my head and say to myself, “Nobody studies history.”
Most of human history has had a surfeit of people versus those that controlled capital and resources. What did the excess people do (those that lacked resources and were unskilled)? They became servants to those who were better off.
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In such a situation, some servants would become critical to the success of the wealthy family. They would become better paid as a result.
First, the needs of people are unlimited. Wealthy people could use help managing their vast enterprises, and reducing their own efforts at home that take them away from their profitable endeavors.
Second, people are more flexible and clever than robots — they can deliver personal services to those that need them. Also, robots cannot deliver the “human touch;” regardless of how clever the AI gets, people will feel better receiving services from people who show that they care.
I realize that language like this may be offensive to many — that is not my intent. My view is one of mean-reversion. Income inequality has been the norm throughout human history. Attempts at creating “equal” societies fail, because people aren’t equal — some are more talented than others, and deserve more as a result. We are reverting to the norm — inequality.
That is part of the problem with the Eurozone — different countries are varyingly productive, but many expect similar abilities to consume. Accepting inequality would be wise — abandoning the Euro would be genius; let countries manage their own prosperity. The Euro allowed weak countries to take on too much debt.
I do not think that robots bring unemployment in the intermediate-term. People will adjust, and wages will adjust. Some unskilled people will serve the wealthy. That will be a good thing, because service is not shameful, and people are happier when they are working.
By David Merkel, CFA of Aleph Blog