The writer, Martin Ford, tries to explain the paradox of market demand and automation using the example of lights in the tunnel. I won’t try to do the same here. However, I will put it simply, if jobs are automated and less people are employed as a results. And without income from employment, there will be no market demand.
Why would business then invest in increased production?
The optimistic view of economist states that increase economic activity creates job. What they don’t know is that in an increasingly automated economy, the job creation does not occur!
I was quite relief when towards the end of the book, the writer suggests a solution which could address this issue i.e. recapture the lost wages using 2 types of taxes:
- Higher business tax
- Higher GST or VAT
I believe our government is currently capturing both tax types above. However, he suggests both types of taxes should be re-prioritized.
So how?
Currently, tax rate for businesses are reduced to encourage productivity. So he suggests a higher tax rate instead. In theory, if a business is making more profits from cheaper labour (automation), more of this profit should be re-captured. Even if the tax rate is higher, business is still enjoying higher profits than before.
Having said that, you don’t want to tax business too much as you want to give business incentive to innovate.
What to do?
He suggests keeping business tax rate constant but increase GST. He makes a point that with higher GST, the burden may fall on low income earners instead. Not to worry, this can be counteracted by applying a lower GST on necessities items but a higher GST on luxury.
I find his view of the future quite bleak. If jobs requiring ‘people skills’ such as bank tellers can be replaced by ATMs, what hope do we have with our current job.
He reminds us again and again that: Everything to be produced by the economy is ultimately consumed by individual human beings. Human being without job means the economy has no demand to produce.
It will take a long time before true AI is possible. However, Roger Penrose stated the following:
“True AI is impossible using conventional computers because consciousness has its roots in quantum mechanics i.e. the area of physics that governs probabilistic and bizarre interactions that occur between particles of subatomic size. “
Does that mean true AI will be possible using Quantum Computer?