As technology continues to improve, more and more people will be permanently displaced from the workforce and will be unable to contribute meaningfully to the economy. In January I first wrote about the relationship between unemployment and technology.
As technology continues to improve, more and more workers will be displaced by automated systems. Manufacturing won't be the only sector affected: how many tax preparation jobs have been eliminated by TurboTax? Sales jobs by Amazon?
Using intelligence as a proxy for a person's general capability to contribute to the economy, we would expect that as technology improves the people who will be affected first will be those who are working jobs that require the least capability. Let's call the red line the displacement line: it represents the minimum amount of capability a person must have in order to be able to do a job that cannot be done by an automated system.
Economic indicators validate my prediction.
Since the end of the recession in June 2009, they note, corporate spending on equipment and software has increased by 26 percent, while payrolls have been flat.
Corporations are doing fine. The companies in the Standard & Poor's 500-stock index are expected to report record profits this year, a total $927 billion, estimates FactSet Research. And the authors point out that corporate profit as a share of the economy is at a 50-year high.
Productivity growth in the last decade, at more than 2.5 percent, they observe, is higher than the 1970s, 1980s and even edges out the 1990s. Still the economy, they write, did not add to its total job count, the first time that has happened over a decade since the Depression.
This employment shift will not be smooth and continuous -- employment numbers may rebound for a while -- but the shift is inexorable. Those with capital (the shareholders of the corporations who own the technology) will continue earning, but those who depend on the value of their labor to survive will be slowly squeezed.
If the trend continues it will necessarily lead to either a giant social-welfare apparatus supported by the machines and the few who control them, or civilization will collapse. Or maybe both!