Unacceptably high technological unemployment and significantly unaffordable entitlements can both happen

Nextbigfuture is technologically optimistic but combination bad future scenarios can happen.

Matthew Yglesias makes the argument that we cannot have both the technological unemployment scenario and the unaffordable entitlements scenario.

I understand why people worry about technological unemployment. And I understand why people worry about rising entitlement spending burdens. What I don’t understand is why people worry about them both simultaneously. In the technological unemployment world, we’ll be able to give everyone a 2013 level of consumption goods with a radically diminished workforce, raising the question of what everyone is going to actually do. To optimists, this simply amounts to ushering in an era of utopian socialism, but to pessimists it smacks of decadence and decay.

The other worry is the opposite of this one. It’s that in the future a very large share of our population will be elderly nonworkers and a very large share of our workforce will be dedicated to taking care of elderly nonworkers (“skyrocketing health care costs”), and that consequently younger people’s living standards will diminish or stagnate.

Either of those things could happen, but they can’t both happen. A world of widespread technological unemployment is a world in which productivity-enhancing technology is allowing us to care for the elderly in some as-yet-unknown low-cost manner. If that doesn’t happen, and health care costs continue to skyrocket, we’ll simply be seeing a structural shift in the patterns of employment. At some point we stopped needing very many farmers to produce enough food to eat, so workers went to factories, and we increased our consumption of manufactured goods. If robots and Chinese people can make the manufactured goods, then workers will go to hospitals and nursing homes, and we’ll be able to cope with the needs of an aging population. Alternatively, if robots can also take care of the elderly, then it really isn’t obvious where the labor demand will come from, but there’s going to be no entitlement crisis—just a clash of social values between moralists and utopians about how to build a leisure society.

So total technological unemployment will not happen in combination with a complete entitlement crisis. However, it could occur that say there is say 20 to 50% unemployment and 20-50% of the workforce taking care of the elderly and supporting medical programs.

Europe has high unemployment and in particular high youth unemployment. They have a high skills mismatch. Also, with outsourcing the employment for particular skills might go a lot more to foreign workers. Either foreign H1B workers or complete outsourcing.

There are also scenarios that look like countries in Africa or the Philippines, where a small number of wealthy people get all of their services and the servant class is employed by massively poor.

Some plus side

I think that radical improvements in mass online training combined with virtual reality training and augmented reality training on demand (say from Google Glass like systems) will help improve worker skills. This will make them more employable.

There will be more productivity from robotic systems. In theory there should be a bigger pie to share. Various social programs would be affordable.

The other aspect is that antiaging and medical success can remove the frailty and need for support from those who are old. Which just means that each person can keep working in some way to support themselves.

Other strategies for a country are to build up national funds like Norway has done with its oil windfall. This provides a constant stream of national income to ensure payment for a minimum level of future social program. This would require doing the opposite of running up national debt levels.

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