Sooner or later, most low-skill jobs will be automated by machines. There is no point for McDonald’s to hire a person who requires employer benefits, breaks, and other human-exclusive needs.
Economically, robots are great for companies. Labor becomes a fixed cost, not a variable one and companies need less optimization to have their labor-force work at high efficiency and profitability.
As more and more jobs become automated, proportionally, the number of people on welfare will increase. When combining outsourcing and automation together, jobs will be lost, whether we like it or not. Unemployment throws a person on the welfare bus.
Unfortunately, this phenomenon is nowhere close to slowing down. The more we automate industry, the less human jobs will be available and that will inevitably lead to a smaller working class.
Let’s take an example: Drivers.
Truck drivers constitute almost a million jobs in the United States and Uber/Taxi drivers contribute thousands more.
They are the first to go with the advent of autonomous driving and other innovations in the auto industry. Surely, some will find new low-skill jobs, but a significant percentage will have to resort to welfare to survive.
This can and will happen with retail, restaurants and other high-employee job industries which throws more and more of the working class onto the welfare bus.
More welfare recipients will lead to more demand for social services that must be funded by taxes. A socialist world is coming as an effect of ultra-capitalism. On the upside, the price of consumer goods will depreciate and social services will get better.
Subways can be replaced by networks of autonomous transportation systems; education can move online and be free, and there can be innovations in the healthcare industry that can make it cheaper and more accessible.
But where is the money going to come from?
Extreme wealth inequality: those that own the industries, and the big-time CEO’s will gain an enormous amount of money from new services, which will have to be taxed at a rate that allows innovation and capital gains, but still enables the flow of money throughout our economy.
On the surface, this might seem like a terrible future of poverty caused by millions more on welfare, but when we look at studies done on a UBI (Universal Basic Income), we see that people don’t stop working but actually pursue careers in small business, the arts and other passions specialized to the person. Even now, more and more people are moving away from traditional jobs in favor of the new gig economy.
Essentially, humans will have to move into creative fields to survive, not in a primal way but in a mental way. Humans have to do something. Otherwise, they become depressed and distraught about the way their life is going. The structure of work itself is tremendously important to humans, we have to have a structure (civilization) to continue to innovate and further our living standards.
Let’s take an example of a country: Denmark
There is a reason why Denmark has the happiest people on the planet.
On the surface, Denmark does not have any geographical advantages. No tropical weather, no warm summers. Many would argue that Denmark has pretty bad weather, snowed-in winters, and disappointing summers. But of course, the weather is not the determinant of happiness.
Denmark has a very small homeless population, only about 0.0017% of the living population, mostly in Copenhagen. This is an effect of a welfare system that makes it particularly difficult to become stranded on the streets.
People who live in Demark are allowed to experiment more in their life. They do not have the fear of dying on the streets or cash-strapping their families to survive.
It all boils down to the amount of risk the average Dane can take on himself to improve his life. There is a smaller barrier to pursuing additional education or starting a business.
A good example of this is Zendesk, a Danish startup that was built on these values.
The founder outlines how he went from scraping the barrel for money at home to becoming a public unicorn worth billions of dollars in his book: “Startupland.”
Two things struck me about the book:
- He expressed fear for his family’s well-being but continued during his lows due to Denmark’s welfare system enabling his family to live a decent life while unemployed.
- Although business was not ideal in Denmark due to unfavorable tax-laws, he justified the price in return for the benefit of risk-aversion (Although he did move his company in the later stages).
We can say that this was only one anecdotal case, however, this stands to me as a fair argument that a welfare-state still allows for huge innovations to happen.
A welfare system, whether it be a UBI or the Danish system, does indeed still enable those on the lower ranks to climb up and create new value for the society.
To perfect a system that is functional is not an easy feat in any respect. There will be people that suffer on the streets and people who will lose their well-being.
The only question is how fast the government can recognize the situation and take action for the greater good of society and human well-being to prevent as many people as possible from suffering.