A Disconnect

The straight skinny coming out of the run-up to the World Economic Forum in Davos, Switzerland is that five million jobs will be lost in the developed world by 2020 due to the rapid advances being made in artificial intelligence and robotics ... see: Breitbart Story. Compound this with the vast migration of cheap labor and hanger-ons from the third world into the developed world ... this creates an employment disconnect that will be very difficult to reconcile both structurally and politically.

One of the reasons that China has had such dramatic economic growth over the last twenty-five years has been its vast supply of cheap and effective labor. Developed nations, in order to counter this economic advantage, have been (possibly somewhat unconsciously) opening their borders to the underdeveloped nations for immigrant labor ... with the result of reducing their national average personal incomes ... striving for wage and productivity parity with China.

Back to the Davos forecast ... a distinction needs to be made in the forces that are being pointed to for these expected employment reductions. Artificial intelligence mainly is of the mind ... allowing quicker and more effective decisions to be made. This does not necessarily remove the need for labor. (except when these decisions make robots or workers more effective.) It just improves the quality of generic decision making. However, robots in fact do replace physical laborers and thus will reduce actual employment (yet improve productivity.)

If in fact these Davos predictions are accurate, what does it mean for the American economy? Well, clearly the current administration will likely not back off its packing this country with immigrants. And if jobs are indeed drying up, this suggests an even higher percentage of these immigrants receiving government assistance ... with even fewer taxpayers funding these doles for the unemployed ... resulting unfortunately in much higher government deficits. Ouch!

There is only one possible solution in my mind ... start collecting taxes from the robots ...