<p>If your assumption that "only a few jobs are left (primarily high-skill)" is true, then there are roughly two options: </p>

<ol>
<li><p>people without jobs become redundant, meaning they will not reproduce anymore and disappear (pretty much as <a href="https://www.economist.com/news/books-and-arts/21722813-quick-witted-hard-working-and-forgiving-horses-helped-man-conquer-world-how" rel="nofollow noreferrer">it happened to the horse</a>). Here you end up with a society of a much reduced size, which will surely happen through some form of recession, or long stagnation period (kind of like a convergence to a new steady state. Naturally, this is very unlikely to happen in democracies (horses could not vote). An alternative is for many of the jobless to emigrate, but automation being a global force, this is just delaying the problem.</p></li>
<li><p>the few remaining jobs are shared among the people. As <a href="https://www.marxists.org/reference/subject/economics/keynes/1930/our-grandchildren.htm" rel="nofollow noreferrer">Keynes forecasted</a> almost 90 years ago, technology could make a 15-hours working week possible. Thus, the fewer <strong>hours of work</strong> available can be shared among the population (which would require some re-skilling effort). Although I am skeptical this will ever happen in capitalism, at least it averts a big recession. </p></li>
<li><p>taxation becomes much more progressive, taxing the rich to provide subsidies to the jobless. An "extreme" form this could take could be the <a href="https://en.wikipedia.org/wiki/Basic_income" rel="nofollow noreferrer">Universal Basic Income</a>, or the <a href="https://en.wikipedia.org/wiki/Negative_income_tax" rel="nofollow noreferrer">Negative Income Tax</a>, favourite of Friedman. Since robotics is to increase productivity and increase profits (by lowering the labour share), an UBI could be finances via taxation on profits. On the one hand, giving income to the rest of the population is likely to generate more demand for products and services, leading to more job creation and growth. On the other hand, these taxation systems could be combined with some form of "unproductive" work, like volunteering, community work, etc. There is plenty of evidence that employment is important for mental and social wellbeing (e.g. <a href="https://scholar.google.co.uk/scholar?q=unemployment+and+depression&amp;btnG=&amp;hl=es&amp;as_sdt=0%2C5&amp;as_vis=1&amp;oq=unemployment+and+" rel="nofollow noreferrer">here</a>), so simply providing income might not lead to socially desired outcomes. As Voltaire said, </p></li>
</ol>

<blockquote>
  <p>“Work keeps at bay three great evils: boredom, vice, and need.”</p>
</blockquote>

<p>In all three options (explicitly and drastically in the first option), fertility is likely to endogenously adapt to these changes, just as it has done so <a href="https://scholar.google.co.uk/scholar?q=economic+growth+and+endogenous+fertility&amp;hl=es&amp;as_sdt=0&amp;as_vis=1&amp;oi=scholart&amp;sa=X&amp;ved=0ahUKEwiH97HXzMTVAhUlKMAKHY-WD4oQgQMIJDAA" rel="nofollow noreferrer">in the past</a>. Likewise, political ideas also adapt to technological and cultural changes, so things like UBI, which before were not feasible, might become socially accepted. The call for UBI from some of the very rich might partly reflect this (or an instinct response of those benefiting from capitalism to save it from a potential crisis/revolution).</p>

<p>Having said all this, I would dispute your assumption that there will be no jobs for the low/middle skilled individual. Under alternative assumptions the three options mentioned above might not be the most likely options anymore.</p>

CC BY-SA 3.0
2017-08-07T07:36:45.663Z
2017-08-07T07:36:45.663Z
luchonacho
<p>There are people vouching for Universal Basic Income as a compensation measure for job loss due to automation. It can be seen as a Keynesian spending measure till the workers are re-skilled and employed again.</p>

CC BY-SA 3.0
2017-06-08T02:26:37.297Z
How will the government finance it? Maybe they will raise huge taxes on silicon valley and large tech companies. But they will be very unhappy about that..........
Umair Zia
CC BY-SA 3.0
2017-06-07T22:53:10.433Z
2017-06-07T22:53:10.433Z
P. Singh
<p>Basically we know that poor and middle class workers have a high marginal propensity to consume as compared to rich people. Assuming that all of their jobs will be done by robots, and  only a few consumers with jobs are left, won’t the overall spending decrease and thus result in a sort of recession? This is if we assume that Rich people who know robotics have a lower marginal propensity to consume and a higher marginal propensity to save. What is your view?</p>

<labor-economics>
Effects of Robotics on the overall marginal propensity to consume
Umair Zia
# Effects of Robotics on the overall marginal propensity to consume

(Asked by: username_0 on 2017-06-07)

Basically we know that poor and middle class workers have a high marginal propensity to consume as compared to rich people. Assuming that all of their jobs will be done by robots, and only a few consumers with jobs are left, won’t the overall spending decrease and thus result in a sort of recession? This is if we assume that Rich people who know robotics have a lower marginal propensity to consume and a higher marginal propensity to save. What is your view?

**Tags:** labor-economics

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## 2 answers

### Answer by username_1 on 2017-08-07. Score: 1

If your assumption that "only a few jobs are left (primarily high-skill)" is true, then there are roughly two options:

1. people without jobs become redundant, meaning they will not reproduce anymore and disappear (pretty much as [it happened to the horse](https://www.economist.com/news/books-and-arts/21722813-quick-witted-hard-working-and-forgiving-horses-helped-man-conquer-world-how)). Here you end up with a society of a much reduced size, which will surely happen through some form of recession, or long stagnation period (kind of like a convergence to a new steady state. Naturally, this is very unlikely to happen in democracies (horses could not vote). An alternative is for many of the jobless to emigrate, but automation being a global force, this is just delaying the problem.
2. the few remaining jobs are shared among the people. As [Keynes forecasted](https://www.marxists.org/reference/subject/economics/keynes/1930/our-grandchildren.htm) almost 90 years ago, technology could make a 15-hours working week possible. Thus, the fewer **hours of work** available can be shared among the population (which would require some re-skilling effort). Although I am skeptical this will ever happen in capitalism, at least it averts a big recession.
3. taxation becomes much more progressive, taxing the rich to provide subsidies to the jobless. An "extreme" form this could take could be the [Universal Basic Income](https://en.wikipedia.org/wiki/Basic_income), or the [Negative Income Tax](https://en.wikipedia.org/wiki/Negative_income_tax), favourite of Friedman. Since robotics is to increase productivity and increase profits (by lowering the labour share), an UBI could be finances via taxation on profits. On the one hand, giving income to the rest of the population is likely to generate more demand for products and services, leading to more job creation and growth. On the other hand, these taxation systems could be combined with some form of "unproductive" work, like volunteering, community work, etc. There is plenty of evidence that employment is important for mental and social wellbeing (e.g. [here](https://scholar.google.co.uk/scholar?q=unemployment+and+depression&btnG=&hl=es&as_sdt=0%2C5&as_vis=1&oq=unemployment+and+)), so simply providing income might not lead to socially desired outcomes. As Voltaire said,

> “Work keeps at bay three great evils: boredom, vice, and need.”

In all three options (explicitly and drastically in the first option), fertility is likely to endogenously adapt to these changes, just as it has done so [in the past](https://scholar.google.co.uk/scholar?q=economic+growth+and+endogenous+fertility&hl=es&as_sdt=0&as_vis=1&oi=scholart&sa=X&ved=0ahUKEwiH97HXzMTVAhUlKMAKHY-WD4oQgQMIJDAA). Likewise, political ideas also adapt to technological and cultural changes, so things like UBI, which before were not feasible, might become socially accepted. The call for UBI from some of the very rich might partly reflect this (or an instinct response of those benefiting from capitalism to save it from a potential crisis/revolution).

Having said all this, I would dispute your assumption that there will be no jobs for the low/middle skilled individual. Under alternative assumptions the three options mentioned above might not be the most likely options anymore.


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### Answer by username_2 on 2017-06-07. Score: 0

There are people vouching for Universal Basic Income as a compensation measure for job loss due to automation. It can be seen as a Keynesian spending measure till the workers are re-skilled and employed again.

> **Comments:**
> **username_0**: How will the government finance it? Maybe they will raise huge taxes on silicon valley and large tech companies. But they will be very unhappy about that..........  

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