"One could argue that automation, tech advances etc would offset...

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    "One could argue that automation, tech advances etc would offset economic decline caused by tech decline."

    Technical advances, in which automation is included, do tend to produce either new products or increases in labour productivity or increases in capital efficiency, or any combination of those three things leading quite often to a knock-on effect.

    Apart from relatively short periods of economic declined or economic contraction called recessions we have been growing albeit more due to immigration than productivity gains.

    Debt, apart from its initial boost to aggregate demand does put constraints on the debtor's ability to continue to spend, which so far has been compensated with increases in public expenditure and increasingly low interest rates. In other words, as private consumption and investment fall short of guaranteeing full employment government spending financed with debt has been called to compensate for that. The fear, and there are very good reasons for that, is that the advanced economies have entered into a long period of negligible or no economic growth called secular stagnation. Needless to say that this phenomenon as little to do with automation or technical advances, except that they have not been able to produce the knock-on effects of the past. For instance, one of the criticisms thrown at financialization has been this:

    "since the 1980s, the financial industry has chased short term financial returns over long term goals, which would require investment in technology and product development. One of the biggest reasons for this was simply a matter of Wall Street following its capitalistic instincts, which told them there was more profit in making money from money rather than in engineered products.Financial instruments provided quick returns with little fuss. They invested in software that facilitated this approach rather than investing in costly brick and mortar needed to build factories. They were also supportive of products that could be sold at Wal-Mart and manufactured overseas."

    Automation is aimed at the substitution of labour with capital and the problems associated with it are a bit different from the ones encountered in the past as among other things we are talking now about intelligent machines capable of challenging our long standing ideas about what humans are or can be. From a cultural point of view, this opens up anew chapter in human evolution. In other words, we are not only talking about economic dislocation which may be massive but also also about tremendous cultural changes. In 15 or 20 years your GP may well be a machine.


 
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