When Robots Rob Us: Can the Economy Reduce Inequality Without Wealth Transfers?

Robots have been stealing jobs for decades, and with each passing year, they continue to take a larger share of the economic pie. This raises the question: is there a way to structure the economy to reduce inequality without relying on wealth transfers through taxation? This discussion delves into the complexities of this issue and explores whether such a scenario is possible.

Addressing Inequality Through Taxation?

There is no other direct fix to inequality caused by private ownership of capital than to tax the owners and distribute cash to the non-owners. However, while minimum wage laws can push the economy to ensure the rich pay more for the poor, these laws often cause more harm than good by artificially distorting a small segment of the economy, such as low-wage workers.

A Basic Income, derived from taxing the rich, can create an artificial labor shortage, driving wages up and capital income down. However, a tax is still necessary to exert sufficient pressure on the market. Thus, while this approach can reduce inequality, it still relies on wealth redistribution through taxation.

Robots and the Evolution of Employment

As robots take more jobs and move income to their owners, can the economy be structured to decrease inequality without resorting to wealth transfers via taxation? The answer is likely no, at least not in the way it is currently envisioned.

Robots will indeed take more jobs, but the value of robot work will not be equal in terms of dollars to the value of manual labor. Automation is a cost-saving measure, and as robot owners compete, they will lower their prices. In this process, new jobs are created, following a cycle that has repeated since the onset of the Industrial Revolution.

Eventually, automated systems may become self-sustaining, and human labor could become the exception. However, this process would not happen overnight. In a self-sustaining system, there would be no need for funding or profit, leading to a situation where the wealthy might end up with all the money. In such a scenario, money would become useless, and we would see absurd examples like end tables made from stacks of dollar bills in Plexiglas cubes.

Addressing Inequality with More Extreme Measures

Some argue that reducing inequality can be done with more extreme measures, such as a firing squad. Shoot all the richest people or shoot all the poorest. While this extreme approach might solve the problem of inequality, it is widely considered unacceptable, even by those who advocate for massive wealth transfers. The moral and ethical implications of such actions make them highly unlikely in reality.

The reality is, replacing a job with a robot means keeping production constant with fewer workers, which means people, not robots, are buying the same amount of goods. In a scenario where workers have no jobs and few people can buy goods, where do these profits intended for redistribution go?

Rewriting history with a firing squad to solve the problem of inequality is not a viable or desirable solution. Instead, the discussion focuses on more practical and less drastic measures. While automation will continue to disrupt the job market, it is essential to adapt and find new ways to ensure economic stability and reduce inequality without relying solely on wealth transfers through taxation.