The Economics of Automation: What Does Our Machine Future Look Like?

Automation and technology are disrupting the job market and making many positions obsolete. This is a result of the fundamental economic principles of supply and demand. When the supply of a certain labor or service exceeds the demand for it, the price or value placed on that labor or service decreases. In the case of apples, if there are too many apples relative to the demand, the price drops and farmers may struggle to make a profit. Similarly, if there are too many accountants or other workers relative to the demand for their services, their value and therefore their wages may decrease. This can lead to unemployment or underemployment. The speaker, Jane Perlez, emphasizes that this trend is already underway and that it may be difficult for many workers to adapt. She encourages listeners to tune into her podcast, Face Off, for more insights into the complex and evolving US-China relationship.

The balance between the supply and demand of labor in various industries, including accounting, can significantly impact wages and employment opportunities. If the supply of labor exceeds the demand, wages may stagnate or even decrease, as companies can hire from a larger pool of workers at lower costs. Conversely, if the demand for labor outstrips the supply, wages may increase, making the profession more desirable. The current reality in the market is that there are about 1.26 million accountants in the United States, earning an average salary of $60,000. However, advances in technology and automation have the potential to significantly impact the supply and demand dynamics in this industry and others, leading to potential wage stagnation or even job loss. Economists predict that the future economy could take one of three forms: a good one with increased productivity and prosperity, a bad one with widespread unemployment and inequality, or an ugly one with a combination of both. Ultimately, it's essential to stay informed about these trends and adapt to the changing job market to secure financial stability and success.

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The post-automation world could lead to a significant increase in birth rates due to the elimination of employment-related stressors. However, this population growth could put a strain on finite resources, potentially leading to a world where humans have a negative value to society. The most likely outcome is a divide between the wealthy class, who own the companies and automation, and the rest of the population, who will be forced to take on low-paying jobs and discouraged from having children due to financial burdens. This could result in a world filled with violence and contempt towards the wealthy. Ultimately, the world may need to come to terms with the negative impact humans have on resources and consider ways to sustainably support a growing population.

In a fully automated economy, social welfare may be unable to sustain itself due to economic forces. People who are unemployable have no economic value, and businesses may no longer provide them with basic necessities if their time and labor are no longer valuable. This could lead to population declines due to fewer births and potentially even starvation. The average consumer may not be as essential to the economic system as they believe. Instead, businesses will trade with each other, servicing the needs of their wealthy owners. This scenario may seem foreign to those in developed countries, but it's a possible outcome of full-scale automation. While we've been fortunate to live in a time where technology has made our work highly productive, it's important to consider what a future looks like where humans are no longer the creators of value. If you're interested in making smarter decisions with your money, check out NerdWallet's Smart Money podcast, where our team of experts can help you build wealth, invest wisely, and plan for major life events.

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