Reprinted from Robert Reich Blog
In 1928, famed British economist John Maynard Keynes predicted that technology would advance so far in 100 years -- by 2028 -- that it will replace all work, and no one will need to worry about making money.
"For the first time since his creation man will be faced with his real, his permanent problem -- how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well."
We still have 13 years to go before we reach Keynes' prophetic year, but we're not exactly on the way to it. Americans are working harder than ever.
Keynes may be proven right about technological progress. We're on the verge of 3-D printing, driverless cars, delivery drones, and robots that can serve us coffee in the morning and make our beds.
But he overlooked one big question: How to redistribute the profits from these marvelous labor-saving inventions, so we'll have the money to buy the free time they provide?
Without such a mechanism, most of us are condemned to work ever harder in order to compensate for lost earnings due to the labor-replacing technologies.
Such technologies are even replacing knowledge workers -- a big reason why college degrees no longer deliver steadily higher wages and larger shares of the economic pie.
Since 2000, the vast majority of college graduates have seen little or no income gains.
The economic model that predominated through most of the twentieth century was mass production by many, for mass consumption by many.
But the model we're rushing toward is unlimited production by a handful, for consumption by the few able to afford it.
The ratio of employees to customers is already dropping to mind-boggling lows.
When more and more can be done by fewer and fewer people, profits go to an ever-smaller circle of executives and owner-investors. WhatsApp's young co-founder and CEO, Jan Koum, got $6.8 billion in the deal.
This in turn will leave the rest of us with fewer well-paying jobs and less money to buy what can be produced, as we're pushed into the low-paying personal service sector of the economy.
Which will also mean fewer profits for the handful of billionaire executives and owner-investors, because potential consumers won't be able to afford what they're selling.