Will Old People and Robots Dominate the Future?

I've discussed the future role that robots might play in human society several times over the years--first in 2011, and most recently just last month. And, of course, I've blogged a lot about aging because the richer countries, in particular, are almost obsessed about the perceived negative consequences of the transition to a higher proportion of people being older (e.g., 65+). If you follow the interesting posts of John Mauldin, as I do (following up on a reader's recommendation several years ago), you may already have read his summary of his recent Strategic Investment Conference held here in San Diego last week. I was especially intrigued by his description of Karen Harris's presentation (she's from the Macro Trends Group at Bain & Company).

Last month Karen’s group issued a magnum opus report called “Labor 2030: The Collision of Demographics, Automation and Inequality.”...Bain thinks automation will eliminate up to 25% of US jobs by 2030, with the lower-wage tiers getting hit the hardest and soonest. That will be devastating, and it’s not that far away...Why is this happening? Demographics and automation are mutually reinforcing trends. One we already see: Employers turn to automation increasingly because they can’t find workers with the skills they need in sufficient numbers. The Baby Boom generation is leaving the workforce (though many Boomers are delaying retirement as long as they can). The additional labor that came from one-time factors like China’s opening has mostly run its course. If sufficient numbers of qualified people aren’t available, employer turn to machines.

Notice in the graph above from the Bain Group that greater inequality is one of the projected dimensions of this future scenario. As Mauldin notes:

The result will be even more inequality between lower-wage workers, highly skilled professionals, and business owners. That will create a variety of problems, one of which is consumption growth. The small number of wealthy people at the top can only spend so much. They save most of their income. Lower-income people spend more of their income. This pattern will only intensify.

Mauldin tends to be politically conservative and so is not too happy about the likely prospect that there will be calls for the wealthy to pay more in taxes to keep society afloat. This is, in fact, exactly the issue raised by Steven Ruggles in 2015 in his Presidential Address to the Population Association of America, as I noted at the time. Keep in mind that the U.S. population is aging, but not nearly as quickly as most European and East Asian societies. As automation and artificial intelligence replace the younger workers who are not being born, and people work longer into older age, a bit of transfer from the wealthy to everyone else is the likely answer to keep the country on track.