The Great Transition: The Economy

The Great Transition is the period when job destruction exceeds job creation and the employment gradually declines from over 160 million towards zero. The time period for the Great Transition is likely to be more than a century. From the point of this book the most important point is the inflection point when job destruction starts to exceed job creation permanently and unemployment starts to grow. At this point major economic policy changes are required to provide an income and create positive incentives for the Great Transition. The start of the Great Transition is likely to start between 2030 and 2050. Before the advance of machine intelligence low-wage workers in the service industries, such as waiters, were immune from automation. With the declining cost of robots and increasing applications of machines intelligence, this is no longer true. Also, machine intelligence automation can be applied in many industries. Once automation based on machine intelligence reaches the mass diffusion stage, the inflection point will occur. The more competitive the economic reforms proposed in the last chapter make the economy, the earlier the inflection point. Increasing competition spurs innovation including automation and its diffusion. When the Great Transition starts, an economic policy to provide income must be formulated. A review of the current patchwork of entitlement programs reveals that it would be better to replace the current patchwork with a form of basic income. The form of basic income that meets the criterion of the least up-front costs and least modifications is implementing a negative income tax. Gradually over time the current patchwork of entitlement programs could be integrated into a single negative income tax program. The path to implementing a negative income tax will be a challenge. Fundamental changes in the political economy to address the difficult problem of income and wealth distribution of the Great Transition are needed. This chapter presents the economic proposal for social inheritance, a modification to basic income that creates a nation of investors and gradually creates a more equal distribution of wealth. To encourage investment, taxes should be shifted from income to consumption. Much progress can be expected on increasing walkability and affordable housing in the great transition society. As the hours worked decline the hours available for leisure activities increases. Society will be increasingly organized around leisure activities.