A thought popped into my mind as I wondered how the economy will develop under the onslaught of digitization and automation. I thought about the massive unemployment and the ensuing poverty that could come out of that. What does that mean for the future progress of mankind?
When I think about inequality on such immense scale and the future progress of mankind, I always think about India in comparison. As a country, it has been around a lot longer than the US, so their population is about 4 times of that of the US but the GDP is only about 40% of the US. I'm under the impression that India has a lot of poverty (the Indians tell me that themselves) but I imagine it is much better since the democratization of the '90s. They have a growing middle class. But even so, they still have mass poverty. AND, I know of no significant invention or innovation coming out of India.
The only thing I could come up with is that wealth had been concentrated in few hands, most of the population (maybe, it's just an impression) had been in extreme poverty, and money was not sloshing around the market to induce innovations. People who are
already wealthy generally don't become innovative and invent new things. They don't have an incentive to do so; their life is already pretty cushy. So India had inequality with wealth concentrated in few hands and no world shattering innovations or inventions coming out of the country.
That situation may change with the growing middle class and the brightening prospects.
But this improvement only happened with the democratization of the country and, in my theory, the investment of US corporations in the county via jobs. When the Indians started to have jobs, they also started to have money to spend. It was not their own wealthy class that made the investment in the people; it was US corporations willing to hire them. At least that's my theory.
So what happens when software eats our jobs? With the money flowing to the owners of capital and with the concentration of wealth in fewer and fewer hands (I imagine a shake out much like musical chairs), will they still invest in people or will they act like the old wealthy Indians? Will this be the death of innovations?