Robots Are Us: Some Economics of Human Replacement

Abstract

Will smart machines replace humans like the internal combustion engine replaced horses? If so, can putting people out of work, or at least out of good work, also put the economy out of business? Our model says yes. Under the right conditions, more supply produces, over time, less demand as the smart machines undermine their customer base. Highly tailored skill- and generation-specific redistribution policiescan keep smart machines from immiserating our posterity. But blunt policies, such as mandating open-source technology, can make matters worse.