• The high-tech employees produce new software code, and low-tech workers produce human services (people such as artists, priests, psychologists and the like). At first, high demand for code-writing high-tech employees increases their wages. However over time some smart machines become better able to learn tasks, and writing new code becomes redundant, the authors state.
  • Demand for code-writing high-tech workers then becomes limited to those who are needed for general code maintenance like updates and repairs. The rest of the high-tech workers end up going into the service sector, which consequently pushes down wages for employees in that industry. And lower incomes reduce the amount of goods and services that workers are able to buy.
  • While there can be several of these so-called “boom-bust” tech cycles, over time robots “can leave all future high-tech workers and, potentially, all future low-tech workers worse off,” the paper states. “In short, when smart machines replace people, they eventually bite the hands of those that finance them.”

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