Robots will make everything. So what will humans do?

Just as our Prime Minister has launched a " Make in India " campaign to stimulate manufacturing inside the country, so as to create lots of jobs, Dani Rodrik, Professor of Social Science at the Institute of Advanced Study at Princeton, USA has written an article in which he says," Manufacturing today is not what it used to be. It has become much more capital- and skill-intensive, with greatly diminished potential to absorb large amounts of labor from the countryside." China has become the manufacturing center of the world by being able to produce consumer goods cheaper than anyone else. " And one downside of China's success is that many other countries are finding it much harder to establish more than a niche in manufacturing," writes the prof. Maybe that is why governments of countries such as Japan and Korea are concentrating on developing robotics which will be the cheapest way to manufacture. Robots work 24/7, do not demand wages, do not go on strike and produce the same precise quality every time. " As a consequence, developing countries are starting to de-industrialize and become much more dependent on services at much lower levels of income than has been the pattern for developed countries - a phenomenon that I have called premature de-industrialization," he writes. Banking, finance, insurance and information technology are high paying and can assist in growth but they employ a small number of highly trained people. That is why the IT sector in India has not been a primary driver of growth. Further," In today's developing countries, the bulk of excess labor is absorbed in non-tradable services operating at very low levels of productivity, in activities such as retail trade and housework." Precisely what has happened in India since 2004, where most new jobs were in housework, restaurants and in construction. While China is extolled for its manufacturing people tend to forget that it has been at the cost of an excess of construction, massive debt, severe pollution and brutal land grabbing. At some point the Chinese will be forced to restructure. As sales slow China is relaxing mortgage and borrowing costs to stimulate the housing market again but how long it can continue to go on building as the population begins to fall, because of birth restrictions, no one knows. Lastly," Partial productivity gains in non-tradable activities are ultimately self-limiting, because individual service activities cannot expand without turning their terms of trade against themselves - pushing down their own prices ( and profitability )." Which means that unskilled people have to compete with each other for jobs and so have no strength to bargain for higher wages. The only solution is to reduce supply - that is to shrink the population. But will politicians want to reduce their vote-bank?