- The 200-Year Deal Is Expiring
Capitalism ran on a simple loop: More people → more
workers → more wages → more consumers → more profits → more investment → more
jobs. GDP growth was population + productivity.
That loop is stalling:
· Population:
Working-age cohort globally peaks ∼2025.
Japan, China, Korea, and Europe ex-immigration are already shrinking.
· Jobs:
Goldman Sachs sees 300M jobs exposed to AI automation by 2030. Tesla, Figure,
and Agility have humanoids piloting warehouse/factory work at $16-$30/hr all-in
cost, falling ∼10%
per year.
For the first time since the Black Death, we may have
fewer workers and less need for them. The loop reverses: Fewer people + fewer
jobs needed = who earns the income to buy what the robots make?
- Yes, Some Corporates Can Still Profit
for 20 Years
Degrowth ≠ no profits. It means profits concentrate.
Japan 1990-2025 proves it:
Company Home
Pop 1990-2020 EPS CAGR How
Keyence -0.1% CAGR ~16% Sold factory sensors globally. 80% gross
margin, no factories
Toyota -0.1% CAGR ~8% Exported 80% of cars.
Hybrid tech = pricing power
Novo Nordisk +0.4% CAGR ~18% Diabetes drugs for aging
world. 90% revenue outside Denmark
The degrowth profit formula:
EPS growth = Pricing power × Productivity
× Global share – Labour cost
If you raise prices 3%/yr, cut headcount 2%/yr via
AI/robots, and sell to India/Africa where population still grows, you can
compound 10-15% while home GDP = 0%.
But if only 20% of firms do that and employ 20% of
workers, who buys the output?
- Who Will Buy When the Jobs Die? — With
AI & Humanoid Robots
There are only 5 sources of buying power. In degrowth
- automation, 3 weaken and 2 must expand, or demand collapses.
A. The State Becomes Buyer of Last
Resort
When households can’t earn enough, governments run
deficits and buy directly or via transfers. Japan: debt 60%→260% of GDP since
1990 to fund pensions, healthcare, public works. That spending is GDP.
AI/robot twist:
Governments will be the biggest buyer of elder-care humanoids, AI tutors, and
infrastructure bots. Private jobs die, but public spending creates demand for
robot fleets. Funded by taxes on robot owners.
Limit: Works only if you can print your currency.
World Bank/IMF loans in USD can’t be inflated away.
B. Retirees Spend Down Assets
Aging societies are asset-rich: Japan households hold
2000 trillion yen, 3x GDP. US Boomers hold $80T. Retirees sell assets and buy
services: healthcare, leisure, and now humanoid companions.
AI/robot twist:
A humanoid elder-carer at $20k/yr vs human at $60k/yr is viable by 2028.
Retiree dis-saving becomes revenue for robot firms.
Limit: Once assets are
spent, demand falls. Dis-saving also pushes real rates up unless central banks
suppress them.
C. Foreigners in Growing Populations
Germany/Japan model: Export 5-8% of GDP yearly. Sell
cars, robots, drugs to India, Nigeria, Indonesia.
AI/robot twist:
Humanoids make re-shoring cheap. 10 engineers + 200 bots can run a factory.
“Local costs, global revenue” accelerates.
Limit: Not everyone can
run a surplus. If all aging countries export to India, India tariffs it.
Currency wars follow.
D. High-Skill Workers Who Manage the
Machines
AI kills mid-skill jobs but raises pay for those who
direct machines. Japan 1995-2020: total jobs -10%, IT jobs +40%, healthcare
+60%. One human + 10 bots can run a restaurant. That human earns 10x.
Inequality rises, but consumption doesn’t zero out.
E. Capital Owners via
Dividends/Buybacks
If firms need fewer workers, profit share of GDP
rises. US corporate profit/GDP: 5%→12% since 1990. Owners spend some.
Limit: Top 10% own 89%
of US stocks. Their marginal propensity to consume is low. You can’t sell 10M
cars to 1M billionaires.
Bottom line:
Buyers = state + retirees + foreigners + high-skill workers + capital owners.
If they don’t add up to output, you get deflation until capacity closes.
- Why Humanoid Robots Make This Different
From Past Automation
Tractors and Excel created jobs elsewhere. Humanoids +
AI may not, because:
1. Generality:
A bot can be reprogrammed overnight: warehouse → nurse → barista. Past machines
did one task.
2. Cost
curve: Target <$20k per bot = $1/hr capex. Humans cost
$25-$40/hr. Cross-over is 2026-2030 for many jobs.
3. Scale
speed: No sleep, no visas. Copy-paste software.
Labour shortage flips to labour glut in <10 years
in rich countries. The “who buys” question arrives before pensions adjust.
- How Do Countries Repay World Bank/IMF
Loans When the Tax Base Shrinks?
External USD debt has only 4 exits:
1. Export
surplus: Earn USD selling robots/drugs/IP. Needs
world-beating firms.
2. Asset
sales/FDI: Sell ports, land, companies for USD. Political
backlash.
3. Austerity:
Cut spending until imports < exports. Greece 2010-2018. Young emigrate. “Few
people take responsibility” because others left.
4. Restructure/default:
Haircut or forgiveness. HIPC wiped $76B for 37 nations.
Why few end up responsible:
In degrowth, tax base narrows. Italy: 13% of taxpayers pay 60% of income tax.
If top 10% + corporates pay, and they leave, debt is unpayable. IMF programs
demand export growth + broader tax base for this reason.
- Three Futures
Path Who Buys Debt Politics
1. Techno-Abundance:
State taxes robots/capital, funds UBI/services. Retirees spend. Inflated away slowly Stable if redistribution accepted
2. Neo-Feudalism:
Only capital owners + exporters. Domestic demand dies Defaults/austerity Unstable,
emigration, unrest
3. Managed
Degrowth: Shorter work week, wealth caps, public AI. Less
consumption needed Jubilee/restructure Needs values shift
Japan/EU = Path 1 so far. Greece = Path 2 briefly. No
one has done Path 3.
- Can Corporates Profit for 20 Years in
Global Degrowth? Yes, If…
- Sell to aging: Drugs, automation, care.
- Sell abroad: >50% revenue from growing
countries. - Need few workers: Software margins, robot
factories. - Return cash: Buybacks so EPS grows as shares
shrink. - State recycles profits: Taxes fund
customers.
Most firms fail #2-#5. They shrink or die. That’s why
index returns are flat in degrowth, but 15-20% of stocks compound. Dispersion,
not a bull market.
- The Uncomfortable Answer
Production = Income = Expenditure.
If machines produce and owners get the income, humans need a claim on that
income to create expenditure. The claim can be a wage, dividend, pension, UBI,
or ownership.
No claim = no buyer.
AI + humanoid robots give us the tech for abundance.
Degrowth forces us to decide who gets the income. The market won’t decide — it
optimizes efficiency, not fairness. “Efficient” may mean 10% work, 90% don’t,
unless we rewrite the rules on taxes, ownership, and distribution.
That’s why “who buys when jobs die” is the central
economic question of the next 20 years.
