Joint goals of job creation and sustainable growth are the main goals of majority of EU funding schemes. E.g. European Innovation Institute explicitly states in its mission https://eit.europa.eu/who-we-are/eit-glance/mission both goals - job creation and growth.

My question is about links between "job creation", "growth" and "automation". Up to now I have came up with 2 intuitive schemes how these notions are linked:

  • Indirect link: automation automates jobs (mostly bad jobs, e.g. manual jobs in agriculture and food processing) and hence creates production and hence provides disinflationary measures to fund higher education and science and skills development and in such manner people can move in better jobs, economy has more complexity and complexity boost the creation of more sophisticated jobs (e.g. jobs in rejuvation/anti-aging molecular medicine). While quite obvious, such scheme has one uncertain point: the income from the use of automation accumulates in the hands of capital owners and not in the people pockets (majority of them have not enough capital shares to live from the capital income) and it can hurt demand or event stop it altogether. So - there is need for government to act: 1) introduce redistributional measures: tax capital and provide education grants, skill development grants and science grants for people; 2) use government investment measures: government can issue bonds (that can be bought by central banks of capital owners) and finance development, education and science grants, government can hope that such grant will grow the economy in sophisticated and complex and hence fast and robust manner and then receive enough tax revenue in future to repay the bonds. Automation helps to boost the supply side and create enough value in the economy to redistribute the value.
  • Direct link: automation and sophistication (especially from the government funded schemes) is allowed only when it directly creates new sophistication or complexity. E.g. automation of agriculture jobs have no such direct link because it just eradicates the jobs. But creation of new kind of 3D glasses has such direct link because it 1) creates new product that can be produced and such production creates jobs; 2) allows the possibility to create new types of jobs, so - one can guess - that this can be thought as job creationg. In this scenario the government funds only the increase of complexity of the economy and the pure automation of the bad jobs is left to the market forces and businesses to happen. Well - if businesses operate in the gig economy with technological unemployment then such automation (driven by the market forces) may not happen due to the availability of cheap labour. And so - such one-sided government support leads to the bad jobs and stalled automation.

So - here are my question: how job creation and economic growth and automation are linked and are they compatible or are they mutually exclusive?

I provided my understanding by showing that the links are quite complext and that the exact answer can be hard to find. So - it is hard to understand whether my question is acceptable by the SE standards. But it is really hard economic problem though. I provided my intuition which definitely is very un-academic. But maybe there is some literature, some academic papers, some working papers on this theme about compatibility and exclusiveness?

Well - my question has very practical background: if I come up with the startup that simply automates some agricultural or food processing jobs by not directly creating any new jobs - is such technology/startup adherent with the mission of EIT (competitiveness of Europe, job creation, sustainable growth) and hence - can such startup qualify for EIT funding as decided by adherence to EIT mission and goals (it is required that any enterprise/project funded by EIT adheres by the EIT mission and goals). But I framed my question as the economic question to understand the policy matters deeply.

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    $\begingroup$ This question is too long-winded. The issue is that if we look at current economies versus 300 years, we see that yes, the economies are more automated, and the number of people working is higher. So it seems the answer is that we can have both. $\endgroup$ Jun 11, 2020 at 16:36
  • $\begingroup$ I added last paragraph which frames my question to be very, very practical and not long-winded, 300 years old or unspecific or philosophical. If I am going to the EUR court regarding the EIT decision then I will most certainly need the expert decision from the professional economist. $\endgroup$
    – TomR
    Jun 11, 2020 at 16:48
  • $\begingroup$ I hope your business plan does not rely on getting legal advice from random strangers on the internet. You would need to find somebody with a background in EU law, who probably charges for advice. $\endgroup$ Jun 11, 2020 at 16:59
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    $\begingroup$ @TomR I am glad that you liked some of my past answers but I also must agree with Brian that portion of your question is about EU law - we economists are not really qualified to talk about that. For example, from scientific perspective during last decades and centuries automation created more jobs than destroyed but even if we assume that this will continue, and there are some reasons to assume it does, it won’t necessarily mean that lawyers will see it that way - you can find examples of laws that are made with 0 economic rationale behind them not just in EU but in most countries $\endgroup$
    – 1muflon1
    Jun 11, 2020 at 21:15
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    $\begingroup$ @TomR furthermore a lot of these EU schemes (and national schemes as well) have aspirational language - for example you will find many nations still engaging in mercantilistic practices arguing it is in pursuit of growth and job creation despite that most of economic theory and also empirical estimations tells us that they do not. It’s likely that whether your project qualifies or not will have more to do with some arbitrary legal criteria than with any long term economic impact of your business and hence it would be better to maybe ask about that portion of your question on law SE $\endgroup$
    – 1muflon1
    Jun 11, 2020 at 21:20


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