I wish this were /r/cmv so I could give you a delta. This is a great post. I still have a few reservations, but you've given me a lot to factor in.
When consumption is dropping, that means production is not increasing, which means my company now doesn't have incentive to go out and buy a robot/AI/automation system.
I hadn't thought about this from the angle of it being a mitigating factor for automation roll-out, and it makes me a lot more comfortable about the rate at which automation would increase. I think how useful this breaking mechanism is still has a factor in how cheap the automation is to roll out, but it does create a limiter on how fast AI can be rolled out that's directly linked to employment, and that was my primary concern.
Time is an enormous resource, previously they were using up a significant amount of that resource to sell their labor. Being unemployed frees up this resource entirely. The internet makes learning/training available for no additional cost other than access to the ubiquitous internet.
I'm still not to sure about this. Sure, the internet is a great learning tool, but I don't see 30-to-40 year-old people with high-school degrees jumping on the internet and retraining into tech jobs. It's possible, absolutely, but I'm not sure it's possible on a large-scale level. I think we're still going to end up with a lot of people who need to go back to school, and that's a huge expense - not to mention they need money during that time they're using the internet to subsist.
The jobs being replaced by automation - e.g., driving - are replacing them with higher-skill jobs, e.g. automation, that require more knowledge to understand and perform. I agree people can do things that were once in the realm of other jobs now - for example, spreadsheets allowing people to easily create charts with a few clicks of a button, no printer or graphical artist needed - but the jobs which create those spreadsheets still require more training than, say, the job of moving the printed work to the office. The tech jobs supporting those machines will also require more education. If you're abstracting away simpler levels of work, then the remaining work is higher-level. I don't think this a bad thing - people are lead to work on more productive jobs now that the simpler ones don't need workers - but it still suggests to me that more education will be required to maintain employment, and I don't think the internet alone will compensate for that. There is subtle irony in this, as I am currently taking a free online college course. :P
There is no model of economics that I have seen which makes this plausible. Decreasing market participants reduce production and can send the entire economy into a downward spiral. Economic growth requires low levels of unemployment, of which we continue to have (currently at 5.5%).
What I was worried about there ends up being the breaking mechanism you mention: decreased participants -> less production -> less automation until more participants enter again.
Do you have any suggested books to check out? I'd love to read something that delves into this sort of thing.