The Robots Are Coming

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From top: 3d rendering of humanoid robots working with headsets and monitors; Michael Taft

Will the age of automation, AI (artificial intelligence), and robots produce a utopian or dystopian future; or, which is more likely, a bit of both.

This discussion will continue for a long time. However, we must start debating how we will deal with these inevitable changes even if we can’t accurately predict their future impact. And do so without falling into the twin-traps of over optimism and apocalyptic pessimism.

An example of the latter was this study that produced a mini-panic – suggesting that nearly 50 percent of all US employment was at risk of automation (that was the headline panic; the report’s details are more nuanced). Nonetheless:

…Our model predicts that most workers in transportation and logistics occupations, together with the bulk of office and administrative support workers, and labour in production occupations, are at risk.

More surprisingly, we find that a substantial share of employment in service occupations, where most US job growth has occurred over the past decades, are highly susceptible to computerisation.

This was quickly countered by a McKinsey Report which stated that only 5 percent of employment would be lost. The difference lay in how they measured the impact – will it fully replace a workers’ job, or most of it, or part of it?

The difference between fully or partially replacing a particular job is crucial to understanding the impact.

The McKinsey Report produced a useful projection based on assessing the automation potential in particular sectors.

The sectors with the highest automation potential, according to McKinsey, are hospitality, manufacturing, transportation, agriculture and retail. Those with the lowest are education, health, information and management.

According to this summary:

‘Almost every occupation that McKinsey looked at had some aspect that could be automated. Even 25% of tasks inside of a CEO job, the analysis found, could be automated. But very few jobs could be entirely automated. McKinsey’s conclusion was not that machines will take all of these jobs, but rather, “more occupations will change than will be automated away.”

So our jobs may not be fully eliminated, but they may be significantly changed.

Some proposals have been put forward to deal with the oncoming Robot invasion. A Robot tax has been mooted, with revenue going to a fund to be distributed to households. Yanis Varoufakis suggests that such a tax wouldn’t be workable. In any event, is it a good idea to tax an investment that can result in greater efficiency and higher productivity?

Others have proposed a Basic Income. There may be a number of good arguments for Basic Income (and there are) but dealing with technological change is not one of them. This could result in fewer people at work having to fund more people not in formal work, with less demand contributing to economic growth.

Still others put great store by education and re-skilling. This is something we should be doing in any event. But this assumes that there will be a growth in employment arising from automation. If there isn’t, what are we training people for – except to increase competition for employment which could drive down wages?

These observations aren’t the last word, merely the first. There are many who would argue that radical technological change is nothing new, that we have lived through these periods before.

They further argue that the reduction in costs will lead to a higher volume of demand for other goods and services, and that the increased productivity will increase net wages. There is much that is potentially true here. The problem is we can’t predict a future that is coming so fast at us.

Here are three proposals that could also help inform the debate.

First, reduce working hours. I have discussed this here. We should be considering this regardless of automation. This is a work/life balance issue which can be negotiated along with wages. If there are fewer hours needed to work due to robots increasing productivity, why not share that benefit out – especially in those sectors most exposed to automation.

Second, future public policy should raise the proportion of employment in health and education – areas where governments have considerable influence through the public sector. There is a long-time rise in such employment.

Prior to the crash, nearly one-in-five in the EU-15 were employed in the health and education sectors. In Ireland it was less but in both instances, there have been substantial increases since 1970.

We know that health employment will rise given the aging demographic. And if we want to invest in education and re-skilling, there will be a need for education employment. These two sectors are the least susceptible to automation.

Third, with the potential of jobs being lost, or downsized and down-skilled, or being transformed into precarious work practices, we should ask: where is the worker’s voice in all this?

If we let ‘market forces’ do their business, with governments trying to play catch-up and plug social holes, we could be in for a debilitating time. That is why the law should vindicate workers’ rights to collective bargaining in order to negotiate the introduction of these changes – whether reduced working hours, higher wages and/or social benefits, or re-training programmes.

Since people will be most affected, they should have equal say in how this is all done.

There are any number of strategies to be canvassed, discussed and argued over. And they all beg more questions. For instance, a policy of increasing education and health employment through the public sector would require that a greater amount of the value uplift of robots be captured by the state. Is this best done through higher corporation tax or equity in those high-tech companies receiving the inevitable public subsidies?

But at least let’s start that discussion now. The last thing we need is to leave the resolution of the problem until after the problem has collapsed the economy – just like what happened in the years leading up to the property boom crash.

Because next time the robots may not be able to put the pieces back together.

Michael Taft is economic analyst and author of the political economy blog, Notes on the Front.

Top pic: Getty

3 thoughts on “The Robots Are Coming

  1. Spud

    We really need to ensure it’s not the bean counters who are in control of signing off automated aspects.
    Interesting to see many part of hospitality industry topping the list – great hospitality is the service delivered by the people, like a friendly check-in, barstaff, waiter etc… I choose some hotels purely for the staff.
    If these touch point are all automated, a souless and impersonal experience awaits.
    Sure, some areas may benefit from automation, but not ALL identified.

  2. anne

    Great piece again from Michael.

    Bertrand Russell said the same pretty much –

    http://www.zpub.com/notes/idle.html

    As pointed out by him, the industrial revolution did not bring more leisure time for workers.

    The economy won’t work with too many not working..besides the 1% wouldn’t want any uprising.

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