How to survive the robot-fueled jobs apocalypse

• Updated on: 2018-09-22
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If rumors that James Cameron is interested in picking up Terminator 6 prove true, perhaps Bill Gates will be in the running for a cameo.

Gates recently cautioned that robots are replacing humans in a wide range of jobs, and he proposed implementing a robot tax as a way to temporarily slow the spread of automation.  He was promptly -- and predictably -- trashed by a bevy of economists. 

Lawrence Summers, the former U.S. treasury secretary, dubbed Gates' plan "protectionism against progress," and others scoffed that the founder of Microsoft had joined the ranks of Luddites. Economic growth has slowed markedly in the past decade, they pointed out. Stagnating productivity and falling business investment indicate the problem isn't too many robots -- it's too few.

If the United States wants to become a global leader in manufacturing again, heavy investment in automation and robotics is required, they argued. A tax on robots would hamper the ability of U.S. companies to compete globally, stifle innovation, and impede capital investment and economic progress.

The pertinent question is: "progress for whom?"

Most people wishing for the return of American manufacturing really have in mind the return of good-paying manufacturing jobs. But that's not happening. President Trump has focused on the exodus of manufacturing jobs to countries like Mexico and China, but automation is a bigger culprit. Researchers at Ball State University found that between 2000 and 2010, about 87 percent of manufacturing job losses stemmed from factories becoming more efficient through automation and better technology. Only 13 percent were due to trade agreements and cheap overseas labor.

And it's not just manufacturing. A recent McKinsey report states that half of the jobs done by humans today in the United States are vulnerable to replacement by robots -- a potential loss of about $2.7 trillion in wages. "The next wave of economic dislocations won't come from overseas. It will come from the relentless pace of automation that makes a lot of good middle class jobs obsolete," President Obama warned in his farewell address.

(Think your job is immune? While 65 percent of American workers expect that within 50 years robots will do much of the work currently done by humans, 80 percent expect their own jobs will remain largely unchanged. Never underestimate the power of the optimism bias.) 

Critics of the robot tax say that workers displaced by the Automation Revolution will eventually adapt and move on to other kinds of jobs, just as they did in the Industrial and Agricultural Revolutions. If only it were that simple. "The Agricultural Revolution was about specialized technology that couldn't be implemented in other industries," Martin Ford, author of "Rise of the Robots," told Wired. "You couldn't take the farm machinery and have it go flip hamburgers. Information technology is totally different. It's a broad-based general-purpose technology."

New Scientist concurs: "Previously, when automation hit one sector, employees could decamp to other industries. But the sweep of machine learning means that many sectors are automating simultaneously."

The Automation Revolution is not only upending employment prospects, it's fueling ever-growing inequality. "Wages that would have been earned by human workers, now displaced by robots, will go straight to [corporate] profits, increasing the wealth gap between those who own the robots and the growing pool of unemployed workers," The Guardian writes.

Gates argued for a robot tax to slow down and ameliorate the effects on displaced workers, but an alternative proposal is to redistribute income from capital gains and dividends, which are now highly concentrated among the wealthy.

Yanis Varoufakis responded to the current debate by proposing a UBD (universal basic dividend). Unlike a guaranteed basic income, which is funded through taxes, with a UBD companies on the stock exchange would set aside a percentage of their shares to be held in common to benefit all citizens. A scheme like this has operated since 1976 in Alaska, where returns from state oil revenues are distributed to all residents via the Alaska Permanent Fund.

"Effectively, society becomes a shareholder in every corporation, and the dividends are distributed evenly to all citizens," writes Varoufakis. "To the extent that automation improves productivity and corporate profitability, the whole of society would begin to share the benefits."

He and other economists point out that the so-called private sector benefits greatly from various forms of public investment, using for free research and intellectual property generated by government-funded universities. "The public sector socializes risks, while rewards are privatized, " writes Mariana Mazzucato, author of "The Entrepreneurial State."

Or as Bloomberg says, why not "redistribute some of the income produced by the robots, giving every citizen a stake in the new automation economy." The government should "think about taxing humans less and redistributing the income of robots more."

Because as Sarah Connor can tell you, stopping the rise of the machines is very difficult.