Taxing Robots and The Universal Basic Wage: the Jobless Future?

4 months ago Ricardo Hylton 0

In the opening scenes of Blade Runner, IRobot, or any futuristic dystopian film where humans are set to confront robots as the future rule makers and breakers of planet earth, we are often introduced to a context where robots are ubiquitous: they fill the landscape, they are the main protagonists, they are the new lovers, the new friends, and the new workers. Is this hollywood fantasy or a harbinger of the very real doom around the corner?

The robots haven’t just just landed in the workplace—they’re expanding skills, moving up the corporate ladder, showing awesome productivity and retention rates, and increasingly shoving aside their human counterparts. One multi-tasker bot, from Momentum Machines, can make (and flip) a gourmet hamburger in 10 seconds and could soon replace an entire McDonalds crew. A manufacturing device from Universal Robots doesn’t just solder, paint, screw, glue, and grasp—it builds new parts for itself on the fly when they wear out or bust. And Google won a patent to start building worker robots with personalities.

 

Of Spoons and Shovels

He tries to outrun his coming uselessness by stocking up on degrees whilst Donald Trump promises her, the unemployed of the rust belt, her job back. You’re both on a treadmill of fallacy, running a race doomed to fail. There was a famous exchange between the Nobel Laureate economist Milton Friedman and an economist from a developing Asian nation sometime in the 1970s. Friedman observed a pubic works program where the workers wielded shovels instead of bulldozers, tractors or cranes. Perturbed, Friedman asked the government economist why the men were working with only shovels. The man replied that this was a program to give people jobs: a ‘jobs program’ to spread the work around to as many people as possible. Friedman’s famous reply was: ‘so then, why not give the workers spoons instead of shovels?’

Trumponomics

Factories played a central role in President Trump’s parade of American horrors. In his telling, globalization has left their factories “shuttered,” “rusted-out” and “scattered like tombstones across the landscape of our nation.”Here’s what you might call an alternative fact: American factories still make a lot of stuff. In 2016, the United States hit a manufacturing record, producing more goods than ever. But you don’t hear much gloating about this because manufacturers made all this stuff without a lot of people. Thanks to automation, Americans now make 85%  more goods than they did in 1987, but with only two-thirds the number of workers. This suggests that while Mr. Trump can browbeat manufacturers into staying in America, he can’t force them to hire many people. Instead, companies will most likely invest in lots and lots of robots.

And there’s another wrinkle to this story: The robots won’t be made in America. They might be made in China.

 

Left, Right, Left, Right

There was a time when Marxism was the only game in town; when Marx straddled the globe like feathers on a duck. Well, maybe not the only game but a worthy opponent to the prevailing orthodoxy. The Russian revolution transpired and the poor people of the world were called on to unite. They saw in Lenin, Trotsky and the Bolsheviks an alternative to the neo-colonizing ways of Europe and America. Franklin Roosevelt, Gramsci and even the genius of John Maynard Keynes saw a role for socialism in rise of nations crushed by the Great Depression. Then Castro and the African leaders after decolonization adopted it in various guises.

But the right hit back with Milton Friedman, Hayek, Ayn Rand and the like. They built up a following with the National Review in America and Margaret Thatcher, Keith Joseph and The Centre for Policy Studies in the UK. After Tony Blair and Bill Clinton adopted Thatcher’s and Reagan’s policies, the right seemed to have won the one hundred (or so) year war. Every western political policy was either right wing or grudgingly center left: limited immigration, tough on crime, small state (limited benefits, sale of public utilities, privatizing healthcare, prisons, postal service, etc.), free trade (when it suited them), etc. held sway. Jeremy Corbyn in the UK and possibly Syriza in Greece have stood out like doves at a party of hyenas.

But a new revolution is underway and it will dramatically change the world we inhabit. It is a revolution of robotics, artificial intelligence (A.I.) and automation. We are, in all likelihood, at the leading edge of an explosive edge of innovation that will ultimately produce robots geared toward nearly every conceivable commercial, industrial and consumer task. Even without raising a pen in anger to document a new approach, could this fortuitous phenomenon (brought on in part by the right’s relentless hunt for profits) of robots signal the rise of the new left?

 

The Age of the Robot

Glance down any high street in London, Tokyo, New York or even Kingston. Many of these jobs will soon be extinct or unrecognizable from what we now see: Typists, taxi and bus drivers, nurses, retail salespeople, personal assistants, surgeons, bartenders, cashiers, waiters, delivery people, fast-food workers, maids, finance management (actually most areas of business management), undergraduate education (won’t be automated as such, just a few really good educators’ reach will be magnified hugely so the rest will have to do something else), medical diagnosis, legal discovery, some forms of writing (legal writing, sports, business, etc.), accounting, some music composition, military strategy, military operations management, military administration, soldiers in the military, assembly line workers, customer support, x-ray technicians, pharmacists, most specialist physicians (we’ll only need a few to remotely control the robots), street sweepers, window washers, website building, receptionists, DJs that use generic loops, etc.

A close examination of this list makes it clear that the once accepted wisdom that only low skilled, manual jobs would be wiped out by AI is no longer correct. Alternatively, in most advanced economies, the major disruption will be in the service sector- which is where the vast majority of workers are now deployed. This trend is already evident in areas like ATMs and self-service checkout lanes. Each and every job is at risk as software automation and predictive algorithms rapidly advance in capability. More and more qualifications will not suffice. Even more training and knowledge of AI will not stop those in the computer industry from being wiped out. Welcome to the Age of the Robot.

 

Work Insecurity

The primary question for capitalism is how to convert these increasingly insecure workers into confident consumers – a problem that is spreading. Following the replacement of the working class by technology, the same is now happening to the middle class by information technology, undermining the very carriers of neo-capitalist and neoliberal lifestyle. There is nothing left to prevent the accelerated displacement of labour.

Automation disrupted agriculture in the 19th century and gave us the first industrial revolution. Machines used to make cloth and steam engines used to run machines fundamentally changed the economic and political times. There were winners and losers. The Chartists rose and fell, Dickens chronicled Fagin and Oliver Twist whilst Marx, Engels and Hegel spoke of historical materialism. Another revolution is underway, and it will change our world in profound ways. The question we need to answer is this: how will we cope?

 

This is not only a challenge for the low skilled

There is a widely held assumption that automation is mainly a threat to the low skilled and poorly educated. This seems fair because those jobs tend to be repetitive and routine. But a better word to describe the jobs at threat to robots would be predictable. Martin Ford notes that if another person could do your job by studying a detailed record of everything you’ve done in the past or become proficient by repeating the tasks you’ve completed in the way a student may sit an exam then your job is at risk. Computers will take your job.

 

More Qualifications won’t work. The right type of qualifications won’t work either.

Faced with the claim that Artificial Intelligence and robots are poised to replace most of the human workforce, most white collar professionals — doctors, lawyers, accountants, and so on — believe they will emerge largely unscathed. They concede that machines can take on routine work, but maintain that human experts will always be needed for the tricky sophisticated stuff that calls for judgment, creativity, and empathy. They would be wrong.

Doctors such as radiologists and surgeons study for up to, and in some cases, even beyond 10 years after their A’ Levels. That is a lot of time by any measure. Yet, it is only a matter of time before robots work alongside (if not completely replace) doctors in the operating theatre. Most respected research and analysis challenges the idea that these professionals will not be spared. Within decades they will be dismantled, leaving most professionals to be replaced by high-performing AI systems.

Wired magazine notes that there are more monthly visits to the WebMD network, a collection of health websites, than to all the doctors in the United States. Annually, in the world of disputes, 60 million disagreements among eBay traders are resolved using ‘online dispute resolution’ rather than lawyers and judges — this is three times the number of lawsuits filed each year in the entire U.S. court system. The U.S. tax authorities in 2014 received electronic tax returns from almost 50 million people who had relied on online tax-preparation software rather than human tax professionals. At WikiHouse, an online community designed a house that could be ‘printed’ and assembled for less than £50,000. In 2011 the Vatican granted the first digital imprimatur to an app called “Confession” which helps people prepare for confession. It seems an increasing amount of leisure is coming to man in the near future.

 

Are there any viable solutions?

With more and more jobs being lost to robots, how will governments across the world react? Rapidly rising job insecurity, the rise of the gig economy and outright mass unemployment will require new innovative policies. What will these be?

Universal Basic Income: State handouts for all?

Momentum Machines Inc. have created robots capable of producing up to 360 hamburgers per hour, also toasts the bun and then slices and adds fresh ingredients like tomatoes, onions and pickles after the order is placed. The average fast food restaurant spends about US$135,000 per year on wages for employees who produce hamburgers and the total labor cost for burger production for the US economy is about US$9 billion annually. Momentum Machines believe that the devices will pay for themselves within a year, and plans to target restaurants, convenience stores, food trucks and even vending machines. This, they argue will reduce labor costs.

Those burgers might sound very inviting, but they would come at the considerable cost of millions of low wage jobs. McDonalds alone employs 1.8 million workers worldwide. And these aren’t just students doing part time jobs. In 2011, McDonalds launched an initiative to hire 50,000 new workers and got over one million applications – a ratio that made getting into Harvard a better statistical possibility that getting a McJob. In the US, more that 90% of fast food workers are twenty or older, and the average age is 35. Could paying everyone a basic wage be a panacea for those about to be shoved from their jobs by automation?

To those that champion it, a universal basic wage for every citizen is a revolutionary idea that cannot be adopted soon enough: as urgently needed, as it is inevitable. In a future where artificial intelligence decimate the jobs though not necessarily the wealth of nations, it is argued that governments should pay all their citizens a basic income regardless of need. It also has rare appeal across the political divide with those on the left advocating that it promises to eradicate poverty and it promises to eliminate poverty and liberate people stuck in dead-end trades. Right wing small-state libertarians believe it could slash bureaucracy and create a slimmer, more self-sufficient welfare system.

Moreover, in this digital age, how will our economies grow if people cant afford to buy the IPads, apps and driverless cars if there is not an injection of cash when they lose their job to a robot? Significantly, it is also an idea that seems to resonate with the wider public. A recent poll by Dalia Research found that 68% of people across all EU member states said they would definitely or probably vote for a universal basic income initiative. Switzerland rejected this idea last year but Finland; sections of the Netherlands, Canada and Italy are experimenting with versions of a universal basic wage. Will this new form of socialism bend the right to its will?

Finland’s two-year pilot scheme will provide 2,000 unemployed Finnish citizens, aged between 25 and 58, with a monthly basic income of 560 euros ($581.48) that will replace their other social benefits. These citizens will continue to receive the basic income even if they find work. So could it work?

It goes without saying that raising sufficient revenue would be an enormous challenge in today’s political environment, given that nearly all politicians in the UK and America are terrified to even utter the word ‘tax’ unless it is immediately followed by the word ‘cut.’ It is important to note here that the basic income itself would be taxable and most low income households would spend most of their basic income, and that would result directly in more taxable economic activity.

Critics argue that it would be unaffordable, lead to a bloated state and be a disincentive to people working. Enthusiasts argue the opposite. It will be interesting to see how people behave. With a guaranteed income, what would you do?

Maybe it will give options to those down pressed by a particular job or boss, without fearing long term unemployment. It may incentivize boldness and in some cases, even increased productivity. For Finnish citizen Liisa Ronkainen, already looking for work for several months, it is certainly an attractive idea: ‘Now that I will get a salary in addition to the basic income I might try even harder,’ she suggests. And there was a similar message from another of the participants, Juha Jarvinen, who has been out of work for five years but now hopes to start a new business: ‘For my part, the basic income will mean I can escape enslavement and feel that I am a functioning citizen again,’ he declared.

Some might decide to acquire more education or change their career, to make themselves more attractive to the labour market. Others might seek to start a business. But there is always the chance that it could be used as an excuse to take it easy and work as little as possible.

What about the unremitting red tape that this may inspire? Bureaucratic logjam it seems could lessen because the payments are unchanged when in work and when unemployed so there is no need for constant recalculations when circumstances change, as occurs for example today in the UK. As for the cost of the experiment, that depends on how many of the 2,000 will find work. The basic income will initially be covered by the money that would have been paid out in unemployment benefit anyway. Costs will only start to build up when people get a job, which will then give us a clear idea of whether this is affordable.

 

Taxing Robots

We pay taxes from the proceeds of our work. If we no longer have work, whatever replaces us in that work should pay taxes in our stead. This is the position of the draft report on robotics by the European Parliament. If robots and artificial intelligence are going to steal human jobs and otherwise disrupt society, they should at the very least pay taxes. ‘Within the space of a few decades [artificial intelligence] could surpass human intellectual capacity in a manner which, if not prepared for, could pose a challenge to humanity’s capacity to control its own creation and … the survival of the species,’ the draft states. The report offers a series of recommendations to prepare Europe for this advanced breed of robot, which it says now ‘seem poised to unleash a new industrial revolution.’

Even without looking at the fallacy of this as an economic proposition, this would be a logistical nightmare to implement. What is your definition of robot? Does computer software count as a robot or does it require a physical form?  How many robots are equal to a single human worker? Would this type of tax have the unintended side effect of discouraging companies from investing in technological improvements?

Is this workable? In my opinion, not in the near future and entire tax codes would have to be rewritten. In truth, the current norm of national governments writing tax policies would probably be replaced a supranational body (sorry Brexit) to deal with the cross border, hybrid nature of robotics, computing and the internet.

Will this lead to the rise of a new left? If mass unemployment ensues, will people expect their government to provide a safety blanket for those left on scrap heap? This remains to be seen. It will require leaders prepared to fight through the initial ridicule. It will require leaders with foresight. The idea of a National Health Service in the 1930s was laughable; or a state pension or welfare scheme for the poor and destitute in the 19th century. Similarly, many on the right have dismissed the possibility of a Universal Wage. Will a leader of the left emerge to drive forward this agenda? Only time will tell.