On April 14, 2017, Karla Lant writes on Futurism:
The widespread adoption of automated systems threatens to further widen the gap between the rich and poor. However, stifling the technology is not the best way to cope with the problem of worker displacement.
A GROWING GAP
Widespread automation has the potential to amplify existing income disparities and produce an unparalleled level of economic inequality. As artificial intelligence (AI)improves and algorithms get more advanced, automated systems can replace more of the workforce, meaning fewer people are needed to generate the same (or greater) amounts of wealth for those at the top. If technology advances far enough, traditional labor may be rendered obsolete.
The advancement of technology has never posed quite such a threat in the past as automation has traditionally created new jobs as it replaced old ones. The Guardian cites the example of bank tellers. ATMs appeared in the 1970s, but there are more human tellers now than back then. Today’s tellers do more than dispense cash, though; they sell financial services and provide advice.
However, the ATM example may not apply as AI improves. If ATMs can dispense cash and advise customers about their mortgage options, too, banks may not need human tellers.
This situation only matters if the ownership of wealth is limited, and at this point in the U.S., it is. Right now, unless you own capital, what you have is your wage. Unfortunately, although productivity has improved since the 1970s, wealth has moved toward ownership and more capital, not wages. Wages and labor are the only source of wealth for most people, and they are also one of the only ways workers can assert themselves in the workplace and advocate for change. If automation renders labor redundant, labor as a source of wealth and power in the workplace will evaporate.
EQUITY AND AUTOMATION
The very wealthy are not likely to be affected by any of these changes. It’s the people working in industries like transportation, insurance, medicine, and customer service that will be hit the hardest.
The Bureau of Labor Statistics (BLS) reported that more people worked as retail salespeople (4.5 million) and cashiers (3.5 million) in May 2016 than any other occupation. Another 4.6 million people were working in transportation and warehousing as of 2014. Clearly, huge portions of the workforce will be affected by the presence of AI, but this disruption will not have a negative effect on the wealthiest people in the world.
The real issue here isn’t the tech itself — it’s the widening gap between economic classes and the incredible poverty it will cause, not to mention the erasure of the working class. Thankfully, there are several proposed solutions to this potential crisis of equity that don’t require slowing down technological advancement. They include universal basic income (UBI), a tax on robots that replace workers, and job guarantee programs.
UBI has been subjected to heated debate, but many, including Bill Gates and Elon Musk, believe it will be feasible in the near future. Former President Obama has also acknowledged that UBI will need to be seriously discussed within the next 10 to 20 years.
Bill Gates and others have argued that robots that replace human workers should pay taxes — or, more accurately, that their owners should. This would place the existing wage burden back on the wealthy and provide money into the “pool,” which could then be used for UBI or education for workers to take on the new jobs that automation creates. These taxes could also fund job guarantee programs.
Job guarantee programs through the government would guarantee a living wage for anyone doing public sector or non-profit work (depending on the program). This is similar in theory to 1933’s Works Progress Administration program. It also shifts the power away from private owners of wealth, who can demand that workers do whatever menial tasks they want at wages they set, and allows people to do anything from teaching to environmental cleanup for a decent wage.
With the National Bureau of Economic Research reporting that the wealthiest 1 percent of U.S. households held roughly 42 percent of the country’s wealth in 2014, we can’t afford to let automation further widen the gap between the haves and the have nots.
I do not agree with the solutions the author presents to providing income for millions in a future where there will be hordes of citizens of zero economic value. Exponentially work of citizens will be affected by the exponential impact the non-human factor of production is having on how our economy produces goods, products and services, allowing us to produce more goods, products and services with far less or the same amount of human labor, doing work that humans are entirely not capable of or would rather not toil at, and doing such most efficiently and at greater consistent quality at less costs to the business corporations who substitute labor workers with the non-human means of production.
All three solutions addressed by the author are “redistribution” solutions that use the coercive powers of government to create a society wherein all citizens will eventually become dependent for their economic well-being on an elite wealthy capital ownership class who control the State, instead of empowering citizens as owners to meet their own consumption needs with government becoming more dependent on economically independent citizens.
All three proposals depend on taxation of those who contribute productively to the economy, whether through their labor or their productive capital assets they own (or both).
The only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, super-automation, robotics, digital computerized operations, etc. as the primary economic engine of growth.
But significantly, unless we reform our system to empower EVERY American to acquire, via pure, interest-free insured capital credit loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings) in the corporations growing the economy, with the future earnings of the investments paying for the initial loan debt to acquire ownership, the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority ownership class. Companies will continue to globalize in search of “customers with money” or simply fail, as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the dividend income derived from the non-human means of production that is replacing the need for labor workers who earn wages and salaries, which are then used to purchase products and services.
Soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries.
None of the three proposals eliminate the further concentration of productive capital ownership among the already wealthy capital ownership class. Instead, they attach a tax on those who are productive rather than providing equal opportunity for EVERY child, woman and man to contribute productively to the economy.
Significant substitution of labor workers with the non-human means of production is a never-ending process, and the speed at which this shift in the technologies of production occurs is dependent on the demand for economic growth fueled by “customers with money.” No or decreasing levels of “customers with money” means economic growth halts or becomes slower. The three proposals seek to increase the level of “customers with money” by taxing those who are productive and redistributing the income — not the ownership and control — to those who need income, instead of creating the condition for EVERY citizen to produce income and become self-sufficient to meet their own consumption needs.
The role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who own productive capital assets. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.
The result is that the price of products and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, and thus for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services.
No one can deny the fact that over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 239 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advances amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
People invented “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive — the core function of technological invention and innovation. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary.
Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the American economy.
It is this ignorance of the necessity for broadened individual wealth-creating, income-producing capital simultaneously with the growth of the economy that is the real problem. If we financed what growth we have in ways that create new capital owners and the earnings of that capital growth were fully paid out as dividend income to the owners, this would create more “customers with money” to demand exponential growth to realize general affluence for EVERY child, woman, and man. Creating demand is how to speed productivity growth, which also will create significant employment opportunities as labor workers also will be needed to work in conjunction with the non-human means of production to build a future affluent economy. This, in turn, will substantially increase tax revenues to support education and infrastructure revitalization and expansion and other expenditures of societal development.
In a democratic growth economy, based on Kelso’s binary economics (human and non-human productive inputs), the ownership of productive capital assets would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen, including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income, from full earnings dividend payouts, would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote environmentally responsible economic growth and more profitable enterprise. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy. As a result, our business corporations would be enabled to operate more efficiency and competitively, while broadening wealth-creating ownership participation, creating new capital owners and “customers with money” to support the products and services being produced.
We need to understand that what has prevented us from solving economic inequality is manifested in the myth that labor work is the ONLY way to participate in production and earn income, and that individual talent and effort are what distinguish the wealthy from the non-wealthy. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.
A significant problem has been that the Federal Reserve has been pushing down interest rates to try to boost demand, as growing productivity increases the ability of the economy to produce more goods and services. But the system, as structured, benefits those already wealthy with lower interest rates that enable the present wealthy capital ownership class to use cheap capital credit secured by their past savings and equity. Instead, what we should do is lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings.
The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each future capital formation transaction, determined by the same expertise that determines it today — management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. Such capital credit insurance would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percenters) to overcome the collateralization barrier that excludes the non-halves from access to productive capital. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
We can no longer disregard the reality that productivity gains, without system reform, will continue to concentrate and further enrich the already wealthy capital ownership class. The solution to earning higher income is through capital ownership, not jobs.
Productivity growth should never be viewed as the enemy of workers, that is ONLY if workers and in the larger context, EVERY child, woman and man share in the productivity gains as OWNERS, and not be limited to wages alone or a redistributed basic income or a living wage provided by the State for anyone doing public sector or non-profit work.
Comment from Center for Economic and Social Justice (www.cesj.org):
Bill Gates’s idea about taxing robots has been getting a lot of play recently. The problem is that it would create more problems that it solves. The solid foundation of any economy is whether it can produce what people consume, and whether every producer is a consumer, and vice versa. To put it more simply, if you want a sound economy, you have to produce what you consume, and consume what you produce, one way or another. Thus, if only labor is productive, then everybody needs to own his or her own labor — which, unless you’re a slave, is always the case. If only land is productive, then everybody needs to own land. If only technology (“robots”) is productive, then everybody needs to own technology. Obviously, claiming that only one factor is productive is wrong; in a perfect world, everyone needs to own each factor of production, whether labor or capital, in the same proportion as it is used in production. This is not usually feasible, especially when people take advantage of their social nature and specialize, but it gives a good rule of thumb to follow. For example, if technology is ten times more productive than human labor, someone has to own technology that will produce ten times what his or her labor would produce just to have a decent income (absent distortions such as minimum wage laws and redistribution, of course). The bottom line is that only by owning — not taxing — robots will ordinary people gain enough income and restore Say’s Law of Markets so that all production is for consumption, and people have enough production to be able to consume.