Robots, Unemployment and the Universal Basic Income

Remember the futurist dream of the 50’s and 60’s? The one where machines, computers and robots did all the menial jobs and provided not only business with increased productivity but employees better job fulfillment and more leisure time. It might still happen but it is going to take a radical change in the status quo and none of the mainstream politicians or economists seem to be offering a road map on how to get there. Like in most things, they are stuck in a 19th century mindset.

The reality is that industrial machines have replaced millions of jobs in the last hundred years, and computers and the internet have sped up and revolutionised manufacturing, finance, education and entertainment among many other things. But it is the incipient mainstreaming of robots and artificial intelligence that will transform economies and the societies they exist within, beyond recognition. As robots reach a price entry point and sophistication that allows them to economically replace both low paid workers and high paid professionals, the effect on the workforce will be profound. How will economies based on consumption be sustained?

Governments and their citizens will be faced with either following the current economic dogma and seeing millions of workers thrown on the scrap heap in the name of productivity and profits; or redesigning the economic system so that those affected through no fault of their own, and those remaining in the fulltime workforce, get to share in the labour saving and productivity gains. This means redistribution of income. This means redistribution of employment. This means redistribution of population. It involves an economic and social revolution. Whether that revolution is planned, broadly agreed to and equitable is the challenge.

I’m not going to go into apocalyptic scenarios involving robots and AI like The Matrix or Terminator, although with weaponised drones and I imagine robotic soldiers, they aren’t that far fetched. Just by focusing on the technology available today, what it can do and the price point it is reaching, you can see the economic logic for many businesses and the threat to many occupations. For example this article caught my eye. A Chinese restaurant using US$6500 robots to cook and serve. McDonalds introducing ordering kiosks in Europe. Computerised, robotic warehousing or even retail. Robot milking machines for dairy. Or this. Australian miners already using giant autonomous trucks. Plans to have long haul trucks moving in automated convoys saving gas by slip streaming a few metres apart. Or of course Google (and others) with their well advanced driverless cars. Computerised legal discovery. Robotic surgery. Computerised medical diagnosis…..the list goes on and on. The short 15 min video below gives a very good summation.

If in 10-20 years time many low paid low skilled and highly paid high skill jobs have been fully or partially automated with a combination of machines, computers, robots and artificial intelligence, what will this mean for both the economy and society? At an individual business level the case for automation will be compelling and self reinforcing. The effect of both falling prices for the technology and falling prices for products from competition, will be deflationary. Fewer people employed will mean fewer dollars to spend on consumption. Most businesses will be forced to reduce prices further and introduce more technology where it can save costs. Labour is one of the few areas where there is flexibility to reduce costs dramatically and as industry after industry, profession after profession is offered robots (and their software equivalent) below the price of existing human labour, more and more businesses will be forced to adopt them at the expense of their human workforce.

Some will say the answer is to resist this encroachment. That is unlikely to work in a capitalist system. Maximisation of profit for shareholders lies at the heart of our current system. A more benign form of capitalism where social and environmental objectives are taken into account may ameliorate the process but not halt it. Artisan businesses will always exist and be able to  charge a premium for their hand crafted product but this will barely dent the massive rise in unemployment. There will also be few alternative sectors of the economy to retrain and move to as most will be subject to the same pressures. During the “Great Recession” many middle income jobs have disappeared never to come back. Businesses are managing without or have replaced staff with automation already. These displaced people currently have the option of low paid service jobs. However there will be far fewer of these in the future.

The current prescribed panacea to unemployment is education, education, education. But already this is showing signs of being a forlorn hope. Many graduates are unemployed or underemployed and the wage premium a tertiary degree once conferred is shrinking. An industry career that looks promising at the start of a 3-4 year degree may have far fewer opportunities at the end as markets rapidly change.

Tertiary education has become commercialised – big business – with many of the young encouraged to take on debt for careers that may never eventuate. Tertiary teaching and large fixed institutions are themselves competing with online courses and tenure and wages are under pressure. When education is a significant cost, how many people can afford to constantly “re-educate” themselves especially with no guarantee of a job at the end.

There are many people who believe that the robotic revolution will be like all the other productivity revolutions; initial dislocation for some but an overall gain for most as we adapt to and adopt the new technology to boost production and consumption. Yet this revolution is arriving at the same time as it is becoming vividly apparent that the earth’s natural resources are becoming rapidly depleted and the biosphere rapidly degraded. Are there enough resources to supply a quantum leap in productivity and production? Can the environment sustain the “growth”? Unless the new computerised, robotised, mechanised processes are dramatically cleaner and more energy efficient with far less wastage, the hope of technology solving our economic and environmental problems seems wishful thinking.

In addition, all production is ultimately for consumption but unless people and governments have surplus income, who is going to consume all the output? A large tail of unemployed people replaced by machines will be a drag on the economy. After all, those robots working 24/7 are not going to be doing the buying. A likely scenario is a small group of the very well paid with excessive consumption, and a very large group of unemployed or underemployed in poverty. Western nations would look very similar to third world nations today.

This all sounds a bit grim. It can be turned into a positive if everyone agrees to accept lower levels of consumption. Automation and robots in particular can be used to do much of our work, freeing up leisure time for most. People will be able to job share the remaining jobs and top up with a Universal Basic Income. Business owners  and shareholders will still derive a higher income but cannot be allowed to take all the surplus. To do so would be self-defeating in the long-term as they require human customers with disposable income. Job sharing and a UBI would allow many to spend more time with family and friends, do charitable or unpaid work and generally interact more with their local community. Utopian? Perhaps but the alternative of a Bladerunner type dystopia is too bleak to contemplate. What is almost certain is that the current financial/consumer capitalist model we have that relies on ever increasing growth, will not survive. We can plan for that now or wait for the sudden stop.

One comment

  1. […] makes a point of mentioning the concerns I have expressed in other posts  (here) (here) (here) and (here) about the future effect on employment, the economy and society of AI and […]

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