Wed, Jan 08, 2014 - Page 9 News List

The march of the intelligent machines

A ‘second machine age’ is likely to test our ability to spread the rewards fairly, but is not something that will destroy jobs, as many fear

By Gavin Kelly  /  The Observer

Fortunately, perhaps, at least some of the issues that this would mean grappling with are more extreme versions of those we should be worrying about already. The rise of the robot is likely, for instance, to result in an increasing share of GDP flowing to the owners of capital at the expense of labor — something that has recently been occurring across many Organisation for Economic Co-operation and Development countries. An acceleration of this should rekindle interest in finding ways to distribute the ownership of assets more evenly, as well as finally prompting a serious discussion about shifting some of the burden of taxation from labor towards wealth.

Accelerating wage inequality, together with a rise in economic insecurity, would sharpen the need to bolster working-age welfare systems at a time when it is already creaking and has few political friends.

Whether the greater democratization of economic risk — if those in medicine, law and accountancy also feel the pressure — would shift the political dynamic remains to be seen.

We also need to focus on those occupations that are widely expected to grow in number and are dramatically less likely to be displaced by machines — such as care of the young and the old. They are heavily reliant on the state. Securing the fiscal basis and public consent to fund these crucial labor-absorbing industries over the next ageing generation, already an enormous issue, would become even more pivotal.

Historical weaknesses on education policy would cost us more dearly. The wage penalty arising from flaky sub-degree-level qualifications — a longstanding weakness — would rise, as would the premium for those who can combine rigorous analytical thinking with creativity. Massive wage returns are likely to flow to those with applied postgraduate degrees — ensuring fair access to them would become a more central feature of distributive politics.

Just as importantly, we need to prevent robot-fear being used as a force for fatalism. There are already voices arguing that the march of the machine means that a decent wage-floor is simply unaffordable. Yet the evidence that the minimum wage has worked well without costing jobs is vastly superior to that suggesting we are entering a new era of machine-peril. Let us not get too spooked.

J.M. Keynes, writing in 1930 as the Great Depression intensified, was prophetic about today’s public anxieties. “We are suffering from a bad attack of economic pessimism ... people say that the rapid improvement in the standard of life is now going to slow down.” He dismissed this sentiment, putting it down to the upheaval of rapid economic change, and argued that his generation’s grandchildren — today’s baby-boomers — would be better off, which of course they are.

We should be equally confident our own grandchildren will also grow up in a digital economy that is far richer than today’s, driven on in large part by further technological breakthroughs. It is harder than ever, though, to have the same confidence that this greater prosperity will be evenly shared out in the “age of the robot.”

Gavin Kelly is chief executive of the Resolution Foundation, an independent think tank aiming to improve living standards for low to middle-income families in the UK.

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