Stop the Robots

Change is always disruptive but the upheaval likely as a result of the next wave of automation will be especially marked. Driverless cars, for instance, are possible because intelligent machines can sense and have conversations with each other. They can do things – or will eventually be able to do things – that were once the exclusive preserve of humans. That means higher growth but also the risk that the owners of the machines get richer and richer while those displaced get angrier and angrier.

The experience of past industrial revolutions suggests that resisting technological change is futile. Nor, given that automation offers some tangible benefits – in mobility for the elderly and in healthcare, for instance – is it the cleverest of responses.

machines can replace radiologists, lawyers and journalists just as they have already replaced bank cashiers and will soon be replacing lorry drivers. Clearly, it is important to avoid repeating the mistakes of the past. Any response to the challenge posed by smart machines must be to invest more in education, training and skills. One suggestion made in Davos was that governments should consider tax incentives for investment in human, as well as physical, capital.

Still this won’t be sufficient. As the Institute for Public Policy Research has noted, new models of ownership are needed to ensure that the dividends of automation are broadly shared. One of its suggestions is a citizens’ wealth fund that would own a broad portfolio of assets on behalf of the public and would pay out a universal capital dividend. This could be financed either from the proceeds of asset sales or by companies paying corporation tax in the form of shares that would become more valuable due to the higher profits generated by automation.

But the dislocation will be considerable, and comes at a time when social fabrics are already frayed. To ensure that, as in the past, technological change leads to a net increase in jobs, the benefits will have to be spread around and the concept of what constitutes work rethought. That’s why one of the hardest working academics in Davos last week was Guy Standing of Soas University of London, who was on panel after panel making the case for a universal basic income, an idea that has its critics on both left and right, but whose time may well have come.