Rise of the robots

Silicon Valley entrepreneur and author Martin Ford believes automation is going to have a profound effect on society, an effect we are unprepared for. Speaking at the RSA today Ford said that as a group economists are generally sceptical about the impact of automation and AI. The reason is historic – it has always proved a misplaced worry in the past. 

But it is different this time for three reasons:

  • The exponential nature of technological change
  • The increasing cognitive capability of technology 
  • And the fact that general purpose technology is increasingly ubiquitous. “There are no safe havens any more”.

One argument is that we will create new jobs as old ones are replaced. However, he argues the new industries are not labour intensive – say, 5% of the work force for the same revenues. “90% workers are still in jobs which existed 100 years ago,” he says. “The entire economy will be more like Google and less like GM in the future.” 

Productivity and compensation decoupled in the 70s and now the benefits have accrued to the capital owners not the workers, he argues. This is because before the 70s automation helped workers become more efficient – since then it is competing with them. 

Technology is no longer just coming after the low skilled (education is the traditional solution); now technology is climbing the skill ladder. 

“Machines do not consume – businesses must be able to sell what they produce,” he says. This means a shift from labour to capital, from workers to owners. “When you take purchasing power from average people and give them to the rich you take demand out if the market – Bill Gates isn’t going to buy 1000 restaurant meals.”

We have a choice between a utopian future or dystopia. In the long run he believes one fundamental answer is a universal basic income. Politically, he says, this is almost unthinkable right now. But if we are going to avoid dystopia we will need to seriously consider options like this. And to pay for it? “Logically we are going to have to shift taxation from labour to capital.”