Automation is changing the economy

Each year, robots play a larger role in the economy. Last week, self-driving cars won the right to drive on public roads in California. Drones now play a significant part in modern warfare.

If you think professional jobs are immune from the encroachment of automation, then consider that stock trading is now performed by algorithms, Coursera offers university courses online, and IBM’s Watson is being applied to drug discovery. Companies such as Boston Dynamics, Rethink Robotics, and iRobot are collaborating with universities to pioneer the role of robotics in all aspects of society. In light of all this, Pugwash decided to discuss whether or not robots are making humans obsolete.

Increased automation can dramatically increase productivity and is often welcomed by industry, as seen in the agriculture sector. However, today the increase in productivity does not imply increased employment — a trend typically enjoyed in the 20th century. These changes can potentially cause significant disruption to the labor forces of the economy. As Erik Brynjolfsson and Andrew McAfee said in the 2011 book Race Against the Machine, new technologies are “encroaching into human skills in a way that is completely unprecedented.”

To increase employment rates, the unemployed must be trained to work in a diminishing pool of increasingly specialized jobs. The sluggish recovery from the global financial crisis and record levels of university attendance are a strong indication that technological change is causing job losses to outstrip job creation. And the role of automated work in the economy is only going to increase.

Although economists are divided about how job creation will adapt to a more automated economy in the long term, in the near future an automated economy will be a major contributor to wealth inequality. We are already observing this consequence. When a small number of online travel agents and tax preparation services can automatically do the job of many office-based travel agents or tax branches, wealth that was distributed among many businesses and employees is funneled into a select number of business owners who operate a more automated service. Likewise, when Walmart replaces employees with automated checkouts, wealth that was previously distributed to workers is retained as greater profit. Evidence of this increasing inequality can be seen in the stagnating median income, despite growing productivity. Unreasonably large wealth inequality hollows out the middle class and is a catalyst for the segregation of society and social unrest. Therefore, it is important to manage this challenge with appropriate economic policy.

What happens when we take this to the logical extreme? Imagine a utopia where all essential professional, white collar, and low-skill jobs are largely automated by robots or software that is owned by a small number of organizations. Wealth is accumulated through the economy without the need for wages to be paid to employees. Changes in taxation laws would be necessary to support widespread redundancy in this automated economy and allow the entire society to enjoy the fruits of an automated economy. Without these changes, we would expect large disparity between the owners of the technology and the remaining population. The development of major projects that occupy redundant citizens at an expense may become more commonplace if the increased wealth from the productive automated economy can be taxed appropriately.

For instance, in the United States, large-scale government projects, such as the military, currently provide employment for many who would struggle to find work elsewhere.

In a world where humans no longer need to work to sustain their livelihood, what would people do with their time? An automated economy may see the rise of a parallel leisure economy, in which people no longer need to spend their time working for an income. Many people would be content to spend their time playing games, traveling, or working for enjoyment rather than necessity. However, one concern is that in the face of a catastrophic event where the artificial intelligence that humans rely on is incapacitated, civilization may totally collapse, with society no longer having the means to operate in the absence of machines.

Such a utopian leisure economy would be contingent on a fair distribution of wealth among its citizens. However, this assumption is a very bold one to make.

If we descend from our utopian fairytale, we may find that those who own the technology enjoy the leisure economy that its wealth provides while the remaining populace is left with the crumbs, unable to compete with an economy of robots. Hopefully, if there comes a time when we must choose between these two scenarios, we will choose wisely.