How to survive the rise of automation

A matter of when.  The rise of robotics and automation is gaining traction as a worldwide topic of concern.  And rightly so.  Just a few years ago, not so much.  Until, that is, the appearance of a funny little car from Google that could drive itself.  This seemingly innocuous event would prove seminal in the vertiginous rise of automated systems in the economy.  Nowadays, not a day goes by without the publication of an article in the digital press on the coming economic dislocation wrought by AI-powered machines.  This one is but one example.  The relentless march of the robots is decimating the employment landscape wherever it goes.  Not even labour-intensive industries like oil and gas, mining and automotive manufacturing are immune to the ravages of the digital locust.

Economists like to chime in on the debate with attempts to assuage the threat.  Predictably, they invoke the inevitability of similar technology-driven upheavals, starting with the granddaddy of them all: the 19th Luddites.  What economists fail to grasp are two self-evident facts: 1) all previous upheavals expanded the volume of workers; and 2) the output of these new workers were immediately absorbed by the working classes in keeping with a rise in their quality of life.  The great industrial revolution of the 18th, 19th and 20th centuries transformed national economies, hitherto characterized as economies of bare subsistence, into employed then working then middle then knowledge classes.  The latest transformation, spearheaded by Silicon Valley, was the first one to reverse this trend.  The advent of software as technological hegemon has shrunk employment numbers while increasing outputs that serve no purpose other than crass consumption (how many new cell phone do you really need?).

Doom is the forecast.  In a previous post (see here), I highlighted the fact that the employment rolls of Twitter, Facebook, Google and Apple together were less than GM’s job count alone, and that ExxonMobile and BP each employed more people that Google, the world’s most valuable public company.  It is arrantly preposterous to cling to the fallacy that the rise of automation will merely change the nature of employment.  There aren’t enough coding jobs to go around to absorb the millions of people who stand to lose their livelihood to robots (assuming that they could be turned into programmers in the first place).  The forecast could not be darker: unless society redefines the terms of its compact with business, society’s citizens will lose their primacy and quality of life.

Hope springs eternal.  The notion that corporations exist solely to maximize shareholders’ returns was entrenched in law a century ago.  The notion went hand in hand with society’s goal to share its wealth among its citizens.  That was the tacit compact that has underscored the corporate taxation framework in the Western World since the Second World War.  This compact is now broken. Corporations are permitted to thrive at the expense of citizens.  The taxation regime is stupendously ineffective, unfair and dysfunctional.  What solutions are there to bring back convergence between corporations and citizens?  By making employment more valuable to corporations than robots.  And how might this be done?  By changing corporate taxation to recognize this value.  Replace the thousands of tax rules and exemptions with two principles: 1) assess corporate taxes on the difference between revenues and payroll totals (for those full-time jobs located in the taxation’s jurisdiction); 2) exclude from the payroll calculations the compensation of senior management (including directors and board members).

Simple. Efficient.  And prioritizing Society’s purpose in the right

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