Thursday, March 30, 2017

A Just Transition to Robot Labor

The robots are coming. Human manual labor is about to be replaced on a scale and level of detail which will surpass even the original industrial revolution. There will be economic displacement. There will also be productivity gains on net, but there will be winners and losers in this technology revolution. Our present laws are woefully unprepared to make this transition a just and socially stable one.

Right now our laws are skewed to favor purchasing a robot over hiring a worker. Robots don't require matching social security or Medicare contributions from the employer. Their costs can be depreciated, often at an accelerated rate. They are a capital asset of the company, increasing its book value. They don't unionize, demand safer working conditions, or sue. If I am running a large company and I have a choice between adding robots or adding human workers, it's a no brainer. And more and more employers will have that choice.

This is all a part of the giant shift between gaining wealth by working capital vs. gaining wealth by selling labor. The accelerating trend is for capital to replace labor. The far left says that the answer is a government provided "basic guaranteed income". I think that is a terrible solution, but some solution is going to be needed, such as this one.

In the meantime the public policy goal should be to ease the economic shock of the transition. That is, that should be the goal if public policy in America was still interested in the welfare of the public at large. What I suspect will happen is that the laws will be fashioned so that the economic gains from robotics are concentrated as much as possible in the hands of those who are on top now. That seems to be the goal of most recent laws.

This will be done in the name of the free market by salesmen posing as economists funded by those on top now. They will give examples from the 101 textbooks as if these simplistic models could really account for the rapidity of technological change; without any public policy accommodation; without regard for the fact that existing laws (as outlined above) already have a government thumb on the scale regarding the choice of human workers vs. robots. They will cheer for "free market solutions" as if we actually had a free market. There is government intervention everywhere in our economy, telling us what we must buy, telling us what features our products and services must have, and subsidizing government favorites while erecting barriers to competition. This is what government does every day at the demands of some of the very same entities whose spokesmen cry "free market" when a regulation which does not benefit them is proposed!

Not that I am opposed to the free market. In many ways I only wish we had one! I don't want to stop the free market, just regulate the displacement caused by technological change to a sustainable level so that the whole system does not break down. There will be opponents who are truly ant-free market. Some will try to block the use of this growing technology in an effort to keep things the same. But things don't stay the same and if America does not move on we will find that the rest of the world will. The goal should be to use public policy to integrate new technology into our lives, not ban it.

At any rate we are talking about a net productivity gain here which could be very liberating for humanity. Or it could be debilitating for humanity. For example, if those on top continue to game the system to reap a disproportionate share of the gains of changes to law or tech while all the economic losses due to displacement hurt everyone else. We could wind up with a top one tenth of one percent with all the capital, a few well paid professionals to service them in jobs the robots can't do (yet), and the bulk of humanity being turned into "useless eaters". Even if most of us wanted to work for $1 an hour, the facilities of the future will be designed to be staffed by robots, not people. What do you do with five billion people who have no way to earn a living?

I suggest a transition period, maybe a generation, or maybe two, where flexible automated labor (robots) have special rules for corporate capital ownership (these restrictions would not apply to individuals who owned robots for either private or business use). There would be no prohibition on their manufacture or use, only on their ownership by corporations. During this period robots could only be owned by small corporations whose stockholders were actual humans. Corporations could not own stock in these corporations. As a localist, I favor this restriction for all corporations. Corporations are creations of government and as such by nature are an intervention of government in the free market. Therefore restrictions on them are not the same as restrictions on the free market, but rather government regulating creatures of its own making.

These corporations would be for the purpose of leasing robots to other businesses. Companies which wished to have robots do their work would rent them, not buy them. And they would rent them from companies which would be owned by the kind of people who would have formerly been workers! So then this would very much be like the worker renting their own labor out to the company.

These special robot-owning corporations would have to be structured so that there was a cap that any one person could own, perhaps two percent of common stock or one percent for the larger firms. Big banks could not buy the stock. GM could not buy the stock. Bill Gates could not sweep in and buy it all. The kind of people who get access to the stock are the same kind of people whose jobs would be taken by the robots. They could buy it for a relative bargain, given that all the big money of those players closest to the printing press would be frozen out. In this way the economic displacement of automation could be mitigated. Instead of the gains all going to the capital holders and the losses all going to the labor sellers, we can transition out to the brightest possible future. One in which the replacement of human labor by automation leads to winners without losers.

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