The critical question following is how we should use all this wealth soon to be generated? A puzzle that opens up economic, social, moral and ethical considerations. Top global institutions lean over the potential implications of a new industrial revolution and build models how those technologies will unfold in the next two decades. A common threat to those futuristic exercises is the risk imposed on today's jobs. A potential massive job displacement might come and bring a broad social upheaval with it.
THE ECONOMIC CONUNDRUM
The current paradigm created by the full employment of the information era's new technologies defies capitalism itself. An economy where the standard input is information, cannot be managed as an economy moved by a market based on commodities and scarce resources. The primary product of the new economy is information. Information is not a limited resource, and that changes the foundations of capitalism in three ways, (as seen...) defends Paul Mason in his book "Post-Capitalism." First, it will reduce the need for work, and so eliminate jobs at scale. Second, it is eroding companies' ability to form price correctly and creating information symmetry where it was not possible before. Third, it has opened new avenues enabling collaborative work that defies monopolies and economic power. The latter two effects are very favorable for a more equitable economy, but the first one will require us to have timely answers. If jobs are eliminated at scale and faster than new jobs are created, we might not have enough consumers and users to fuel the new economy.
And that is an unpleasant conundrum to solve - how can we create a period of unparalleled wealth and massively eliminate jobs supporting capitalism at the same time?
If we look back and analyze past disruptive economic cycles triggered by technology, we can find models to apply and find viable answers. Those periods were called industrial revolutions. In each of those cycles, we see a similar pattern. They generated both more wealth and jobs in the long run, but social distress during the transitions. Technology has been the single most significant driver of long-term human and social improvement, but it comes with a price tag that has to be picked by the generation living the transition. But, has it?
Automation has generated wealth and progress so far. Today we live longer and way more comfortable than 200 years ago when the first industrial revolution started. But if we have asked workers their expectations and views during those transitions periods, they would not be favorable or even catastrophic. Industrial Revolutions may be cruel for workers in the years they are taking place and would be awkward and meaningless to explain the benefits and positive forecasts to the displaced workers. We have a moral obligation to learn with the past to create a better future and avoid unnecessary pain and distress. Economically, we have discovered how to do that. A good example is the counter-cycle President Obama has created to get us out of the 2008 depression. It was inspired by the learnings of the 1929 crash and other recessions. We need to do the same with this 4th industrial revolution and create social equity to make a better transition for all of us and not just a few. We can avoid suffering if we invest in education and the creation of social nets to the displaced ones and the new generations of students.
There is no reason to think the new cycle will not generate jobs and wealth in the more extended run. I do believe so. But it is scary to see its concentrated effect in the next two decades. This cycle will create more intense distress as its full impact will be felt in one-quarter of the time of the first two industrial revolutions, and about half of the third one - just 25 years. Not enough time to prepare an entire generation to adapt to new jobs' demands. We will have to re-skill and up-skill every worker and student for new categories of posts demanding more education and critical thinking.
Therefore, we need to build a bridge, one that will connect today with a brighter future for all of us. And it will require all of us to understand that and use democratic ways to push for changes.
THE UNIFYING BRIDGE
This bridge will bring liberals and conservatives, capitalists and socialists altogether.
It is the most significant concern of liberals, socialists, and humanitarians today, the rising social inequality. The social gap between the wealthier 1% of the population and the rest has been just enlarged in the last decades. That wave of new technologies should, but it is not soothing the problem. In the capital side, mergers and acquisitions of new companies are consolidating the leadership and propelling business concentration around fewer players. The top 3 tech companies are flirting with the trillion dollars cap as we speak, a level not seen before in history. And the problem tends to worsen out as we see more concentration and therefore less competition in key industries. Despite a shallow celebration by the government last month, we see stagnant wages even though the US is in full employment. Even worse, protectionism is back on the agenda, protecting profits for the largest businesses and creating higher living costs for the population. The widening social gap erodes the foundation of society and poses a threat to democracy. Its consequences vary from the growth of the homeless population, a staggering 106,000 people in the West Coast to the growth of social costs as healthcare and social nets, to the rise of urban violence. Unnecessary social distress that we can avoid if we coordinate our efforts towards a balance economic agenda, one that enables economic growth and combat business concentration, stimulate competition to tame prices and reduces social inequality.
Capitalists are very happy with the economic recovery of the last decade, and employees too as jobs are back. Businesses are boosted by the digital revolution and gaining more access to new users and markets. But as automation increases the elimination of jobs, and soon at a large scale, we will see businesses desirably being more profitable but more and more people having their jobs displaced. That is not a sustainable cycle. In the next years, we will hit a break-even point where we will need more users and consumers to be able to keep growing businesses, but the unemployed workers will be out of the market. The situation will be critical as new jobs will not be created at the same speed they have been eliminated. We will need a solution to protect both our economy and our people. That means the mechanisms to redistribute income and reincorporate people as consumers back in the economy will be a target of both capitalists and socialists, both businesses and workers, both conservatives and liberals. As I have explained in my previous article, if we do it timely, we need no tax increase to fund such mechanism as AI will amplify wealth generation. All we need is to redistribute it better to keep people in the formal economy during the transition, and invest in social equity, mainly quality up-to-date education to all, to create a new workforce capable of being productive in the 21st century. Jobs will come back. We need prepared workers to take them. Today we have gaps in tech jobs that we are not able to fulfill with our internal market only. We compete internationally for talent and companies are doing all possible to attract those talents. But they are in short supply. We can expect that will be the reality in most industries soon. We need to massively prepare our students and the current workforce to compete for those jobs. Education every time more define the employability line, and in the future, we will only have jobs for highly skilled workers with a clear sense of collaboration and affective skills. A bridge we need to build, altogether.
We will invest to create more social equity through programs that significantly improve education and guarantee a basic income to the population whose had their jobs displaced. Those programs may have different formats like baby bonds or UBI (Universal Basic Income), a program to guarantee a minimum income to the entire population. Many piloted programs in various countries across the globe, including cities in the US, are proving that providing the basic needs for individuals and families and help them to keep their heads above water is very effective to reintegrate them in the productive society. That way they develop the necessary conditions that allow them to go back to school and get re-skilled and trained for new jobs. It is a myth that people helped by those programs will stop fighting for better conditions and more dignifying ways of making a living. That is the morally correct thing to do.
MAY WE ALL WORK TOGETHER
Time to put aside our political differences and current understanding of social policies. AI is puzzling us with new moral questions and will require us to re-discuss what the ethical behaviors are we want to adopt moving forward. An unprecedented wealth will be created. We need to help each other to transition to a more humanitarian new future with dignity. UBI and Baby Bonds are only two possible solutions. We depend on favorable public policies to make those mechanisms real. Which representative are you going to give your vote? The Yea or Nay?