Future Wall Street Journal headline: “Profits Rise as Worker Productivity Soars.”
Jerry Kaplan is a fellow at the Center for Legal Informatics at Stanford University and teaches ethics and impact of artificial intelligence in the Computer Science Department. His latest book is Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence.
Future New York Times headline: “Robots Steal Jobs at Record Pace.”
Whether the future is very bright or very bleak depends on who you are. Most experts agree that we are about to experience an acceleration of automation, largely resulting from advances in artificial intelligence. This will likely drive dramatic improvements in worker productivity and increase aggregate wealth over the next few decades. Sounds great, but not for the workers who will be displaced—which is to say most of the population.
From the Great Depression through about 1970, strong unions and collective bargaining helped workers in the United States garner a significant share of the benefits of rising productivity, lifting middle-class living standards. But since that time, productivity continued to rise unabated while wages stagnated, with the profits accruing to the upper class—basically, enterprise owners and executives. The question is why, and what, if anything, we should do about it.
While there are many causes, one of the least appreciated is the privatization of long-term infrastructure investment. When the government invests, the benefits should properly flow to society in general. When private parties foot the bill, the return, rightfully, should flow mainly to the investors. For example, the U.S. government has invested more than $300 billion (in today’s dollars) in the interstate highway system—possibly the best public investment in U.S. history, with broadly distributed benefits. By contrast, most of the cost of broadband access has been borne by private parties, over $1 trillion to date.
So it’s not surprising to see a generation of hyper-wealthy Internet moguls protecting their turf: The 1998 federal Internet Tax Freedom Act prohibits taxation on Internet use.
There’s a good argument that this is as it should be, a “new normal”—but that’s little comfort to those left behind. Let’s face it, workers aren’t responsible for their own increased productivity. As a general matter, they aren’t working faster, harder, or more than they did 50 years ago, and people aren’t smarter (though they may be better trained mainly as a result of public investment in education). In fact, the average full-time employee is working fewer hours than ever before. What’s made the bulk of the difference in productivity is technological advances, infrastructure improvements, more efficient organization, and better information put to more effective use. People are still people, but today’s cars are way more efficient than your grandfather’s Oldsmobile, not to mention that computers outperform his hand-cranked adding machine by factors measured in billions. Why does it follow that drivers or bookkeepers should be paid more? They weren’t responsible for either of these improvements.
Whatever the reasons for the disconnect between productivity and wage growth, it’s a problem for everyone, not just workers. Rich people like their money, but who wants to live in a world where the haves hide in cloistered communities defended by private armies, while starving haves-not work for peanuts, if at all? To date, we have chosen to distribute society’s resources largely based on our ability and willingness to work. Fair enough. But we appear to be rapidly evolving to a world where assets, not labor, are the primary driver of prosperity. So the question is: How can we move toward an economy that equitably distributes benefits in an asset-based economy?
It’s certainly possible—the economy isn’t a force of nature, we get to design it—but it will be a challenge. We can and should tweak our economic system when changed circumstances warrant: It should work for us, not the other way around. And indeed, it has shifted tectonically, though quietly, over the past few centuries. Two hundred years ago, most of the U.S. population worked in agriculture, so arable land represented the bulk of society’s assets. During its earliest years, the U.S. innovated in the area of land use policy, essentially offering free land to those willing to use it productively. Programs like the Homestead Act of 1862 gave settlers ownership of land they had worked for at least five years. In other words, the government was in the business of distributing, if not re-distributing, society’s assets. Today, however, we’ve got food production under control, requiring the efforts of only two percent of the labor force, and the proportion of U.S. assets represented by land has correspondingly dropped to a mere six percent (roughly $14 trillion of $225 trillion).
The bulk of society’s assets now take a different form, most prominently financial instruments. The idea of giving everyone money is rightfully odd, to say the least, but in principle the government could re-distribute new wealth, for instance by making low- or no- interest loans to every citizen solely for the purpose of capital investment—only slightly metaphorically, to buy a robot to work in their stead. But that’s only one possible approach.
The good news is that the U.S. GDP has doubled fairly reliably about every 40 years, and there’s no reason to expect it to falter. This means that by about 2055, we will have created new assets roughly equal in value to all of today’s assets. If we can find ways to distribute even part of this new wealth more widely as it is created without interfering with its formation, there’s plenty of room for everyone to get on the economic escalator without raiding the piggybanks of today’s affluent. By analogy, this is as if the acreage available for homesteading doubled every four decades—we could give away nearly two percent “new” land each year without taking any away from anyone. This is great news. It means that, carefully managed, there’s at least a shot at making wealth a sustainable, renewable resource.
As the coming wave of automation washes over our economy, we’re about to discover that Karl Marx was right: In the struggle of labor against capital, capital has the upper hand. Instead of fighting the inevitable, we need to go with the flow, and stop thinking that labor is the only virtuous path to personal comfort. Perhaps the road to a more equitable future is to raise a generation of capitalists, not workers. When we wanted more food, we gave away land to individuals willing to work it, not to increase the holdings of those who already had farms. When we want more money, perhaps we should make capital available to individuals willing to put it to work, not to backstop increased leverage for today’s financiers. Micro investors just might deliver macro benefits.
For the Future of Work, a special project from the Center for Advanced Study in the Behavioral Sciences at Stanford University, business and labor leaders, social scientists, technology visionaries, activists, and journalists weigh in on the most consequential changes in the workplace, and what anxieties and possibilities they might produce.
