When Robots Take Our Jobs


Nathan Gardels is the editor-in-chief of Noema Magazine.

Having slowly recovered from the great recession a decade ago, the global economy is finally back on the growth track — including in the United States, as the American president characteristically trumpeted in his State of the Union speech this week.

The coming peril resides in the promise of this good news. As unemployment falls and puts pressure on wages to rise in the age of digital capitalism, automation of labor by intelligent machines will accelerate. That in turn will reinforce a trend already underway: the divorce of employment from productivity and wealth creation. Inequality then deepens as wealth concentrates among those who own the robots, so to speak, while those who have only their labor to sell increasingly scramble to cobble together a living wage through precarious gigs.

Nobel economist Michael Spence and Laura Tyson report that 80 percent of job losses in American manufacturing over the past three decades have been due to technological displacement. New jobs have also been created but mostly in low-wage services with greatly diminished income. Recent studies project that the trend will continue with as much as 40 percent of the U.S. workforce losing their jobs to technology by the early 2030s.

This presents a paradoxical challenge for governance in the digital age: The more dynamic a perpetually innovating knowledge-driven economy, the more robust a redefined safety net and opportunity web must be to cope with the steady disruption and gaps in wealth and power that will result.

As the economic guru behind French President Emmanuel Macron’s reforms argued in The WorldPost recently, one answer is “flexicurity” — a labor market that is more adaptable to the fluid shift of tasks in the workplace cushioned by a universal net that protects the welfare of workers instead of specific jobs.

In The WorldPost this week, Jacob Hacker proposes the vital complement to flexicurity in tackling new levels of economic insecurity and inequality — the opportunity web of what he calls “predistribution.”

He cites former World Bank economist Branko Milanovic’s trenchant formulation of this idea: “The only promising avenue to reduce inequality is interventions that are undertaken before taxes and transfers kick in. These include a reduction in the inequality of endowments, especially inequality in education and the ownership of assets. … If market income inequality can be controlled, and over time curbed, government redistribution via transfers and taxes can also become much less important.”

For Hacker, predistribution is not some untested idealistic scheme but was in fact the foundation of broad American prosperity in the past. “Predistribution policies — like public investments in infrastructure, education, research and development, and the regulation of labor and financial markets — built the American middle class,” writes the Yale professor. “And the collapse of such investment and regulations is the main reason that the middle class has experienced stagnant wages, plummeting bargaining power and a declining share of national income since the late 1970s.”

Hacker is critical of the American left for focusing on redistributing wealth after the rich are already rich instead of focusing on how to enhance the skills, bargaining power and capital assets of the rest of society. He notes with irony that, as exemplified by the overhaul of the U.S. tax code just passed by the Republican-dominated Congress, the rich know how to help themselves. “The political right understands that American inequality is ultimately about predistribution rather than redistribution. Why doesn’t the left?,” he asks.

Nicolas Berggruen takes Hacker’s notion of predistribution a step further by floating the quite original idea of employing the latest digital technology — blockchain — to build up a sharing economy in which all have an equity stake.

“The idea of the sharing economy,” he writes, “has so far come from companies like Airbnb, Uber and Lyft and has been controlled by venture capital-backed private corporations. Here’s where blockchain comes in: it provides a technological mechanism for enabling sharing. At its core, the technology of blockchain is a mechanism for securely keeping track of information, for example about ownership and transactions. Rather than storing the information in a central location, blockchain makes multiple copies and distributes them across all the nodes of a network. Each transaction is propagated across the network at essentially zero cost and with total transparency.”

This capacity, Berggruen muses, could enable a non-state and non-bureaucratic way to broadly extend ownership. He offers this example: “Each new robot in an autonomous vehicle fleet could be fractionally owned by every member of the community in which it operates. Every time someone purchased a ride with one of the vehicles, rather than the income only going to a private company, it could be distributed to everyone in the community” through the blockchain technology. “In a nutshell, what the Internet was to social media — the core enabling technology — blockchain is to the possibility of a true sharing economy.”

For Berggruen, this approach would “address inequality at its root, on the production side. Instead of waiting for inequality to happen and then addressing it via a universal basic income, we can instead pursue the idea of a universal right to intellectual and capital goods — a universal basic capital.”

“Using blockchain to enable such a distributed, democratic ownership structure,” he concludes, “could give everyone a stake in our roboticized future, instead of deepening inequality and political conflict.”

Drawing on their recent book, “Capitalism Without Capital,” Jonathan Haskel and Stian Westlake examine how the rise of the “intangible economy,” built on skills and knowledge instead of “tangible assets,” such as machinery and buildings, has impacted productivity, employment, income inequality and financial access as well as widened the chasm between traditional and digital companies and between cities and rural areas.

In our increasingly intangible-intensive economy, they write, “spillovers are a force for equality: potentially everyone can copy a design or a business idea. But if intangibles are valuable in synergy with each other and can then be scaled, this is a force for inequality” because of the disruption and displacement caused in the tangible economy and its host communities. (Think Uber replacing licensed taxis.)

Their concern is that the policy response to this inequality is to double down on conventional notions of infrastructure investment and regulation to bolster the tangible economy — thus consolidating the divide between the old and new instead of adapting and updating policies to unleash the potential of intangible capital.

If the synergies of the intangible economy that Haskel and Westlake identify as causes of inequality can be married to Berggruen’s idea of shared ownership of those synergies, we may well have stumbled onto the rudiments of a new social contract for the digital age that spreads wealth more equally.

This was produced by The WorldPost, a partnership of the Berggruen Institute and The Washington Post.