Monday, September 4, 2017

Automation necessitates a novel approach to education, economics, and healthcare

Joshua Davis, Columnist - It’s impossible to read the news these days without hearing something about automation. From Dominos and Ford doing research on self-driving delivery vehicles, to the predicted loss of 80% of retail jobs to automation , to the rise of AI in routine knowledge work, such as banking. In fact, 42% of Canadian jobs are at risk thanks to automation.

In the past, the jobs lost to automation were made up for by those created through innovation. However, the pace of automation has now reached a point where it exceeds innovation. In Martin Ford’s 2016 book “The Rise of the Robots: Technology and the Threat of Mass Unemployment”, Ford raised this issue through the example of General Motors (GM) and Google. In 1979 GM employed more than 800 000 workers, and made approximately $11 billion USD. In 2012 Google employed 58 000 people and earned about $40 billion USD. For comparison, GM finished 2012 with about $4.9 billion USD profit, and employed less than 220 000 workers. Tech giants are making more profit than ever with fewer people, while old industries are making fewer profits, though still with fewer people.

Furthermore, the vast majority of these job created by innovation will require higher education. In an essay published in 2015, notable philanthropist and college dropout Bill Gates addressed this issue. "America is facing a shortage of college graduates. By 2025 2/3 of all jobs in the US will require education beyond high school. At the current rate... the country is expected to face a shortfall of 11 million workers over the next ten years."

This problem is not unique to the US. In Canada, skill mishmash has already resulted in 550,000 unskilled workers being unable to find work, despite nearly 1.5 million skilled job vacancies. Macleans Magazine has suggested that by 2021 there could be approximately a million unskilled workers in Canada, with 2.6 million skilled job vacancies. This poses two problems: First, that the entry barrier for the remaining jobs will be too high; and secondly, that under our current education system, demand for skilled workers will exceed supply.

A strong case is being made for universal basic income (UBI) to step in as a solution to this problem. At this year’s World Government Summit in Dubai, genius billionaire philanthropist Elon Musk called UBI one of the only solutions to the rise of robotic automation.

“Twenty years is a short period of time to have something like 12-15 percent of the workforce be unemployed,” Musk said. “I think it’s going to be necessary. There will be fewer and fewer jobs that a robot cannot do better.”

Meanwhile, companies in Silicon Valley are beginning to take a serious look at UBI. Y Combinator, Sillicon Valley’s top startup accelerator, is giving 100 families in Oakland minimum wage. This pilot program is set to run for six months to a year, paying both employed and unemployed people $1000 - $2000 per month.

“Basic income is one way to ensure that people are able to meet their basic needs,” wrote Elizabeth Rhodes, director for YC Research's non-profit arm. “We’re not sure how it would work or if it’s the best solution, which is why we want to conduct this study.”

Sir Chris Pissarides, winner of the 2010 Nobel Prize in Economics, advocated universal basic income during the closing session of the 6th Lindau meeting on economic sciences. However, Pissarides stressed that a form of job guarantee should go hand in hand with UBI.

“Universal basic income is an easy way of providing for the basic needs of life. Then you can perhaps provide social services such as health and education through the market,” said Pissarides.

“The state could subsidise wages in these industries, or employ people directly on reasonable incomes who otherwise would be unemployed. Rather than providing people with state-run services, you can trust people to decide for themselves how to spend their money.”

While some may take umbrage at Sir Pissarides suggestion that public services be provided through market capitalism, his view that UBI alone will be insufficient to address inequality is supported by the data from an ongoing Finnish study outlining its benefits and risks.

In Finland, 2000 unemployed people have been given a guaranteed income of about $664 per month, regardless of whether they find work or not. While they have found that participants have lower levels of stress and a greater incentive to pursue entrepreneurial ideas, they’ve also bolstered criticisms regarding inflationary effects of UBI on housing, as well as concerns that it may reduce access to healthcare in an aging population. UBI has many benefits, but it is not a silver bullet which will solve all of our economic concerns.

There is no historical precedent for automation at this pace and scale. People need access to income. Training needs to be provided to meet the demand in these upcoming industries. And healthcare needs to be accessible to our population. As artificial intelligence and robotics continue to revolutionize our world, we need to develop novel solutions to tackle these modern problems.

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