By Denny Gulino
WASHINGTON (MaceNews) – It’s dawning on governments that robots do not necessarily pay taxes and it’s becoming apparent to workers that their future income is in the hands – or probes or sensors – of these same robots as public policy falls to keep up and protect them.
Sounds like chaos in the making, but actually it will all be highly organized – if the robots have anything to do with it.
It’s Tuesday and the IMF has just concluded its two-day consideration of the future. To sum up, once a few obvious problems are worked out, the new world will be one of leisure and increased autonomy for human beings. Or once the humans have been rendered quite useless they can, of course, be phased out. Okay, perhaps that’s overstating the degree of pessimism.
Yet it’s dire outcomes, perhaps not as dire as that last part, that can be a troubling prospect for those like researcher Ian Goldin who Tuesday sketched out the underappreciated transition well under way for an audience of experts in measurement. They were assembled by the International Monetary Fund for a forum on “Measuring Economic Welfare in the Digital Age.”
Goldin was not necessarily terribly pessimistic about the future, just concerned that right now, no one, particularly the public sector, is prepared for it. The former director of policy at the World Bank is doing his best to rectify that, having authored 21 books.
In the second day of the IMF’s “Beyond GDP” forum, the University of Oxford researcher modestly explains how “20,000 Ph.D.s couldn’t figure it out.” He explains how Donald Trump, Brexit and the increasingly “super exponential” pace of technological change and the recalibration of risk all fit together. When current events outstrip the ability to understand or plan for them, the result is “fear.” Fear begets populism.
On the first day of the forum, Goldin had given another presentation, telling the hall full of statisticians and economists how the data got beyond them. For example, “We’ve lost track of how many hours people are working,” he said, which means society can no longer measure productivity and so analyze the sources of prosperity and how to preserve it.
On the second day of the forum Golden got up to speed, flashing pictures that at first glance looked like standard illustrations of scenes of industry. On second glance they became unsettling depictions of factory floors largely devoid of humans. Like the Tesla factory, Impressively populated by robots and relatively few people.
Current technology, being implemented in 2018, is driving the furious pace of change, he pointed out, not technology still on the drawing boards.
Another speaker, Jim Balsillie, also saw politics, populism and technology interwoven. Balsillie is the head of Canada’s Centre for International Governance Innovation and better known as the co-founder of Blackberry.
“The exploitations of data provide the new behavior of the society that created the data in the first place,” he says. At one end of the scale, Facebook’s algorithms seemingly lead to deaths in Myammar as false news that was not challenged inflame whole populations, something the company, the government or anyone else had not anticipated. At the other end of the scale, similarly vast populations trade their data for convenience and are happy to do so – without much understanding of the consequences for privacy or societal flexibility.
We can still measure the number of robots per human in South Korean factories, a hint of what’s ahead for the United States with just a minor fraction of that total so far. Next step. Then what? Goldin and others on the program made their point, that we don’t know. And there is less than sufficient efforts to find out.
Goldin’s set of research findings is the one at the high end of human “disintermediation,” with around 47% of existing jobs being phased out in the next couple of decades. Educational attainment will not insulate many from the changes, he says. More comforting percentages from the OECD and elsewhere are not even half that. That’s because, he says, they are not properly gauging the speed of change, the “super exponentialism” of change.
Goldin’s broader view shows that a vast sorting process is underway and gaining speed because the pace of change runs on capital, and it is less available to those nations which already don’t have enough. The coalescence of capital, and development and the depletion of capital and development are already clearly discernible if you know where and how to look, he says.
The financial crisis revealed some of the instability inherent in a system that, as Goldin said, 20,000 Ph.D.s could not quite understand. They work for all the central banks in the world. And presumably, at the IMF and other multilateral organizations that have an interest in world development.
The heart of the crisis was the unanticipated consequence of technological change, the kinds of financial engineering that became possible. It didn’t have to be mortgage backed securities. It didn’t have to be CMOs. The innovations that moved from theory into practice so they could be accomplished with a certain number of keystrokes were the mechanism of crisis when coupled with a vacuum of understanding of their systemic effects.
“Nobody can say they didn’t have enough information” going into the crisis, Goldin said. “It’s the blizzard that matters,” not the mass of data points. “We’ve got a few scars on our back,” and now the question is “are we able to get our heads around this and do the right thing.”
Goldin explains why the 24 explanations given for why productivity growth appears to be slowing down or disappearing throughout much of the developed world fail. Some are very compelling but they don’t sequence properly. Nothing happened in the 1990s that caused the productivity slowdown in the 2000s.
Back to public policy, how do governments make decisions when those who do their measurements and the metrics they use are not capturing the important parts of what’s happening? If robots don’t pay taxes and neither do the displaced workers who have had their incomes removed, then taxes on the robots will be necessary to feed the workers. Corporate taxes vs. income taxes? But who will pay the corporations?
IMF Managing Director Christine Lagarde, who appeared at the closing of the forum, recounted how Henry Ford once told union leaders he could devise mechanical ways to replace workers to which they replied, then “Who will buy the cars?”
“Mankind doesn’t always need a massive crisis to find its way forward,” Balsillie said in his expression of tempered optimism. One conclusion: Once upon a time, specifically 1944, nations came together to figure out a system of international value transactions they could live with. The Bretton Woods negotiations produced the IMF and its role of balancing the system. Now the system is changing on its own without any such guiding principles. Who will put together the new Bretton Woods?