G20 china_web

Innovative technologies
Governments must
consider innovative
policies, such as
guaranteed income
Martin Ford
Futurist
Martin Ford is a futurist and the
author of The New York Times
bestselling Rise of the Robots:
Technology and the Threat of a
Jobless Future and The Lights
in the Tunnel: Automation,
Accelerating Technology and the
Economy of the Future, as well as
the founder of a Silicon Valleybased
software development
firm. He has more than 25 years’
experience in computer design
and software development.
@MFordFuture
econfuture.wordpress.com
→ However, when agriculture
mechanised, long-term structural
unemployment did not arrive. Workers were
eventually absorbed by other industries.
Average wages and overall prosperity
actually increased dramatically. This clearly
shows what economists call the Luddite
fallacy – that technological progress will
never lead to broad-based, long-term
unemployment.
The Luddite fallacy holds that as
labour-saving technologies improve, some
workers lose their jobs in the short run but
production also becomes more efficient.
That leads to lower prices for the goods
and services produced, which in
turn leaves consumers with
more money to spend. So
demand increases across
nearly all industries,
creating more jobs. That
seems to be exactly what
happened with agriculture.
Food prices fell as efficiency
increased and consumers spent
their extra money elsewhere, driving
increased employment in manufacturing
and services.
Reaching a tipping point
AI and robotics are general-purpose
technologies. When agriculture
mechanised, other labour-intensive sectors
remained capable of absorbing workers.
There is little evidence to suggest that will
be the case this time around.
As automation penetrates nearly
everywhere, work will disappear. There
must come a tipping point beyond which
the overall economy is not labour intensive
enough to continue absorbing workers
who lose their jobs because of automation
and globalisation. Businesses will then be
able to ramp up production by employing
machines and software. Structural
unemployment becomes inevitable.
50%
of US jobs might
be performed
by machines
by 2033
Automation also creates a serious
problem with consumer demand. If
automation is relentless, the basic
mechanism that gets purchasing power into
the hands of consumers breaks down. That
creates a potential economic scenario of
too few viable consumers to drive economic
growth. Economies would then risk
stagnation or even a deflationary spiral.
Policy reform
In the coming decades, the world will
face the challenge of adapting to this
new reality. The power of AI and robotics
needs to be leveraged for the benefit
of society, finding a way to
mitigate the potential impact
on employment, economic
security and consumer
confidence.
AI is adept at climbing
the skills ladder. Tasks
performed by highly
educated workers such
as journalists, lawyers and
radiologists are already affected.
Relying on the traditional policy of ever
more training and education is unlikely to
be a sustainable solution.
Governments must consider genuinely
innovative policies. One promising idea
is to implement some form of guaranteed
income or universal basic income. All
members of society would have financial
security and the means to contribute to the
consumer demand necessary to sustain
economic growth.
Information technology continues to
advance exponentially and its impact on
job markets could materialise rapidly.
It is important for governments to
initiate research and pilot programmes
designed to test policies that could be
scaled up to enable their economies and
societies to thrive in the event of a major
technological disruption. G20
94 G20 China: The Hangzhou Summit • September 2016 G7G20.com