JOHN TÖNS JP. Is the trend towards Artificial Intelligence a threat to Employment?

If today’s (12/06/19) National Press Club address by Chris Richardson is to be believed then the trend towards artificial intelligence presents no threat to employment. The analysis presented, however, reminded this listener to Mark Twain’s comment ‘that there are lies damned lies and statistics.’

On the face of it, it would seem that there is little to fear from the growing use of robotics or artificial intelligence. Employment data from OECD countries shows that all countries experience the highest rates of employment in history. Surely if AI is a threat to full employment it would have been shown up by now?

However, we can delve even deeper. Richardson reminded us of the shrill voices of alarm that were raised in the 1970ties. Then the threat to employment was from the influx of married women. Equal opportunity meant that the work force had effectively doubled in size, yet all these doomsayers were proved wrong – unemployment did not grow exponentially; the economy had little difficulty in finding work for all.

But perhaps there is a different lesson to be learnt from history. If we plot wage growth from 1900 to the present and likewise corporate profit growth over the same period, we notice something interesting. Up to about 1970 the two grow at roughly the same rate. However, from the early 1970ties, wages begin to flat line as corporate growth continues unabated.

This is a puzzling trend. Wages growth fuels consumption so how did the corporations continue to grow their profits? As households became dual income households part of what would have been a wage increase was used to pay the women but that alone is not enough. Corporations used their profits to enable the banks to introduce something that was unknown: the credit card. This in turn has meant that in most OECD countries the majority of households are living on the edge. The debt to income ratio for Australians is 189%. Australians need a mere adverse economic zephyr to default on their debt.

Chris Richardson is right that the influx of women into the workforce did not create unemployment but what it did seem to do is to reduce incomes forcing households to rely on cheap credit to fund their lifestyles. We can also note that during the last 50 years there has also been a significant growth in the precariat – they are not included in unemployment statistics but often have incomes below the poverty line, and as they do not have permanent employment are shut out of the housing market.

Little wonder that there is a lively debate in the literature about the idea of taxing robots. No doubt Chris would concur with the view ‘that the Fourth Industrial Revolution is no different from earlier waves of automatization, hence AI will largely complement, rather than substitute, human labor, rendering “robot taxes” in addition to conventional capital gains taxes not only unnecessary, but harmful.’ (Arndts, J. and K. Kappner (2019). “Taxing Artificial Intelligences.” IREF WORKING PAPER NO. 201902.)

It is a matter of no small concern that politicians continue to listen to economists like Chris Richardson.

John Töns JP was a teacher, curriculum writer and researcher for SA Department of Education


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4 Responses to JOHN TÖNS JP. Is the trend towards Artificial Intelligence a threat to Employment?

  1. I agree with most of JT’s commentary. The historical precedent of past technological change decimating employment and forced relocation of labour is likely to be repeated. Chris Richadson is an executive of an entity reliant on big business in both the access economics and multinational accounting arena. International tax dodging is a speciality. Many cynics would ask who paid for the ‘selective’ analysis being relied upon? The multiple repetition of the word myth was nauseating. NLP suggests that this notion was accepted by the economically unsofisticated. The cognitive dissonance, wilful blindness and selective use of economic statistics was uninformative. In reality a Polly-Anna optimists dream of never ending growth without intangeable expenses and societal costs.

  2. Michael johnston says:

    John tons is on the right track but he doesn’t go far enough. It’s the combination of AI with Macine Learning that provides the greatest threat. All the waves of automation, mechanisation, digitisation and so forth are as nothing when we consider the prospect of algorithms being used to eliminate jobs. This keeps me awake at night.
    Our society is largely built on jobs, even as a mere social welfare system. What happens when there are no jobs?
    We are, as yet, incapable of sensibly discussing the prospect of a living wage, let alone a Universal Basic Income.
    No jobs, you say. How ridiculous! But we have been seduced by history to believe that jobs displaced by automation et al have all been replaced by new jobs. That has been our past, but it is not the future. All the wizards of Silicon Valley are directed at robotics and the elimination of costly labour. With the combination of AI and machine learning their time has come.
    Work will remain, but any human activity that is capable of an algorithm will see robots displace jobs. Wither our society in such a scenario!

  3. Greg Bailey says:

    Chris Richardson has been a prominent public relations advocate for neoliberalism for many years. He is photogenic and often appears on television as an expert, though seemingly without the detailed knowledge of economic history most economists used to possess.

    Whatever his technical knowledge of neoliberal/classical economic theory and econometrics, his skill lies in giving simple answers to questions in a manner suggesting a high level of rationality, gravitas and a capacity for prediction. He does not, however, take the longterm view John has given in his article, nor does he attempt to anchor his analysis in the larger cultural framework where the economy is embedded. In this he is like many other business economists who seem very nimble with numbers and cliches, but with little else.

  4. David Brown says:

    the miners in WA are reducing their workforce as they automate not only their trucks and trains but all the way through to centralised (and remote) security with ongoing waves of reduced staffing in all areas

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