Large numbers of jobs such as the manufacture of cars on the assembly line are increasingly being done by robots. About one-half of the present day jobs may be under threat from robots. White collar jobs like those of legal research are under threat from Artificial Intelligence (AI). We cannot stop this thunderous entry of these job-eating technologies. We must focus on the positives of these technologies just as we appreciate the rain accompanying the thunder, and not the noise.
The expansion of e-commerce has made it possible for small entrepreneurs to enter the global marketplace. I wanted to publish a book but the publishers would not take it. So I published it myself because the web allowed me to sell directly to the customers. Small kirana shops are taking orders from customers in their area and supplying fresh vegetables. In this way, e-commerce is creating new businesses even though, at the same time, some old fashioned shops are losing customers. There is no consensus on the net impact of these technological developments on jobs. However, if history is any guide, the impact is likely to be positive. After all, the technology of motor car displaced the horse cart but led to a net increase in the number of jobs in transportation.
A huge expansion of jobs is likely in services that are difficult for the computers to provide. Massachusetts Institute of Technology economist Erik Brynjolfs says, “Machines are not very good at motivating, nurturing, caring and comforting people. Human interactions are something that are important but, so far at least, machines are wholly inadequate for those kind[s] of tasks. Thus, sales persons, nurses, kindergarten teachers and domestic helps will continue to have a bright future.” In fact, jobs available in these professions will increase. My daughter lives in the United States. Her nanny broke her hand and could not come for work. Pronto, she logged on the net and found another nanny in a short time. Health and education services will create a large number of jobs.
A report on CNBC.com says that China is moving fast in this direction. People in China feel the most positive about future technology and their job prospects, with 65 percent saying that innovations such as artificial intelligence and robotics will create career opportunities in the next five to 10 years. Attitudes to job prospects in China far outstrip the global average, with only 29 percent of the people across 10 countries surveyed by Dentsu Aegis Network agreeing that emerging technologies would create new jobs. The report, called the Digital Society Index looks at how much people have access to technology. Access to these technologies will enable the people to grab the emerging opportunities. The United Kingdom comes out top of the list, with the United States of America and China following. India was not included in the 10 countries surveyed showing that global experts do not consider us in the reckoning in the race of robots and AI.
We are moving into uncharted waters. We do not know how many jobs will be lost to robots, e-commerce and AI. It is possible that the numbers of jobs lost may be more than those created. The problem is especially grave for us because we not only need to create jobs in lieu of those lost, but also need to create jobs for the large numbers of youth entering the work force. The challenge of creating jobs in the face of AI was recognised by famed physicist Stephen Hawking. He said: “The internet…makes possible…[for] very small groups of individuals to make enormous profits while employing very few people…” He said that Trump and Brexit are the result of this lack of employment.
One solution to the loss of jobs is to impose a “Robot Tax.” Companies that replace human workers with robots must be required to pay an additional tax. South Korea has reduced tax subsidies for firms investing in automation. We can take this farther and impose a tax on Robots. The revenues from the Robot Tax can be used to pay a fixed income to all the citizens under a Universal Basic Income Scheme (UBIS). Let us say the production of a T-Shirt till now required raw materials such as cotton and electricity worth Rs 50 and labour cost of Rs 30. Now, let us say, one-half of the workers are replaced by robots. So, the cost of production of the T-Shirt now becomes Rs 65 (Rs 50 for raw material as previously, plus only Rs 15 for labour against Rs 30 previously). Now, the government can impose a Robot Tax of Rs 15 pushing the cost back up to its old level of Rs 80 (Rs 50 for raw material, Rs 15 for labour and Rs 15 for Robot Tax). The revenue from the Robot Tax can be used to pay the UBIS to all the people.
UBIS will lead to the end of “work.” It will no longer be necessary for a person to work in order to live. Those who want a higher income alone will have the option of working. Others could live off the UBIS without working. This would create a golden era. In 1845, Karl Marx wrote that in a communist society, workers would be freed from the monotony of doing work. They would be able to “hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner.” In 1884, socialist William Morris proposed that in “beautiful” factories of the future, surrounded by gardens for relaxation, employees could work only “four hours a day.” That is the kind of golden society that could be established if we impose a Robot Tax and pay UBIS to all the citizens. In absence of a UBIS, the same robots would become a curse. Unemployment and pauperism will lead to large numbers taking to drugs, terrorism and crime.
We need to approach robots, e-commerce and AI. We must tax them and use the revenues to pay a UBIS to our citizens. We also need to provide free Wi-Fi across the country and make the net accessible to our youth so that they can grab the emerging opportunities globally.
Bharat Jhunjhunwala is a former professor of Economics at IIM Bengaluru.