Category: Automation and Work

Tax Cuts and American Jobs: Where will the Corporations Put Their Tax Savings?

SOURCE ITEMS

Imagine all enterprise functions automated by software and performed through a single point of access, which happens to be a virtual agent with cognitive capabilities. You can stop imagining and start thinking about the repercussions, because this is much closer than you may think.

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I have not met a single CEO, from Deutsche Bank to JP Morgan, who said to me: ‘ok, this will increase our productivity by a huge amount, but it’s going to have social impact — wait, let’s think about it’.

George Anadiotis, Who’s automating the enterprise? Meet Amelia and the future of work, ZDNet, November 8, 2017.  Accessed November 8, 2017.

COMMENTS

In commenting on the proposed tax cuts for businesses in the U.S., numerous business analysts have pointed out that many global corporations have lots of cash on hand (much of it off shore) and that borrowing costs are very low.  If there were investment opportunities in the U.S. that promised a decent return, those corporations would be using that cash and borrowing capital.

Profits have been rising largely via cost cutting and swallowing up rivals rather than through the growing incomes of customers and clients.  Can workers in the U.S. really expect U.S. corporations to change investment strategies solely because their cash holdings overflow even more?

Even if the tax cuts went to U.S. consumers, the impact on investment strategies would be minimal – unless Trump succeeds in creating a U.S. market protected from imported consumer goods.  Tax cuts and automation are not the private domain of U.S. economic policy; Germany and China and all the other players can be expected to respond with their own investment incentives, so increased U.S. consumer spending would almost certainly distribute new investment across the world economy, resulting in more automation, more global displacement of working people, more profits, more wealth inequality, and more damage to the natural environment.

It is worth noting one more thing from the article cited above.  Business operations can now be automated very quickly, much more quickly than underfunded retraining programs can retrain workers and return them to work.  This mismatch between the speed of business innovation and the speed of government responses to worker displacement and income losses will only get worse.

The Trump Administration’s Apprenticeship Strategy Leads to a Dead End

The idea that apprenticeship programs, especially for industries that hire people with skills in science, technology, engineering, and math (STEM skills), is widely accepted and promoted, so the Trump proposal is not out of the mainstream of thinking about barriers to employment and wage growth.  However, expecting much of an impact on employment and wage growth from the Trump administration’s turn of attention to apprenticeship programs will only hand you disappointment.

Over the last several decades, American business and government support for workforce training has declined dramatically, as shown by declining funding levels.

At a time when employers are struggling to find the skilled workers they need to fill available jobs, funding to train workers has dropped dramatically. Since just 2010, federal education and training programs have been cut by more than $1 billion.

Federal funding webpage, National Skills Coalition.  Accessed June 15, 2017.

The incidence of training in the previous 12 months fell roughly 28 percent overall during the period between 2001 and 2009. The results show that the decline in employer-paid training was wide-spread, affecting most industries, occupations, and demographic groups.

Jeff Waddoups, Did Employers in the United States Back Away from Skills Training during the Early 2000s? Seminar Invitation, Center for Work, Organization, and Wellbeing, Griffith University.  Accessed June 15, 2017.

The Trump administration’s proposal does not restore former levels of funding, much less move America to a new level of support for apprenticeship programs.  The reason is in plain sight, but studiously “undiscovered” by political and business leaders: American businesses are no longer dependent on a skilled American workforce; dozens of high and middle affluence nations are training skilled workers who then seek work through globally organized recruiting institutions, and then either migrate across national boundaries to workplaces or work across national boundaries without physically moving.  In most cases, American businesses can offer these globally available skilled workers more of what they want than can businesses in most other nations, so American businesses generally get the workers they really need.

In addition to sourcing skilled workers from a rapidly growing global pool of skilled workers, American businesses are turning to a rapidly growing supply of robots that are becoming increasing skilled with each passing month and decreasingly costly to own.  Robots may not yet be able to take over all skill intensive activities of workers, but competent management teams can (and do) orchestrate teams of human workers and robots so as to hold human staffing steady or even reduce it while still increasing output.

These are the stubborn 21st century realities that no feasible set of U.S. policies can undo or overcome.  Despite the widely held belief to the contrary, we are actually living in a world economy weighed down by an oversupply of skilled labor.  Fortunately, this fact becomes more apparent with every passing day, but, unfortunately, for a very disturbing reason.  As skilled workers around the world are pushed out into the cold because of oversupply with no employment prospects that match the expectations they were told to have, more and more are turning their talents to cyber crime, to designing murderous weapons on an ad hoc basis, and to building terrorist organizations.

A Background Note

The use of apprenticeships and recognizing the value in them goes back thousands of years.  More relevantly, U.S. states have long recognized the value of apprenticeship programs and supported and promoted them through legislation; the federal government has done so since 1937.

Since time immemorial, people have been transferring skills from one generation to another in some form of apprenticeship. Four thousand years ago, the Babylonian Code of Hammurabi provided that artisans teach their crafts to youth.

History of Apprenticeship, Washington State Department of Industries.  Accessed June 15, 2017.

Since 1937, the Bureau of Apprenticeship and Training has worked closely with employer and labor groups, vocational schools, state apprenticeship agencies, and others concerned with apprenticeship programs in U.S. industry. It has field representatives in the 50 States.

History of Apprenticeship, Washington State Department of Industries.  Accessed June 15, 2017.

The point, of course, is that there is nothing new and noteworthy in the Trump administration’s apprenticeship proposal.  They are just trotting out old ideas that seem new because they have been pushed aside long enough for many American’s to think they are seeing something new and untried.

Robotics, Artificial Intelligence (AI), and the New Era of Labor Exploitation and Coercion

SOURCE ITEMS

But salaries higher than those offered last year might not be part of the deal. … Gardner said about a third of employers surveyed plan to raise salaries this year, compared with 60 percent to 70 percent before the 2008 recession.

Curt Smith, Job market better for recent grads, MSU survey finds, Lansing State Journal, October 9, 2015. Accessed October 10, 2015.

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By one dismal measure, America is joining the likes of Third World countries. … The number of U.S. residents who are struggling to survive on just $2 a day has more than doubled since 1996, placing 1.5 million households and 3 million children in this desperate economic situation. That’s according to “$2.00 a Day: Living on Almost Nothing in America,” a book from publisher Houghton Mifflin Harcourt that will be released on Sept. 1.

Aimee Picchi, The surging ranks of America’s ultrapoor, CBS News, September 1, 2015. Accessed October 10, 2015.

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There could be between 10,000 and 13,000 victims of slavery in the UK, higher than previous figures, analysis for the Home Office suggests. … Modern slavery victims are said to include women forced into prostitution, “imprisoned” domestic staff and workers in fields, factories and fishing boats.

Slavery levels in UK ‘higher than thought’, BBC News, November 29, 2014. Accessed October 10, 2015.

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Erik Brynjolfsson has a dream of the future. Or perhaps more accurately, a nightmare. … A vision of a world where computers entrench the power of a wealthy elite and push the majority into poverty. … Brynjolfsson is an economist at the Massachusetts Institute of Technology (MIT) and co-author of The Second Machine Age, a book that asks what jobs will be left once software has perfected the art of driving cars, translating speech and other tasks once considered the domain of humans.

Nick Heath, Why AI could destroy more jobs than it creates, and how to save them, TechRepublic, No Date. Accessed October 10, 2015.

COMMENTS

In the distant past, when the worth of a human worker was primarily her/his calorie power (for moving, pushing, pulling, lifting, twisting, and turning materials and equipment used in the production and distribution of wealth), only a very few workers were engaged in highly skilled work and decision-making.   In most of the world of work, one worker could easily replace another (according to one story, a mule was more valuable to a mine owner than a man). Slavery was cost effective, immigrant and seasonal workers and starvation wages were the norm.

In the nearer past, workers in affluent nations had gained substantial economic power as business owners increasingly needed human workers not only as a source of energy but also as a repository of learned production skills (e.g., skill at soldering a resister to a circuit board without leaving an electrical arc point), and as managers, problem solvers (the intelligence to figure out why the assembly line shut down or whether a particular article contained information relevant to a lawsuit) and planners. The nearer past was also a time when much of the world was still not incorporated into nation-states and markets, so capturing more and more of the world’s people as consumers required more and more production and distribution facilities and equipment, which required more and more highly skilled workers and managers.

All of that is going fast. Fossil fuels and solar power (in all its forms) replace human muscle power. Robotic skills replace human skills. AI software and massive computing power combine to make better, faster and more consistent (unbiased by considerations of kin, ethnicity, race, gender, looks, etc.) decisions than human decision-makers.

What is left to give the mere mortal economic importance? Not much.

AI and robotics, in conduction with fossil fuels and solar energy, have dramatically reduced and will continue to reduce the value of working people for the world’s business owners and managers. In the context of global competition, American and European workers are much too costly given the savings achievable through combining AI, robots, and low wage, unskilled workers in the world’s factories and offices. Even the most honorable of business owners and managers must succumb to the competitive pressures – shedding higher wage, skilled workers and escaping regulations and taxes now devoted to protecting employment rights. Wages, benefits, and employment protections must continue to fall in the wealthiest nations and the best of businesses.

Enslavement, indentured servitude, unpaid family labor, and self-exploitation are labor acquisition strategies as old as humanity and there is no reason to believe the less honorable among the world’s owners and managers will not directly and indirectly take advantage of these strategies. Studies are already finding that these things are on the rise. There is no reason to believe the business owners and managers who are fair to their own workers will stop closing their eyes to the exploitation and coercion of working people practiced by the other owners and managers with whom they do business. Relying on the cheapest sources of components and raw materials must be part of the competitive strategy of every business owner and manager, including the most honorable.