Preparing society for technological disruption and automation

What are the mechanisms that might help prepare society for technological disruption, automation, and continuing global economic shifts? And how will they be paid for?

Supporting the unemployed

Here are some ways this may work:

1) Universal / Guaranteed Basic Incomes
With inevitably employment casualties from automation many are arguing for a guaranteed or universal basic income (UBI)– paying a living wage to everyone – at a rate typically higher than unemployment benefit. Countries such as Canada, Finland, India and Namibia have been experimenting with different models. The newly elected Italian government has a manifesto commitment to introduce UBI.

2) Conditional Basic Incomes
One of the arguments against UBI is that a large proportion of the population simply don’t need it. To address this, a conditional scheme would make payments available to those below a certain income level as a top up to get them to a guaranteed earnings level. This could replace a lot of unemployment and work-related benefits, be available to all to apply.

3) Community Service UBI
Here the receipt of UBI would be tied to individual’s undertaking community service reinvestment.  In return for the receipt of UBI, they would choose service projects (community gardens, walking trails, artwork, etc.) delivering a public benefit, giving individuals a sense of achievement, enable the acquisition of new skills and connections.

4) Guaranteed Basic Products 
This might run alongside some form of UBI. Everyone eligible would receive credits for key products such as clothing and healthy foodstuffs. Government might use this to tackle critical food related health issues. For example, diabetics might be completely excluded from purchasing anything adversely indicated for them.

5) Guaranteed Basic Services
Claimants could receive services free at the point of consumption e.g. travel, healthcare, utilities. Again, governments might use such measures to nudge desirable societal health and environmental behaviours – through free gym access and free public transport.

Funding the Transition

Our view is that doing nothing is not an option. We need governments to face up to radical shifts in society with investment in equally radical policy experiments.

See also:

• PwC: AI to create more jobs than it displaces

• Capgemini: Intelligent automation could add $512bn to the financial services industry by 2020

• Understanding SAE automated driving – levels 0 to 5 explained

Some ideas of how this transition could be funded:

1) Robot Taxes
Many of the potential issues around the introduction of AI/other disruptive technologies will arise from employers’ choices. Without holding back innovation, we must explore how to fund the resulting social costs. One proposed option is “robot” or automation taxes. Firms would pay a higher rate of tax on the profits they derive from increased automation. 

2) Tax Enforcement
A less radical option would be for governments to start using technologies such as AI to improve tax collection. Globally, governments are struggling to fund their current commitments and many services are over-stretched. Tax increases might not be needed if people and companies simply paid what they are legally supposed to and didn't use avoidance mechanisms.

3) The New Tax Collectors
Rather than recruiting more tax inspectors, government could outsource collection to lawyers and accountants on a no win no fee basis. Having advised for years on how to avoid tax, they know where to look for the gold.

4) Taxation at the Point of Purchase  
Large companies have often avoided paying taxes where the transactions are undertaken. Instead they have issued invoices and reported their profits in a lower tax location. Simple rule changes would require firms to pay the tax in the markets where the clients reside. This isn’t simple but we could find out quite quickly what the potential gains and issues might be.

5) Delegitimising Tax Havens  
A more drastic measure would be to ban all use of offshore tax havens and tax avoidance schemes. A short grace window would be provided for citizens to bring their money back onshore to be subject to national taxation rules.

6) Higher rate taxes for a fixed period
Of course, the above measures may not work to provide the funds needed for the proposed support for the unemployed. If so, then the targeted application of increased taxes to higher earning individuals and businesses could help provide the interim funding to finance the measures described above and in the previous article.

There are no magic money trees to fund the costs of economies transitioning to the next model which serves the whole of society. However, fundamental changes are taking place with potential for large scale job loss e.g. resulting from AI. To avoid a medium to long term crisis, we need to be experimenting now with a range of policy measures to raise skill levels, generate new employment opportunities, and support those who lose their jobs in the transition process. Clearly these policy measures will require investments – requiring bold experiments backed by leaders with the courage to pursue them.

Rohit Talwar, Steve Wells, Alexandra Whittington, April Koury, and Helena Calle of Fast Future