Republicans argue that the lower taxes for corporations and wealthy individuals promised in the tax bill currently before Congress will result in new investment in businesses and more jobs. But in the age of artificial intelligence and automation, trickle-down economics won’t create employment. What corporations and the US economy at large need most in this emerging era is not more free cash, but a new approach to machine-assisted human productivity and purpose.
Olaf J. Groth (@olafgrothsf) is a professor of global strategy, innovation, and digital futures at Hult International Business School, as well as CEO of Cambrian.ai. With Mark Nitzberg he is the co-author of Solomon’s Code: Humanity in a World of Thinking Machines, due in 2018.
Corporations don’t invest in human labor if the same investment in technology, particularly in software, will yield greater productivity. History shows that when given the choice, corporations virtually always opt to invest their cash in machines operated by fewer high-skilled workers, rather than in more medium-skilled workers who could produce the same amount.
That’s because technology, and in particular software, is a production asset that has increasing returns—it doesn’t get depleted, tired, or sick when it has to produce more, unlike the typical human. Software works around the clock, regardless of time zones or holidays. And the more intelligent the software gets, as with machine learning, the more efficient it becomes compared with its human competitor.
Scholars, think tanks, and consultancies have written about looming job disruptions accelerated by the current wave of automation. The more alarming scenarios suggest automation and AI will eliminate 40 to 60 percent of today’s jobs. No one knows precisely how many occupations will be eradicated, but it’s clear that a large share will change dramatically in coming years, thanks to increasingly intelligent software.
Yet, government, corporations, and the education system have all failed to focus sufficiently on defining and designing future job categories that allow humans to play to their strengths when their tasks are integrated with intelligent tools. Instead, the US is pretending it can keep running an economy that’s designed to make humans and machines compete for work.
If American corporations only needed cash to prepare themselves and the country’s workforce for this future, they already would be doing it, because they have some $2 trillion of cash reserves. But in corporate America’s defense, it has good reasons for retaining this much liquidity: Cash helps firms respond quickly to disruption, whether in the form of a wildcard entrepreneur or another financial crash. Cash fuels near-term product development efforts, helps companies enter new markets, and funds acquisitions. But longer-term, innovative concepts for the future—including the development of careers in which humans have a defensible edge over machines—are not on that list.
Creating those kinds of jobs requires an emphasis on the broader needs of our economy and society, and that is best achieved through a collaborative process with government, unions, and academia. It’s time to figure out how innate human competencies can best integrate with machines, but corporations concerned about meeting their quarterly numbers don’t typically focus on those issues.
Currently, businesses are good at taking routine tasks away from humans, but not very good at elevating purpose-driven human creativity. Business and government leaders can strive for greater productivity while readying the American workforce for what some economists have called the Fourth Industrial Revolution. To do this, Congress should create tax relief incentives that encourage corporations to develop jobs for this new age of labor. These incentives could come in the form of financial rewards for participating in public-private partnerships tasked with determining which non-routine tasks humans do really well and enjoy doing the most. Then these partnerships could identify routine tasks that machines can take over, while simultaneously identifying new opportunities that take advantage of—and sharpen—human beings’ human capabilities.
For a model of how this could work, look at the apprenticeship programs that German automakers BMW and Volkswagen brought to their factories in South Carolina and Tennessee. Companies in Germany train high school graduates through a mix of on-the-job mentoring and school-based learning while getting paid a small salary, just enough to sustain themselves. These 2- to 3-year programs, jointly run by government and corporations, help companies create a larger, more qualified group of workers. After a few years on the job, German workers can choose either to stay in their applied track or go on to college.
To be sure, while the German model is more integrative, it isn’t perfect; an American version of this program could focus more explicitly on the overlap between “hard” data science and human “soft” skills, and on rapid experimentation and iteration. High school students who opt for an apprenticeship track could earn tax credits for participating not just at the beginning of their careers, but throughout their lives as they acquire new skills.
Corporations and workers could also earn tax credits for setting up, running, funding, or participating in digital entrepreneurship training and startup programs, especially in structurally weak and socio-economically underprivileged areas of the country. The US government should then mitigate the deficit expansion resulting from tax credits with a carbon tax that would also encourage investments in environmentally cleaner production and transportation.
Introducing a collaborative program could eliminate the perceived competition between humans and technologies and instead help workers transition to more future-resilient jobs. By doing this, Congress could get the country ready for the 21st century economy in a manner that uses machines to unburden humans, not the other way around. And Congress could renew the country’s role as the trailblazer and a global beacon for high-tech progress that enables human potential.
Unfortunately, Congress’ tax bill will do nothing to get us there.
WIRED Opinion publishes pieces written by outside contributors and represents a wide range of viewpoints. Read more opinions here.
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