When the Robots Rise

July 4, 2016 Topic: Society Region: Americas Tags: DemocracyRobotsTechnologyClassEmployment

When the Robots Rise

Will automation kill the middle class—and democracy with it?


THE MODERN left has its roots in advocacy for destitute workers and the dignity of labor. Its primary ambition has long been not to liberate mankind from toil but to honor and reward hard work. The connection is a little less evident in the United States than it is in Britain, where the Labour Party literally originated as a trade union, or in Germany, where the Social Democratic Party has long made its political pitch to workmen everywhere. And yet, America’s left too—both the modern-day Democratic Party and more radical manifestations like Occupy Wall Street—remains, first and foremost, a movement devoted to ensuring that people who work hard get their just recompense. Their primary audience is, in the words of both Bill Clinton and Barack Obama, those Americans who “work hard and play by the rules”—or, in the language of Elizabeth Warren, people who “came up the hard way . . . out of a hard-working middle class family in an America that created opportunities for kids like me.”

Because labor unions still play a large role in the Democratic coalition, Democrats tend to think about inequality from a worker’s perspective. Much of their thinking tends to be rooted in the ideal of mid-twentieth-century mass-factory work, and the inherent conflicts between labor and management. Some specific recipes have been substituted as Democrats embraced the requirements of a globalized economy over the last few decades, but the default strategy remains the same. Democrats seek to improve the lot of workers by requiring more of employers: more benefits, higher salaries (e.g., the fight over the minimum wage), better working conditions and so on. The Obama administration, for example, has devoted considerable energy to making sure more employees are eligible for overtime pay, and making it harder for employers to classify workers as contractors.

To be sure, Democrats are more supportive of spending on social programs than Republicans. But even many of these programs are oriented towards helping people who are already in work, as in the case of the Earned Income Tax Credit, or getting people back to work, for example, through various educational benefits.

Taken together, these measures have done a lot to improve the material condition of American workers. But the flip side is that these protections for workers significantly raise the cost of hiring workers. It’s hard to disagree with the premise that $15 per hour is a reasonable wage for fast-food workers. But in the age of automation it is also hard to ignore the possibility that a high minimum wage speeds up the transition to automating low-skill work. The fast-food industry, for example, employs more than two million wait staff, three million cooks and a sizeable share of the nation’s more than three million cashiers, according to a recent Washington Post article. As the price of robots goes down and the price of labor goes up, more and more fast-food chains will opt to delegate these tasks to machines instead of workers.

The fast-food industry is hardly an isolated case. By the National Employment Law Project’s estimate, 42 percent of all workers earn less than $15 per hour. Most of them perform repetitive work that doesn’t take special skills, meaning that they may soon go the way of elevator operators. The dilemma this poses for the left is real: low wages keep workers in poverty; high wages push workers out of their jobs. So long as the Democrats’ primary economic focus remains on decent-paying jobs, this impasse will remain.

Instead of acknowledging how fundamental a challenge the automation revolution poses, Democrats have tended to cast declining wages as a mere problem of skills and education. They seem to believe that, if only workers could get more training or attend college, they would command higher wages. Recycling the familiar pabulum that “[d]eveloping the skills and abilities of these workers . . . presents a significant opportunity to improve their wages and to increase the productivity and competitiveness of employers,” the Obama administration has created something called the Upskill Initiative. Invoking the same rhetoric, Hillary Clinton now proposes spending an additional $350 million so that more people can get a college education.

The left’s response to the rise of robots, then, is likely to be more of the same. In the future, they realize, those who have the skills to operate the machines or to do high-level creative work will do well. If more people are trained to do high-level creative work and operate machines, they assume, the economy will thrive. Education, they conclude, is the key—preferably that of the STEM variety.

It is an argument that is as misguided as it is simple. Even if policymakers could design and enact effective programs to support widespread education, it’s unclear how much of a difference they would make. There are many reasons for this. One is the long time lag of educational investments. As Larry Summers notes, two-thirds of the labor force of 2030 is already out of school today. But in an economy of increasingly scarce employment, it is also unclear how successful education and training programs will be for those who do participate in them. The remaining high-skill jobs will be limited to those with a certain degree of natural aptitude, and the more people rush to fill these jobs, the weaker the bargaining position of labor in general. At some point, retraining yet another person to code may simply displace a recent graduate from that very same retraining program. Even if every American were trained to perform some task that machines are not yet able to carry out, the aggregate effect would likely be minor. If the total number of these tasks is low, spreading skills to the masses will not avert mass unemployment.

In a 2012 Foreign Affairs article, Francis Fukuyama observed that it has been a long time

“since anyone on the left has been able to articulate, first, a coherent analysis of what happens to the structure of advanced societies as they undergo economic change and, second, a realistic agenda that has any hope of protecting a middle-class society.”

Unfortunately, he is right about the left’s failure to face up to the fact that its old solutions no longer work—and the consequences are likely to be dire.


THE MOST important players in both parties are likely to rank among automation’s winners. Politicians and their top donors alike are part of the small portion of the population who have the skills, capital and connections to profit from the remarkable productivity of the coming automation age. They will be eager to keep those gains to themselves. So it is little wonder that they are deeply uncomfortable with the idea of significant redistribution—or that the issue has so far remained off the “serious” policy agenda.

A small minority of wealthy elites has nevertheless begun to argue for more redistribution. Some of the rich who favor redistribution are motivated by genuine fears about the kind of society that would come about if a greater share of Americans were destitute. Democracies with universal suffrage, they realize, have only ever proved stable in conditions of significant middle-class affluence. It follows that democracy and the automation revolution may genuinely be at odds. To survive in the automation age, democracy would have to restrict the voting rights of the bulk of the population. The only alternative is to recreate the economic conditions of mass affluence that have long sustained the system through increasingly active redistribution.

Other elite advocates of redistribution are more concerned with their perceived self-interest than with preferences about the kind of society they want to live in. Nick Hanauer, a self-proclaimed “zillionaire,” has argued that an effective defense of the enlightened self-interest of the rich requires significant redistribution. “Our country is rapidly becoming less a capitalist society and more a feudal society,” he writes. “Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.” To avoid a revolutionary assault on the wealth of the rich, Hanauer suggests, they should be so forward-looking as to share a significant portion of their wealth voluntarily. “Wake up, people. It won’t last.”

A concern about the long-term consequences of extreme inequality has also persuaded some libertarians, like scholars Matt Zwolinski and Charles Murray, to defend redistribution. They worry that populist anger at widespread immiseration may eventually lead to widespread demands for the state to take an ever more active role in the economy—or even to capitalism collapsing altogether. They therefore favor forms of redistribution that would limit the expansion of the state and soften popular pressure for the state to rein in capitalism. Harkening back to Milton Friedman’s negative income tax or even Thomas Paine’s citizen dividend, they champion a universal basic income. The best course of action, they argue, is to transfer money to the poor in a way that minimizes state involvement in the economy, and then let them figure out how to spend it.