Robots and Profit

“Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution.” – Stephen Hawking

An economy is successful if it adequately provides for all its citizens. The Organization for Economic Co-operation and Development states that poverty in Canada has been steadily growing since the 1990s. Now, one in seven Canadians live in poverty. But hope is on the horizon. Canada is getting set to initiate experiments with guaranteed basic income, and proponents are coming out across the political spectrum.

Back in the ‘70s, we were told that technological advancements would lead us to a life of leisure and comfort. Instead, for much of society, it has resulted in job insecurity, a downward pressure on wages, and job scarcity. We’re just seeing the tip of the iceberg.

According to the Bank of England, 50% of jobs could be taken over by machines in the next 10 to 20 years. “These machines are different,” the bank’s chief economist Andy Haldane said. “Unlike in the past, they have the potential to substitute for human brains as well as hands.”

Examples include:

  • IBM Watson, famous for winning $1 million on Jeopardy, is now doing analysis for medical professionals.
  • Artificial intelligence (AI) is being used to write real estate, financial analysis and sporting event articles indistinguishable from those by human journalists.
  • Driverless vehicles will cut into the markets of parts suppliers, auto insurers, body shops, parking lot operators, and many more.
  • Google and Apple are starting up mobile account and loan companies that threaten Canada’s big banks, who responded in 2015 by increasing automation and cutting jobs.

Google, Facebook, Microsoft and IBM are all betting on AI as a prime source of growth. Mid-level jobs are on the radar.

For the owners of capital, automation has been a bonanza. As capital replaces labour, owners seize a greater share of income. An Oxfam International study showed that in the last 5 years, the number of people that have as much wealth as the poorest half of humanity has gone from 388 people to just 62. The richest 1% now has more wealth than the rest of the world combined. And the automation revolution still has a long way to go.

To address the increasing concentration of wealth at the top, some Canadian provinces are conducting pilot projects on a guaranteed basic income. Every citizen in the project would be guaranteed a minimum income. At income tax time, low-income earners would receive a rebate. As income increases, the benefit declines, but less than proportionately to ensure an incentive to work.

If adopted, existing welfare, disability support and old age security programs would be replaced. Several Queen’s University professors have tallied the cost of a Canada-wide basic income system that provides every adult in with an annual income of $20,000 and children with an income guarantee of $6,000. The cost: $40 billion.

The Fraser Institute pegs the total cost of Canada’s current income support system at $185 billion in 2013.

So there are some huge potential savings to a streamlined system. But there are other potential savings too. Poverty is also one of the biggest burdens on the healthcare and criminal justice systems in Canada. Health care now consists of nearly half of provincial spending and is under great pressure to cut costs.

Back in the 1970s, Manitoba ran a successful basic income pilot project in the small town of Dauphin. The four year program saw unprecedentedly high secondary school graduation rates and an 8.5% reduction in hospitalizations, particularly for mental health, accidents and injuries. The project aimed to find out if giving money to working poor would kill their drive to work. The result: only new mothers and high school aged boys opted to work less – and for very good reasons. The project was widely viewed as a resounding success but was cancelled for political reasons.

Support for basic income is widespread in Canada. The municipality of Kingston and the mayors of Calgary and Edmonton have voiced their support. Both Ontario and Quebec announced plans to run pilot projects. The Liberal Party of Manitoba has pledged to run two pilot projects if they win in April 2016. The Canadian Medical Association is behind it. Mr. Jean-Yves Duclos, Federal Minister of Families, Children and Social Development has expressed pleasure that the program is generating interest. (Although basic income is not in the official Liberal platform, two policy resolutions on basic income were passed at the 2014 Convention.) It’s endorsed by the Green Party of Canada in their policy document, Living Green. Senator Art Eggleton has tabled a motion in the Senate to encouraging the federal Liberals to evaluate it. Former Conservative Senator Hugh Segal has endorsed the idea for 45 years.

Outside of Canada, interest is growing too. The Dutch launched a pilot project in the city of Utrecht. Finland has announced it will bring in basic income for everyone later this year. The Swiss vote in June on a basic income plan that will provide every citizen with the equivalent of $3,200 Canadian per month.

With even more automation and concentration of wealth, poverty in Canada is sure to grow. We could try to create new meaningless jobs selling more stuff we don’t need, creating more pollution and destroying more of the earth’s dwindling resources. Or, we could conserve our resources, reduce government spending and provide all Canadians with a decent life. The biggest challenge will be standing up to the interests of the “machine-owners”. But, it looks like we may be ready.

First published in the April/May 2016 issue of North Simcoe Life.