Robots Don’t Pay Taxes

Robots don’t pay taxes

-Scott Dennis May 15, 2017

“Winning an election is a good-news, bad news kind of thing. Okay, now you’re the Mayor. The bad news is that you’re the Mayor”. –Clint Eastwood

Where I live tells a story about how people feel about their taxes. We are north of New York City along the Hudson River and walking distance from a small village that really wants nothing to do with its larger neighbor. Our municipality of nearly 200,000 people has an ongoing problem with its budget and even gets chastised by the State Comptroller for being too optimistic with their projected revenues and not realistic enough about the cost of their appropriations. So does this mean that the Mayor and his administration don’t know how to run government, or are their other factors that we can point to as citizens? The small neighboring village I mentioned is the model for what has been happening for decades to the tax base of cities and is a hint to a larger looming challenge of technology on our economy. What our country has seen following post-war desegregation of housing and education and other civil rights victories, racial clashes and the conservative politicking against taxation generated a rapid exodus of higher-income white people from urban centers to suburban enclaves like the one walking distance from my home.  These suburbs slowly developed separate school districts and incorporated as separate towns, taking a significant tax base away from urban centers and contributing heavily to disinvestment famously from places like Detroit, Cleveland, and St. Louis but this has also been the case in our New York towns. Generally speaking the communities we live in survive by taxation revenues in the form of sales tax, real estate tax and fees for the use of city facilities. So woe to the city manager who has to decide how best to use the funds they have to make a community livable, with the best education for the children and free of pot holes, especially because their job is getting even harder with the onset of technology in major industries.

“Our technological powers increase, but the side effects and potential hazards also escalate”. Alvin Toffler

 

Technology and the Community

Imagine an opening ceremony for a new factory that has been automated for full efficiency and to minimize labor. The Mayor that is proudly cutting the ribbon should ask themselves, “will the robots be paying taxes?”.  This is not simply a modern Luddite position on technology rather a question of how we will be able to support our communities going forward.  Data on American labor over the last three decades has shown that there has been a steady rise in employee productivity but that wages have remained stagnant. The parallel to the shift of affluent citizens to suburban alcoves with manufacturing profits moving to shareholders is clear, off shore bank accounts are the new safe havens.  As workers are displaced in record numbers the most dramatic effect will be on services provided by our towns and unlike the challenges facing cities now, a technology revolution may be irreversible.

 

The table above is a 2013 snap shot of probabilities that your job will be displaced by technology in some way. I would like to add drivers (long haul, delivery, postal) to this list with a probability in the high ninety percentile with the onset of autonomous vehicles. In the graphic showing the most common profession by state (courtesy of NPR) what is illustrated clearly is how widespread the job displacement in the driver category would be;  every policy maker should be thinking of these drivers in terms of effect on their tax base. It will take a sustained effort to tell the stories of people displaced in the workplace by technology, Blue Collar Think Tank is a non-profit working to let these stories be heard and facilitate stakeholder meetings to create holistic strategies for the labor force.

www.bluecollarthinktank.com

@bcthinktank

Scott Dennis writes for the Blue Collar Think Tank.

Will blockchain be a net loss for jobs?

Will blockchain be a net loss for jobs?

By Scott Dennis March 4, 2017

It is early days in the world of block chain technology, so why worry about its effect on jobs? If you buy into the hype that is being dealt from bit coin fueled startups all the way to IBM’s New York headquarters then you would believe that the impact of blockchain will be no less as important as the internet. The internet is the world’s greatest printing press, disseminating information globally with limits however in its ability to trade items of value in a secure way. A new way of trading is essentially the promise of blockchain, employing the same technology that makes crypto currency detached from the usual gate keepers of money, developers imagined an open ledger where business transactions are ultra-transparent with an incorruptible digital trail. With blockchain the only element missing is the kind of trust that traditional banks currently enjoy, which advocates hope will come over time.

Will jobs be lost?

If champions of blockchain compare it so closely to the internet then in may be helpful to analyze its future impact on the job market by asking “has the internet been a job creator or destroyer?” As of this writing Snap Inc. a company that lives online is having its IPO rolled out and it will be put up on the bookshelf of e-businesses throwing off billions of dollars on paper. Despite the high profile earnings of similar companies and their millions of users the jury is still out on how the internet has affected workers.  The Economic World Forum has this to say in regards to internet effect on employment:

“According to calculations, current trends could lead to a net employment impact of more than 5.1 million jobs lost to disruptive labour market changes over the period 2015–2020, with a total loss of 7.1 million jobs—two thirds of which are concentrated in the Office and Administrative job family—and a total gain of 2 million jobs, in several smaller job families.”

On the other hand McKinsey & Company has leveraged its resources to come up with an alternative perspective:

“The Internet’s impact on global growth is rising rapidly. The Internet accounted for 21 percent of GDP growth over the last five years among the developed countries MGI studied, a sharp acceleration from the 10 percent contribution over 15 years. Most of the economic value created by the Internet falls outside of the technology sector, with 75 percent of the benefits captured by companies in more traditional industries. The Internet is also a catalyst for job creation. Among 4,800 small and medium-size enterprises surveyed, the Internet created 2.6 jobs for each lost to technology-related efficiencies.”

Why the confusion?

Analysts can come up with very different perspectives when asking questions about new technology because jobs need to be seen as different labor families, grouped into clerical, industrial, managerial for example. Technologies like blockchain will mean different things to different people or labor families. What we can say for sure is that blockchain has some important goals to improve market transactions, if you are working as an intermediary along a logistics, trade or other commercial chain the target is squarely on your back.  This is how blockchain offers added value fiscally, by blowing away an assortment of gate keepers that are seen as expensive and potentially unreliable. The near term question will be if the assurances of security and transparency are enough of a tradeoff to cast off many traditional jobs, only time will tell.

Scott Dennis writes for Blue Collar Think Tank

www.bluecollarthinktank.com

@bcthinktank

 

 

Workers Identity in a robotic world

Workers Identity in a robotic world

By Scott Dennis Jan 18, 2017

 

 “If a man is called to be a street sweeper, he should sweep streets even as a Michelangelo painted, or Beethoven composed music or Shakespeare wrote poetry. He should sweep streets so well that all the hosts of heaven and earth will pause to say, ‘Here lived a great street sweeper who did his job well.”

“No work is insignificant. All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.” – Dr. Martin Luther King Jr.

 

Dr. King brought to light our nations struggle with racial inequality, in his many brilliant speeches he carved a narrative that helped to solidify an identity for the oppressed. If you listen closely to the logic of his discourse you find an economic model at the heart of racism. In the American south land owners intentionally created enmity between the races to frighten poor whites into accepting lower wages. The equation was simple to understand, work for pennies or we will get slaves to replace you. For the millions of workers facing obsolesce due to technology this may sound familiar.

Years later Dr. King would point out anecdotally that the southern white policemen that locked him in jail were bringing home the same pay as a black rail car operator in Chicago, the racial advantage was an illusion held onto by racists who could not face the reality of belonging to the larger multi-racial group called the working poor. As a society we have to ask ourselves if anything has changed and if the wonders of our technological advances are lifting all people up or creating a new procariat, or class of people as economically “precarious” as King faced in his time.

What is the identity of a worker?

It is important to note that a workers identity is looked at in a very different way by government and policy makers versus an individual’s own thoughts on how they relate to work. Everyone reading this has their own opinion on what work means to them ranging from a disgruntled factory worker, to a middle manager looking for inspirational leadership as well as contented academics nestled in the ivory tower. Policy and corporate decision makers see things in a different context. With the economic downturn in 2009 concerns about workers could be summed up from a passage taken from Dennis Snower’s Keil Institute study (May 2013).

“..workers can adopt either an elite or underclass identity. An elite worker has a pro-work ethic, with a low disutility of work and a high disutility from being unemployed. This gives the worker a strong incentive to take up work and thereby raises her job finding rate. Conversely, the underclass worker has an anti-work ethic, with a high disutility of work and a low disutility from being unemployed, leading to a lower job finding rate.”

Studies like these are most common when the system is seen to be broken as was the case in 2009. In the simplest terms work has always needed labor and industry makes it their business to drive the narrative to understand where the attitudes of the people are and to control them when possible. Groups like Blue Collar Think Tank are taking action by thinking through strategies for workers with changing identities in the face of technology.

All labor that uplifts humanity

As you toil in your cubicle you might not think that your work helps to uplift humanity, but it does in the practical sense of your taxes being used to improve infrastructure, provide a social safety net for those in need or your contributions to schools and the institutions of your faith. Community bonds are strengthened through friendships at the workplace and when you understand the inherit dignity of work a creative zeal can spark inspiration in even the most mundane occupation. This is why we are at a cross roads in the face of uncontrolled automation, we could suffer the erasure of the workers identity unless we take a determined and holistic approach. In 1879 Henry George anticipated this state of affairs when he wrote in Progress and Poverty:

“The fact is that the work which improves the condition of mankind, the work which extends knowledge and increases power and enriches literature and elevates thought, is not done to secure a living. It is not the work of slaves driven to their tasks either by the task, by the taskmaster, or by animal necessity. It is the work of men who somehow find a form of work that brings a security for its own sake and a state of society where want is abolished.” 

So as Dr. King famously asked where do we go from here? It starts as it did then with understanding who we are in these changing times so that the interests of humanity can be heard above the churning of technological progress. Asking not always can we do this thing but should we and what are the consequences? The new identity of the worker should echo George’s quotation to bring security for its own sake. Workers will need to be more organized in the future to get to that point and will also need to unmask those who want to divide them for their own interests so that the mistakes of the past will not be repeated.

Scott Dennis writes for www.bluecollarthinktank.com @bcthinktank

Is Sushi Chef a Blue Collar Job? Jiro’s Nightmare

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Is Sushi Chef a Blue Collar Job? Jiro’s Nightmare

By Scott Dennis 12/6/2016

“Good Cooking Favors the Prepared Hand” – Jacques Pepin

In Jiro’s dream there is always the same theme, sushi and how it is made. He finds peace in the wooden bar and the santoku hocho knives sharped and ready. The years of tradition and training make him confident when he hears the “Noren” or door curtain open only to reveal a machine. It faces Jiro and hums a metallic tune, within seconds spewing forth a perfectly proportional piece of sushi onto his bar, Jiro’s dream has become a nightmare.

Ask yourself, if you were controlling the world when would it be okay to automate the tasks we do? Consider your local sushi chef, when you sit down at his bar and rub together your chop sticks you are entering into a rather unique arrangement. Few culinary experiences are as intimate as you observe the chef’s skills with the knife and his subtle use of his hand to fold the rice. Too much rice and it is more than a mouthful, l too little and the taste of the fish tips the balance of flavors that that the chef has worked for years to perfect. Thanks to the intense romance sushi lovers have with this process some of the most expensive restaurants in the world are now sushi bars; however looking at this through the lens of automation perhaps all of this ancient technique is just elaborate marketing for fish slapped on rice?

As human beings we are beginning to ask ourselves where we want to draw the line between our desire for human craftsmanship and the convenience of automation. Despite what seems like an unstoppable tsunami of technological influence in the workplace and in the economy, we can actually decide and should retain the power as citizens, consumers and people to have a debate about how human work is valued. The first move toward valuing human work is to start the heuristic process and sort through cognitive biases that are working against our own interests, organizations like Blue Collar Think Tank are providing a sustained platform for these timely questions.

“… we can actually decide and should retain the power as citizens, consumers and people to have a debate about how human work is valued.”

There is a short horizon to the self-driving car or robot mail carrier, but we may not see a pilotless commercial aircraft in our lifetimes, why is that? To return to the food metaphor the supply chain for a nice steak is almost fully automated from farm to a fine dining restaurant but we value a human being applying heat to it before we eat it. We need to distill this rationale to understand where technology is properly applied and where it can do massive damage to our society.

Scott Dennis writes for Blue Collar Think Tank

www.bluecollarthinktank.com

@bcthinktank