Davos Elites Can’t Tell The Truth About Automation

Conspiracy theorists portray Davos as the biggest Illuminati shindig the rest of us will ever see in plain sight. In doing so, what they miss amid a blizzard of ideas and discussions in the chilly Swiss air is that Davos is really a deliberation network that serves just one purpose: to calculate the likelihood of social disruptions that are the result of technological disruptions. Within a larger discourse that some are calling Globalization 4.0, this year the deliberation network seems to have settled on the thorniest question imaginable: “What will we do with all the useless people?”

“Many executives gathered at the exclusive World Economic Forum this week acknowledged that inequality is a major problem fueling populist backlash, and that some middle-class jobs in the West are being lost to trade and automation (even though more jobs overall are being created around the world).

A few business leaders in Davos went so far as compare today’s situation to the late 19th century, an era when tycoons like Andrew Carnegie, Andrew W. Mellon, and John D. Rockefeller amassed huge fortunes while most in the working class toiled under harsh conditions.

“We’re living in a Gilded Age,” said Scott Minerd, chief investment officer of Guggenheim Partners, which manages more than $265 billion in assets. “I think, in America, the aristocrats are out of touch. They don’t understand the issues around the common man.”

The solution to inequality, many in Davos said, is “upskilling” people so that they can obtain better jobs in the digital economy.

“The lack of education in those areas in digital is absolutely shocking. That has to be changed,” Stephen A. Schwarzman, chief executive of Blackstone, told a panel. “That will very much lessen the inequalities that people have in terms of job opportunities.”

Schwarzman, whose net worth is estimated at $13 billion, said it is “up to the grown-ups” to make digital upskilling happen in K-12 schools.”

“‘The aristocrats are out of touch’: Davos elites believe the answer to inequality is ‘upskilling’” | The Washington Post | Heather Long | 01/26/2019

The idea that “upskilling”—offering educational opportunities so that people can get better jobs in a more technological economy—has a chance of short-circuiting populist resistance to increasing wealth inequality is an indication that the elite deliberation network is running low on good ideas and may be breaking down as a mechanism for solving social problems created by technological advances.

Note the critical juncture in this article where the emphasis suddenly shifts from training workers for the jobs of the future to who foots the bill, and how:

“There’s also the question of who would pay for education and re-skilling. Democrats like Rep. Alexandria Ocasio-Cortez (D-N.Y.) have proposed higher income taxes on the rich, while Sen. Elizabeth Warren (D-Mass.) is set to unveil a proposal for a new tax on wealth.

But millionaires and billionaires in Davos panned the idea of higher taxes, arguing that the private sector does a better job than the government of spending money wisely.

“No, I am not supportive of that, and I don’t think it would help the growth of the U.S. economy,” Dell responded when asked about his views of Ocasio-Cortez’s proposal for a 70 percent marginal income tax on earnings above $10 million.

Dell noted that he and his wife contribute most of their wealth to a foundation. “I feel much more comfortable with our ability as a private foundation to allocate those funds than I do giving them to the government.”

Others argued that their tax rate is already high and that raising tax rates could push people to move abroad or not invest.

“If I look at my tax rate now, it’s probably well into the 60s,” said AECOM chief executive Michael S. Burke, adding that he pays federal taxes, California income taxes, sales tax and a significant property tax. “I think we ought to have a competitive tax rate.”

When asked whether corporations should pay higher taxes, executives again criticized the idea. In 2017, President Trump and the Republicans in Congress passed a sweeping tax bill with the largest corporate tax cut in U.S. history.

“It’s an easy fix, I think, for many people to say, ‘Well, let’s just tax,’” Block said during a panel.”

Davos moguls and technocrats are hardly enthused about paying higher taxes so that government structures can help displaced workers find worthwhile jobs in the future.

Why? Because disrupted human labor is an externality they expect a suite of technological advances will price out of their markets.

Though it’s lurking in the background, this article doesn’t mention that the upskilling discussion takes place within larger discussions about automation. Increasing levels of automation is the industry and tech mogul’s endgame that cannot be discussed openly and honestly.

If we take the future of advancements in automation and artificial intelligence seriously, then we must acknowledge that “upskilling” as a remedy for potentially displaced workers as well as income and wealth inequality is a ruse and a farce. It’s a cruel joke that will be played on people who don’t understand the logic of technological progress.

As automation inevitably replaces human work (even “symbolic” labor such as coding and financial analysis) we should expect that algorithmic artefacts and artificial intelligences will eventually upskill themselves. At some point they will upskill continuously (and perhaps collectively) without human intervention. Eventually they will do so at faster rates than currently conceivable. The process by which an automated system improves itself could eventually be completely opaque to humans as it becomes leaps and bounds more productive.

This may sound like a science fictiony scenario, but we can already imagine occupations in which humans will eventually be automated out of work. (I suspect it will begin in earnest with young people. Anyone who’s been to a McDonald’s lately has seen the future of fast food.)

It’s difficult to think of a more disruptive development ever in human history. Full fledged automation regimes will render human upskilling redundant and irrelevant in the way that the internal combustion engine eliminated the need for the horse and buggy.

The way to cushion the social and psychological blows of the inevitable isn’t (as some have argued) universal basic income. In that arrangement workers would have to bargain away the only leverage and power they have while it’s still valuable—their labor. Instead, we should at least consider ways in which displaced citizens can essentially become “shareholders” of and receive “dividends” from corporations that transition to predominantly automated processes, perhaps in exchange for lower or no federal taxes.  

There are no easy answers for what will be a global, world-changing, and inevitable dilemma. Because we’ve spent seventy years mythologizing middle-class consumerist lifestyles made possible by the forty-hour work week, in the digital age we’ve ignored the integral part automation has already played in the progress of capitalism. Consequently, other than social unrest or massive wealth transfers from the top to the middle and the bottom, we have no real, sustainable responses to tech moguls for whom a new Gilded Age built on network effects is what the motivations and ideologies of robber barons have always been about.


Where are your hammers for these nails?

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IMAGE SOURCE: No machine-readable author provided. Mixabest assumed (based on copyright claims). [Public domain], via Wikimedia Commons

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