Harvard Model Congress 2012

EFFECTS OF INCREASED AUTOMATION By Nyla Brewster

INTRODUCTION

By the year 2030, an estimated 15% of the world’s workforce will lose its jobs due to increased automation. Jobs that have existed for decades will be made faster, easier, and cheaper for companies

through the use of machines. Automation has been occurring A series of vehichles throughout the past century across the world, but the next two constructed in an decades will see especially high levels of technological innovation. automated Self-driving vehicles, self-ordering kiosks, and machines that have assembly line. the capability to perform complex tasks previously only done by Source: Alamy hand are just the beginning. As a result, these 400 million displaced workers will be forced to find new careers, potentially in fields in which they have no exposure or training. Unemployment, poverty, and inequality will continue to rise in the absence of intervention. Automation is a general term referring to the use of technology, whether that be a machine or another computer-driven apparatus, 91% of all to perform tasks without any human intervention. Processes as organizations use simple as screwing on a toothpaste cap and as complex as the at least some form construction of entire cars have been made more efficient through of automation. automation. It is estimated that 50% of current work activities could be automated using technologies that exist today. Moreover, this figure does not account for technologies to come in the near future. While the vast majority of such tasks are those that require little training or technical skill, automation will affect almost every field of work. Countries all over the world, regardless of size or economic power, face a great challenge in the coming years in

HARVARD MODEL CONGRESS

making this transition a smooth one for the millions of displaced workers.

EXPLANATION OF THE ISSUE Lathe – handheld machine used to Historical Development manipulate wood, metal, and other Throughout history, shifts in automation have altered and materials influenced developments in the workforce. One of the first notable machine tools was the lathe, first produced in 1772. Allowing The Industrial miners to cut, drill, and shape metal easily, this tool was one of the Revolution – period first to demonstrate the great improvements in efficiency that can between 1760 and result from automating lengthy and repetitive processes 1840 during which traditionally done by hand. Europe and the US Just over two decades later, The Industrial Revolution made significant spurred automation on an unprecedented scale in Europe, the manufacturing United States, and many other countries that experienced the direct advances or indirect effects of such progress. Factories became primary centers of production and opened up in great numbers. Cotton spinning and paper printing were just two of the many automated processes that developed in such factories. There have also been many notable improvements in the agricultural sector, most notably the tractor. Gas-powered tractors completed what once took days or weeks in just hours. As a result, the number of workers in agriculture decreased by over 50% in some countries, including the United States.

The last major shift, which is particularly relevant to the One of the first gas workforce today, was the emergence of artificial intelligence and powered tractors. Source: FarmCollector robotics. The first robot was created in 1939, over a century after the Industrial Revolution had ended. Soon after, the first autonomous robots were developed. While these early machines had simplistic functions, such as navigating through a course, they laid the foundation for the use of artificial intelligence in automation today. After slow rates of innovation in the beginning of Artificial the 21st century, progress is now being made faster than ever Intelligence – before. These new automation technologies create unique problems development of to the world that have not been previously encountered or dealt computer technology with on this scale. The effects of rapid automation must be to perform typically addressed given that this age-old practice continues to grow and human tasks evolve without any signs of stopping.

Scope of the Problem Not only are the disadvantages of automation unequally distributed, but the many problems within automation are multifaceted and complex. Automation primarily affects the job prospects of low-skilled workers who may not possess high levels of

human capital. As mentioned before, automation can be used to expedite many processes that are often performed through intensive physical labor. This creates a need for more workers to receive better quality education, such that they can perform other jobs. However, education is often prohibitively expensive, creating another issue for governments to address. Automation also affects certain industries, including manufacturing, agriculture, and even retail, more than others. Understanding the different aspects of these problems is a crucial step in finding the most effective policy solutions. Loss of Jobs Depending on the rate of innovation within automation, anywhere from 100 to 800 million workers around the world will lose their jobs in the coming years. Not all, however, will be forced to find new professions. Although automation is often blamed for taking humans out of the picture, as of now, there is still a need for Box stacking robot human supervisors or aides for new technologies. Amazon, for in a warehouse. example, trained employees who previously stacked or moved boxes Source: The Verge to serve as operators for machines that now perform said tasks. As a result, the number of jobs lost does not directly translate into unemployment. The main group affected by increased automation are those who will be forced to seek jobs in completely new fields. It is anticipated that as many as 375 million workers will be in this difficult position. As technology advances, the most valuable skills in the workplace will continue to change. This will make finding new jobs for the hundreds of millions displaced workers even more complex. Organization for Rather than physical skills or a willingness to perform dangerous or Economic unsafe tasks, employers will seek workers with social skills, Cooperation and creativity, critical thinking, and other abilities that cannot be Development automated. Technical and digital skills, such as computer (OECD) - programming or software development, will also be in high International demand. A study performed by the countries in the Organization organization with the for Economic Cooperation and Development (OCED) found goals of increasing that almost a quarter of people do not know how to operate a trade and worldwide computer at a basic level. Finding jobs to replace those lost is only economic progress the beginning of the problem. The workers must be prepared with the skills they need to work in the fields with the most demand in the coming years. Educational Deficits Through education, people are exposed to new technologies and given the necessary skills to work in higher level jobs. While almost all developed countries have some form of government-funded education open to all, not all are created equally. Germany, for example, often offers a rigorous program during which students

engage in apprenticeships along with taking classes. Many experts believe that, in order to make the transition, not only will work experience have to be intertwined more closely with schooling, as Institute for Public seen in Germany, but also will governments need to place a greater Policy Research focus on teaching skills that translate into jobs. Computer literacy, (IPRP) - Liberal think science, technology, engineering, and math (known as STEM) skills, tank in the UK and critical thinking, are just a few of the proposed new focuses. conducting extensive In many countries, access to higher education is largely international research dependent on one's socioeconomic status. In every major developed nation, the rates of higher education decrease as income decreases. As a result, there is a significant need for greater government investment in higher education. It is important to note that of the jobs that will be automated in the coming decade, the majority are low-wage jobs. In other words, those currently earning the least in society will be affected most. Without proper intervention to ensure more equal access and expanded opportunities for everyone, the Institute for Public Policy Research (IPRP) notes that the gap between the rich and the poor could be widened. While education will assist younger generations while they enter the evolving workforce, there is also a great need for retraining mid- career workers. Governments currently, according to the OECD, invest very little in job retraining. In some cases, this already minor investment is decreasing. As layoffs and job-loss due to automation continue, it is essential for the downward trends to be thwarted. Varying Impacts Across Sectors Due to having fewer financial constraints, countries with more advanced economies will automate at faster rates and thus be more greatly impacted by innovation. Additionally, each country’s labor market differs and is made up of different types and amounts of jobs. Jobs with high demand in some areas may simply be unnecessary elsewhere. As a result, the effect of automation on a Close view of an country will vary greatly, both due to its economic power and the apple-picking robot mere fact that certain fields have a higher potential to automate analyzing fruit for than others. ripeness. Manufacturing will certainly continue to experience further Source: CBS automation, as it has for decades. In 1900, manufacturing made up over 20 percent of the worldwide workforce. However, it has now decreased to under half of that figure. Due to the nature of the manual labor-intensive field, manufacturing has always been a sector prime for innovation and automation. Similarly, agriculture will continue to see a decline in labor. From employing almost 40% of the workforce in 1900 to a mere 2% as of 2000, the industry has been greatly affected. With the anticipated introduction of a number of machines, including automated fruit and vegetable pickers, for example, this number is expected to decrease to close to zero.

However, there are many other fields not involving manual labor that are also affected. A number of comprehensive studies have calculated numerical values that represent the automation potential within different fields of work. These numbers provide useful insight into the impending presence of automation in just about all fields of life. Retail, for example, has an automation potential of 53%. Due to the introduction of self-ordering kiosks, self-checkout machines, and other technology, there is expected to be a great decrease in the number of retail workers. Food services, with an automation potential of 73%, similarly have the potential to be streamlined both through self-ordering machines and easier methods to make food fast. A few other fields with automation potentials of more than 40% include transportation, mining, real estate, and utilities. The United States has the largest G20 Action economy in the While the G20 does not currently have enforcement power or G20, and South rules that all countries must follow, its members are among the Africa has the most powerful in the world. With 18 of the 21 largest country smallest. economies present in the G20, its economic influence cannot be denied. The G20 has acknowledged the possible effects of increased automation on multiple occasions. In its 2018 summit, held in Buenos Aires, Argentina, with the theme “Building Consensus for Fair and Sustainable Development,” automation was discussed and debated. At the end of the summit, G20 countries made the decision to add the following to the final statement of intent, a list of commitments the toward which the G20 is working: 1. “We need to create the conditions for more and better jobs. We need to provide tools and skills to those people looking for a job and whose jobs are at risk of being replaced by automation.” 2. “We will seek to pin down the impact that technological change is having on productivity, growth, jobs, and inequality.” As this was very recent, the G20 has not made much progress beyond establishing these goals. However, it is expected that the countries will each work on these goals internally, and the topic of automation will be discussed at a future annual summit. United Nations Other Policy Action (UN) - International organization Due to the relatively new nature of this issue, there has been dedicating to little concrete action taken across the globe. One proposed solution, maintaining peace, a universal basic income, is currently being tested on a small scale order, and security in in both Canada and Finland. Results, however, will take multiple the world years to interpret. Multiple other bodies, like the G20, have also made commitments to work toward mitigating the effects of automation. The United Nations (UN), for example, has named automation

one of its frontier issues. Acknowledging the fact that the exact effects and rates of change are unknown, the UN urges its member states to develop restrictions on adopting new technologies and anticipate the potential rises in unemployment and inequality.

IDEOLOGICAL VIEWPOINTS

Conservative View For both conservatives and liberals, it is widely accepted that the increase in automation will have major impacts on the future. The differences, however, lie within the solutions. Conservatives generally favor less involvement by the government in the economy and society and emphasize individual responsibility and hard work. As such, conservatives are less likely than liberals to endorse significant government investment in the education, rather viewing it is the responsibility of the person to seek and pay for job retraining or higher education. Additionally, conservative communities have historically chosen policies that limit government provision of welfare or social services and maximize the ability of the economy to work on its own. As a result, in reference to automation, the conservative approach may be one that interferes in the market and lives of workers less. However, conservatives do not always oppose all regulation. More moderate conservatives may favor the use of policies like tax incentives for companies, for example, as a way of correcting for externalities and fostering social goods. Liberal View Liberals generally favor greater government involvement in the economy, and are more likely to support investment in education or social programs. A primary liberal policy idea is ensuring that the educational system provides the citizens of each country with the skills necessary to work. This may entail greater government investment or making the education system more accessible to all populations, including middle-aged workers. Liberals may also be likely to favor solutions which provide retraining to displaced workers. They tend to support workers’ rights and unions and are generally willing to back solutions which Children in a ensure that appropriate benefits are received by them. They are also computer science likely to support regulating technology, particularly that sold by course. large technology companies, as well. Liberals are also more likely Source: Code and Circut than conservatives to support using taxes as a way to generate revenue for a social program. Although liberals and conservatives do not agree on every policy idea, there is common ground to be found in the goal to ensure

good quality jobs for all workers. Automation threatens that vision, and it must be dealt with adequately.

AREAS OF DEBATE

Government Investment in Education As one of the greatest barriers to both entering the workforce and transitioning into a new career is human capital, a clear solution is education. Education, often viewed as a great pathway to opportunity, has the ability to provide people with the skills they need to succeed in the changing workforce. As highlighted earlier, there has been a great shift in demand for skills. As a result, governments need to invest in their own educational systems. Firstly, the structure of learning and the goals of schooling must be altered, as the modern world requires new skills. Computer science and other STEM classes, for example, should be emphasized and taught in greater depth. Additional funding can also be utilized to craft more comprehensive educational systems, either through providing work opportunities during school years or lowering the It is also crucial to price of higher education, so all may seek more schooling if they so invest in the choose. The mere price of education should not influence its retraining of accessibility. While educating those who will enter the workforce in the future workers who will is important, it is also crucial to invest in the retraining of workers one day lose their who will one day lose their jobs to automation. Through increased jobs due to government funding, systems can be put into place to provide automation. workers with retraining free of charge. As most of the lost jobs will be low-wage jobs, making retraining affordable is a critical aspect of preventing a possible rise in unemployment. The arguments in favor of this solution are grounded in the belief that increased investment in workers will yield returned greater tax revenue from the workers later in life. As those who benefit from such services will likely receive higher paying jobs, the government will receive repayment, in the form of tax revenue, from those assisted by retraining programs. Additionally, workers with more disposable income spend money and stimulate the economy. Therefore, this solution carries important possible economic benefits. The arguments against this solution often note that it is not the responsibility of the government to provide education and training. While jobs will be lost due to automation, jobs will also simultaneously be created. Many who believe the difference between the lost and created jobs is small do not view the government as responsible for intervening. Additionally, investments in education and retraining can often be very

expensive, causing some concern about the money’s source and whether it will be spent appropriately. Political Perspectives on this Solution A conservative view of this solution would likely view it as too comprehensive and expensive of an intervention. In this solution, the government assumes the costs of the shift in work, but many A recent study conservatives view this as a burden each person should bear on found that their own. Universal Basic A liberal view of this solution, however, sees government Income could intervention in this situation as necessary and the solution as a generate $2.5 comprehensive plan to minimize inequality. A number of international groups such as the G20 and the UN trillion in have identified educational subsidies as a potential solution to the government loss of jobs due to automation. revenue. Universal Basic Income Universal Basic Income (UBI) is a survivable income distributed to every citizen in a country. It is a very basic level of income a person would receive regardless of employment status. In the United States, for example, presidential candidate Andrew Yang has proposed giving every US adult citizen $1,000 a month. Many claim the benefits of a UBI are widespread and span through multiple aspects of life. First, added financial flexibility will foster greater entrepreneurship and innovation among those who could not have afforded pursuing self-employment. Additionally, people with a basic level of income are expected to invest in their own education, enabling themselves to build crucial skills and obtain higher-paying jobs. UBI also aims to reduce poverty by ensuring that families do not go without the basic necessities. Lastly, workers will have more security if they lose their jobs, whether due to automation or to another force. There are many opponents to UBI, as many see it as far too radical. Especially in countries with large amounts of debt, implementing a UBI is viewed as unreasonable and unfeasible. Supporters, however, view UBI as a crucial step to decreasing the overwhelming gap between the richest and poorest in society. Political Perspectives on this Solution Universal Basic In the conservative realm, UBI is widely viewed as an extremely Income (UBI) - radical intervention. Liberals, however, are more divided. Some see Survivable income a UBI as a step toward a society in which all have equal opportunity, given to all given to but others believe the intervention goes too far or is unfeasible to all citizens regardless execute. There is also concern regarding the cost of the program of circumstance and the impact UBI could potentially have on the workforce. Several countries, such as Canada, have begun small scale implementation of a UBI. While the topic has created great debate

from all sides, the research is still underway, causing many organizations to wait to issue formal opinions. There are however some prominent businessmen, such as Bill Gate and Elon Musk, who have voiced their support. Robot Tax When robots replace workers, jobs are not the only thing lost. With each worker who loses his or her job, the government loses tax revenue it previously collected from that worker. As a result, as more and more jobs are automated, overall tax revenue will decrease. Some have suggested implementing a tax on the work done by robots and machines to replace the lost revenue. Those opposed to the so-called “robot tax” often state the unnecessary interference of the government in innovation. There is a fear that companies fearing high taxation may slow their implementation and investment in automation technology. Those who support such a tax, however, often express hope that, in the long run, there will be higher levels of innovation. Analyzing automation in the coming decades is a relatively new area of research, so in some cases, such as the potential effects of a robot tax, more results are needed before a definitive consensus is reached. Political Perspectives on this Solution Conservatives often view increased taxation negatively, and this proposed solution is no different. Many with this viewpoint see potential taxation as a limitation placed on the benefits brought by innovation. Not all conservatives are opposed to every form of taxation, but most would not favor heavy taxation, which cuts significantly into companies’ profits. Liberals, however, view taxation with the aim of greater good and equality of opportunity as widely beneficial. Adding a robot tax helps the government maintain revenue, and it may also encourage companies to employ workers, rather than robots, when able. While no significant interest groups have expressed support for a robot tax, South Korea has implemented a experimental system to test such a tax. Enhancement of Worker’s Rights The G20 has committed in the but to working towards improving the rights of all workers, however little progress has been made. Through this solution, which proposes expanding and enhancing the rights of workers in all G20 countries, workers will be protected. Proposals to expand workers’ rights might focus on empowering unions, minimum wage, working conditions and hours, and healthcare and pension benefits.

Throughout history, as work has changed, worker’s rights have altered along with it. Beginning with the right to strike in 1842, many other important rights, such as trade adjustment assistance and the ban of pay discrimination, have followed. Increasing worker’s rights to provide automation assistance will provide workers with the ability to seek better opportunities and locate new jobs. 2018 G20 Summit Supporters of this policy highlight the benefits of providing in Buenos Aires, protective policies for workers that allow them to feel more secure. Argentina On the other hand, many opponents highlight the fact that Source: Yahoo News automation is a natural process of innovation, and the government need not be involved. Political Perspectives on this Solution Large numbers of conservatives and liberals have shown interest in increasing the rights of workers. The extent may vary; for example, liberals are generally keener to bolster unions than conservatives. However, this is viewed as an inexpensive solution that may benefit many, and compromise can be reached. Many international groups, including the United Nations and the European Commission, have committed themselves to working toward higher levels of worker’s rights worldwide.

BUDGETARY CONSIDERATIONS

European The G20 does not have a set budget or enforcement power. Commission – a Therefore, countries will each have to assess their financial subset of the EU situations internally prior to committing to a proposed solution in responsible for their country. operations and While many of the proposed solutions may require money, it is enforcement of important to consider the benefits gained from such policies. For policies. example, if funds are utilized to provide workers with better education, the government will receive some amount of money back in the form of tax revenue due to the increase in wages from these workers higher level jobs. It is up to you to determine which plans are good investments and how much, if any, will be returned in the long run. The G20 countries are among the most powerful in the world, and many are well-connected with other international organizations. As automaton is an international issue and many different groups will be collaborating to implement solutions, it may also be beneficial to seek funding through collaboration with an organization with greater funding.

CONCLUSION

Automation will affect every country regardless of how rich or poor it may be. The universality of this issue brings about many logistical problems. For example, overcoming the various barriers to finding a solution that will suit multiple countries’ preferences will be a challenge. However, the G20 is well-suited to serve as a forum for brainstorming and committing to the kinds of policies that can make a worldwide impact. While there is a great focus on the negative effects of automation, it is important to understand the great benefits it will also bring. Becoming a more technologically advanced society brings greater efficiency and allows further innovation to take place. As with all changes, there are side effects. These proposed solutions seek to address these side effects. Please note that there are many other solutions not listed in this briefing. You should be creative in your thinking, and not limit yourself to the few examples provided here. Also, when choosing a solution, it is essential to think critically about the feasibility of implementing, funding, and gaining support for the initiative. You should conduct extensive research on both the issue and your assigned country in order to come to the best solution.

GUIDE TO FURTHER RESEARCH

To gain a greater understanding of the G20 and its priorities, visit the organization’s website. Every year, the member countries host a summit during which they convene and discuss the pressing issues of the time. The reports from each of these summits provide valuable insight into the current priorities of the G20 along with their action plans for different issues. The 2018 summit emphasized automation specifically, and therefore will report will prove especially helpful. There are, however, many other aspects of the G20 that can be learned and that will be crucial to understand for the conference. To gain further knowledge on automation, it may be beneficial G20 countries to choose a few industries and look into specifically how they will be generated 85.2% of affected by automation. It is crucial to gain a holistic understanding the world’s GDP in of the concerns regarding automation, as some believe there will be 2013. no negative effects. Look into all sides of the issue through a combination of economic journals and respectable news websites. There are also a variety of companies, such as McKinsey & Company, that have published extensive research in the realm of automation.

The commonly discussed solutions, many of which are discussed above, each have different sides to them. I encourage you to seek out conflicting viewpoints on each of these, as they all have advantages and disadvantages. The state of your particular country’s workforce, education system, and economic position will help inform your decisions on various proposed solutions.

GLOSSARY

Artificial Intelligence – development of computer technology to perform typically human tasks

European Commission – a subset of the EU responsible for operations and enforcement of policies

Institute for Public Policy Research (IPRP) - liberal think tank in the UK conducting extensive international research

Lathe – handheld machine used to manipulate wood, metal, and other materials

Organization for Economic Cooperation and Development (OCED) - international organization with the goals of increasing trade and worldwide economic progress

The Industrial Revolution – period between 1760 and 1840 during which Europe and the US made significant manufacturing advances

Universal Basic Income (UBI) - survivable income given to all given to all citizens regardless of circumstance

United Nations (UN) - international organization dedicating to maintaining peace, order, and security in the world

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