Tuesday 13th August 2019
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London School of Economics professor Robert Wade says officials in Wellington are too blase about the impact of artificial intelligence, one of four factors he sees contributing to how the “Trump era” could last 30 years.
Wade made the remarks during a talk about the rise of global inequality and populist leaders such as US President Donald Trump and UK Prime Minister Boris Johnson.
Before an audience of 150 at University of Auckland’s business school last night, the Kiwi ex-pat emphasised artificial intelligence as one of four drivers of the current political climate.
The other three drivers are negative interest rates, immigration and US-China tensions, he said.
“The first big driver, and I stress this to this audience because in Wellington last week I spoke to quite a number of officials at MBIE (Ministry of Business, Innovation and Employment) and economists and I was kind of surprised by how blase they tended to be.
“Certainly the comments were: 'well yes, [AI] will replace some jobs, but it will create others now unknown - we don’t know what those jobs are - but they will surely come on, so on balance, we should be okay, we have time to adjust'.”
“I am not so sure,” the economist said.
Wade said upheaval from the impact of artificial intelligence which may displace workers, combined with the other three factors will encourage authoritarian rule. While in the previous two post-war eras, technology had only displaced blue collar workers, AI meant that white collar jobs previously sheltered were now at risk.
“The bottom line is, steps have to be taken in civil society to weaken the sense that capitalism is rigged to help those with capital and at the expense of workers.”
The New Zealand government should set a goal to lower the ratio of income share for the top 20 percent to the bottom 20 percent. In Scandinavian countries, the ratio is 3.5-4:1, meaning that the share of income of the top 20 percent is about 3.5-4 times that of the lowest 20 percent.
In New Zealand the ratio is 5.7:1, Wade said.
“From 5.7 to four is not impossible. Political parties won’t say it, but it would give some concrete rather than vague floating up in the air of what the project should be.”
Taxes and transfers to redistribute wealth were not useful because they could be “reversed at the stroke of a pen,” Wade added.
“There are a whole lot of things that can be done to spread the ownership of companies so that large populations can have capital income. Because with capital income not labour income you can lie on the beach and receive it. That's what the rich do on their super yachts.”
Other ways to redistribute and create more “economic democracy” in firms would be legislation that requires companies to have employees on the board and remuneration committees, Wade added.
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