Automation will increase the economic wealth gap

Automation will create extra wealth, but regulation is necessary to spread it across society

Without regulation, automation will only serve to make the rich richer, according to a new report.

Two opposing schools of thought dominate the automation conversation. One says that it will save money, take pressure off of overworked humans and make everyone better off. The other insists that robots will replace humanity, take all of our jobs and then kill us.

While the IPPR Commission on Economic Justice (an initiative to rethink economic policy for post-Brexit Britain) might not be quite as extreme as Elon Musk, its report does fall into the ‘Be concerned' camp. It states saying that automation will augment the workforce, but increase wealth inequality by favouring technology owners.

Automation will produce ‘significant productivity gains that will reshape specific sectors and occupations', says the report. Jobs will be reallocated rather than eliminated, economic output will rise and new sources of wealth will be created.

The challenge will come in the fair sharing of the benefits of automation. If this happens, the IPPR sees a future ‘where prosperity is underpinned by justice, with a more equitable distribution of wealth, income and working time'.

Without controls, however, the equality divide could get worse: society as a whole will be richer, but that wealth will be even further concentrated at one end of the socio-economic scale.

The IPPR made five propositions, and used these to devise three key recommendations:

  1. Work will be transformed by automation; not eliminated;
  2. In the absence of policy intervention, the most likely outcome of automation is an increase in inequalities of wealth, income and power;
  3. A managed acceleration of automation is needed to reap the full productivity benefits and enable higher wages.
  4. An Authority for the Ethical Use of Robotics and Artificial Intelligence should be established to regulate the use of automating technologies; and
  5. New models of capital ownership are needed to ensure that automation broadens prosperity, rather than concentrates wealth.

Based on these conclusions, the report suggested three ways to ensure that the benefits of automation are shared fairly:

First, the acceleration of automation will need to be managed and digital technologies adopted throughout the economy. The government must provide greater support for firms across the country to integrate new technologies. The skills system must also be reformed to help employees cope with the transformation.

Second, new public institutions should be established to inform and regulate how automation is used. These organisations should also be able to ensure that society responds proactively to the ethical issues raised by robotics and artificial intelligence.

Lastly, new models of collective ownership are required to ensure that everyone has a claim on the dividends of technological change, to enable automation to work for the common good.