Introduction
Horse-back riders fearing to be replaced by cars, postmen fearing to be replaced by e-mails and more recently an accountant fearing to be replaced by robots. New technological advances that will replace your job is a 500-year-old discussion regarding anxiety about automation and is recognized throughout history. Ricardo’s book On the Principles of Political Economy and Taxation written in 1821 already touched upon this fear of the working class. Often, these worries do not prove to be accurate. Some people may lose their job because of the inability to adapt. Nevertheless, in general new jobs arise, productivity increases and because of lowered prices consumers even become richer (Frey, 2019). Nowadays such fears are being fueled once more due to the current Covid-19 pandemic and provide a podium for populist voices claiming to truly listen to these fears. The ongoing crisis is cause for worry of an accelerated digitalization. Businesses were forced to quickly shift towards an online working environment forcing certain jobs to become obsolete. Due to the shift to an online working environment physical jobs on location, such as clerical work, are left with a decreasing demand for their services and face potential replacement by software (Economist, 2020). This reminds of the prediction made by Guy Standing in 2002 calling upon “The end of the century of laboring man” (Standing, 2002).
A large strand of literature analyzing empirical evidence has researched whether automation will indeed lead to a loss of jobs. Academics such as Acemoglu & Restrepo (2020) and Autor & Salomons (2018) have analyzed the effects of automation on the Western world for over a decade. In their research they show that although certain jobs will indeed disappear, new tasks might arise often providing higher salaries. Nevertheless, these benefits do not distribute equally among all groups. Fear of automation may be more apparent and pressing among certain groups. The classes that will be affected are the lower and middle classes, in which the middle class is affected the most since they frequently perform easily automated tasks. In the manufacturing industry for example, the industry that is the most susceptible to automation, many middle skilled workers can be found (Autor & Salomons, 2018).
The following paper argues that due to automation primarily the middle class is more inclined to express populist opinions, which in this specific case may not be so bad. The middle class in this respect is defined as the group of people with an income of 25% above and 25% below the median (Milanovic, 2016). Furthermore, populism implies an appeal to lower and middle-skilled people who do not feel acknowledged in their fears by the elite. Developments such as the election of Trump and Brexit show the increase in the populist vote. This may be partly due to growing wage inequality caused by the introduction of automated technologies. Fear is seen as the driver behind voter’s behavior, reflecting the voice of the middle class. After elaborating on this argument, this paper will continue to discuss some suggested policy reforms.
Automation of Routine Tasks
Empirical evidence suggests that the effect of automation on job replacement is skills biased. In general, academics agree that complex tasks requiring high dexterity such as hand-eye coordination are less likely to be performed by robots (Acemoglu & Restrepo, 2020). These types of jobs are present in the high-skilled worker group, such as consultants or physicians. Their jobs often require analytical or social skills, which are more difficult to be replaced by robots or AI. On the other hand, a job that consists of more routine tasks is more susceptible to replacement, for example being an accountant or a bank clerk. Such jobs are usually present in the middle-skilled group. The lower class performs both routine and non-routine tasks, such as a hairdresser or a cab driver. This group is therefore somewhat less threatened compared to the middle class (Dao, Das, Koczan & Lian, 2017).
In the past decades a labor market polarization trend is observable in developed economies as seen in figure 1. This is often considered to be related to increased automation replacing middle-skilled jobs. Other factors that relate to the hollowing out of the middle class are developments such as import competition or an aging population (Michaels, Natraj & Van Reenen, 2014; Breemersch, Damijan, & Konings, 2017).
Opinions about Automation
Different theorists such as Marx, Keynes and Schumpeter have provided their opinion on the threat that automation poses to the future of work. According to Marx technological progress only benefits the capitalist and meanwhile exploits the workers. Due to technology the notion of work is degraded. Furthermore, it undermines the lives of workers in and outside of work. Keynes on the other hand provides a very different perspective in which he argues that automation eventually only benefits workers since they have fewer working hours and more leisure time. The problem of ‘technological unemployment’ is only faced in the short-run but will be solved in the long-run. In contrast to Marx, Keynes did not see a need to change to communism, rather one should stay loyal to capitalism (Spencer, 2018). Schumpeter furthermore predicts a “creative destruction” as a consequence of automation. New innovations will displace old tasks during a dynamic process. However, new jobs will arise because of increased economic growth (Ulgen, 2013).
Although interesting interpretations, the opinions of such theorists are not always shared by the wider public. Popular media publishing headlines such as: “Robots Will Destroy Our Jobs” dominate the public debate and affect the attitude of workers towards automation. A research recently released, interviewed 11,000 workers in 11 developed economies. It showed that individuals with different characteristics possess different opinions about how automation will affect their job. In general, high skilled workers remain optimistic and focus on the potential opportunities of such a development. On the other hand, older people that have already experienced job volatility throughout their lifetime are much more pessimistic. Furthermore, negative associations regarding automation were expressed predominantly by low-skilled people or people whose jobs are most susceptible to replacement, namely the middle-skilled people (Mulas-Granados, Varghese, Boranova, deChalandar & Wallenstein, 2019). Moreover a 2017 Pew Research report showed that 85% of American citizens would prefer policies with certain restrictions on the use of robots (Pew, 2017).
Populist voices
Such negative opinions regarding automation and the future of work may well be reflected in the public vote of the affected people. Large parts of citizens living in developed and developing economies have seen their incomes stagnate during the past 25 years. Discontent and fear about such growing economic inequalities contribute to populist choices such as electing Trump in 2016 and Brexit. Many theorists turn toward globalization as the fuel to this discontent (Stiglitz, 2017). According to Stiglitz (2017) globalization has not been able to deliver what it has promised. Rather, it only benefits large corporations. Such developments have deepened the distrust in democracies and elites (Stiglitz, 2017). A primary cause for globalization and the associated inequality, is the increase in technical changes as shown by Autor & Salomons (2018). Technology has fast-forwarded economic growth.
As long as people are secure and satisfied, faith in democracies persists (Wolf, 2017). Milanovic (2016) argues that a democracy is the favored form of governance of the middle class. It allows them to limit the power of the higher and lower classes. The middle class however has been declining in size and economic importance over the past decades. As a consequence, democracies are destabilizing all over the world. According to Crain (2016) voter behavior is largely influenced by people directly in your social environment, such as family and friends.
Standing (2011) even speculates about the creation of an entirely new class due to these increases in distrust, primarily driven by capitalism. He refers to this as the precariat. These types of people are faced with a life of unstable labor. They do not have an occupational narrative to their life. Often these people are overqualified for the labor they do and have to bear the risks of life themselves. The precariats are characterized by individuals possessing feelings of desperation, anxiety and anger, meanwhile being deprived of their rights in cultural, social and political domains (Standing, 2011).
Growing economic inequality caused by technological displacement and unemployment may inflate such anger (Frey, 2019). Covid-19 leads to the displacement of many workers. Losing your job feels like losing part of your identity. Feelings of shame and hatred will fuel the discontent of the middle class, or the class as Standing defines as the precariat. Populist voices are thriving as the losers of implemented technological innovations are gathering.
Reforms leading to wealth distribution
Nevertheless, some nuance has to be provided to the story of this supposedly anger-fueled pitchforked group of people voting on populists. To a certain extent their fear may be justified, as empirical evidence has shown waning incomes of the middle income during the past decades. Although besides the displacement effect of automation, a replacement effect is prevalent resulting in productivity increase and new jobs, not everyone is able to benefit from these positive developments (Acemoglu & Restrepo, 2020). The response of the middle class to the development of technological progress will largely depend on the way society distributes the wealth that accumulates from such progress.
Several reforms can be identified in literature that would allow for a smooth technological transition. Stiglitz (2017) for example vouches for the creation of conditions under which the evolution of technology becomes welfare enhancing to all groups. The focus should be on core values such as freedom and democracy and for example imposing a higher minimum wage. Srnicek & Williams (2015) on the other hand argue that we should embrace the replacements by robots rather than suppress them. By attaining full automation, reduction of the working week, provision of a basic income and a reduction of the work ethic a society is able to fully commit to automation. Workers will become satisfied and truly free. Ferguson (2015) agrees with the provision of a basic income and shows an application of certain developments such as unconditional cash transfers (Ferguson, 2015). Although interesting, such approaches are not applicable to all situations. According to Standing (2011) the precariat class would be calmed down by the introduction of new politics leading to a new income distribution system and increasing a feeling of collective identity. The class of angered people would become more altruistic and feel more secure. This opinion is shared in general by the 10.000 citizens of the 11 developed economies mentioned before. Although such a task is challenging, the government should play a role in the provision of protection and social benefits.
Nonetheless, following the opinion of Rodrik & Sabel (2019) these initiatives do not suffice. The so-called productive-technological dualism responsible for the populist backlash should be addressed by pursuing a good-job economy. This type of economy focuses on sustaining the productive segments in the private sector. Redistribution on its own is not enough, it should be combined with interventions aiming to enhance skills, support start-ups and implement active labor market policies (Rodrik & Sabel, 2019).
Conclusion
All of the described developments in this paper hint towards increased labor market polarization caused by technological displacement of routine tasks in the middle class. This increased inequality subsequently leads to an unsatisfied class, inclined to vote on populists. Nevertheless, such populist voices may in fact have a valid point. Wealth accumulated by means of technological advances ought to be distributed more equally. Most suggested reforms to respond to these problems include reskilling programs to re-educate low and middle-skilled workers and establish a basic income. Furthermore, I agree with Rodrik & Sabel (2019) that workers should have the opportunity to be satisfied with their job. If this group is acknowledged in their needs, technological progress can be beneficial to all. Applying this to the current situation, governments should be stimulated to consider a more redistributive economy combined with the creation of an economy in which workers feel secure, are provided with good working conditions, and meanwhile remain positively challenged. Based on predictions made by the Economist (2020) it is expected that the upcoming automation due to Covid-19 will be gradual rather than sudden and speedy. Governments ought to take precautions and start to reform policies to ensure that economic inequality reduces and people can truly benefit from the advantages that technological advances, such as robots and AI, have to offer.
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