The Weird CEO

by Charles Towers-Clark

  The advocates of the Asilomar principles call for regulation. However, one of the drawbacks of over-regulation is that it stifles innovation.[xc] As the implications of Artificial Intelligence are relatively unknown, few governments are willing to be enthusiastic about regulating its use; firstly because it is not clear what should be regulated and secondly because governments fear that regulation will move research and jobs to other less regulated territories. Indeed, there will be a tendency to enact laws that will protect jobs which would otherwise be replaced by Artificial Intelligence. This, in my view, would be a mistake; better that we appreciate early that the future of work will change and prepare for the social implications of this fourth industrial revolution.

  Part of the solution is a different approach to law. At present, companies try to control everything and anything so as to avoid being sued. The result of this is often absurd rules and processes that dampen any initiative that an employee could show.

  We need to create an environment that allows employees to take ownership of what they are doing but protects them and the company from court cases as a result of decisions that may not have been wise?

  Over the years, I have found that the best way to avoid the possibility of a court case is to be ready to provide a genuine apology, even if not entirely at fault, and to keep communicating in order to understand why the other party is hurt.

  In the future, legal uncertainty will be largely avoided due to smart contracts which will ensure that an action follows an event without human interaction. With this in place, the vagaries of a contract and human interpretation become irrelevant – if the event takes place then the action happens and vice versa.

  However, in the meantime, company rules may be absurd to one person but sensible to another. If employees are given the freedom to take ownership of their tasks and take what they perceive to be the best decisions, then there needs to be an understanding of what is absurd and what is sensible. Making people go on training courses just so that a training box can be ticked is not going to provide benefits in the long term. However, motivating employees to want to go on courses that consider the legal aspects of their job is a great start. If you encourage people to use common sense instead of trying to second-guess what their boss would do, then they will probably do the right thing – and become wiser as a result.

  Wisdom is generally learnt through experience which brings the knowledge to avoid doing things that may result in being sued. So how else can you impart this knowledge?

  The advice process is a very effective way to resolve this predicament. Decision makers should be looking at the financial, personnel, social, organisational and other aspects of any decision – making sure that it makes sense legally is part of that consideration. Therefore, advice givers should encourage decision makers to consider the legal aspect of any decision alongside the more fun stuff.

  Although we need to be careful not to encourage a more litigious society, the social implications of automation, especially as a result of the effects of Artificial Intelligence, are probably of more concern.

  D)

  SOCIAL IMPLICATIONS OF AUTOMATION

  “Automation is great for profits, but it’s a real potential trouble area for society.”

  Chieh Huang – Boxed CEO

  “Managed badly, the benefits of automation could be narrowly concentrated, benefiting those who own capital and highly skilled workers. Inequality would spiral.” – Institute for Public Policy Research[xci]

  The IPPR report makes various suggestions to politicians. These include: re-training programmes; an ethics watchdog to oversee the use of automating technologies; new models of company ownership; forcing businesses over a certain size to share profits with workers; and the creation of a sovereign fund to invest in businesses.

  However, it is not only the implications of automation that could cause upheavals in society. Other factors combined with automation could leave part (possibly the majority) of society disenfranchised. These include:

  Growth in low skilled jobs (as more people become available to undertake these jobs, the pay for these jobs will decrease).

  Proportionally less working people as we are surviving longer.

  Greater change in monthly incomes leading to uncertainty.

  Increased numbers of people on zero-hour contracts. This allows employers to choose when and if they need people to work.

  An increase in the length of time it takes for the unemployed to find a new job. This leads to an increasingly de-skilled and de-motivated part of the workforce.

  In addition to these points, some countries, especially the UK, are in the middle of a confidence crisis about productivity. The UK scores 18% below the productivity average of OECD countries. Since the 2008 financial crises, almost all countries are below their previous productivity levels. Sir Howard Davies, Chairman of the Royal Bank of Scotland, commented “It would seem that, in addition to the factors affecting all developed economies, the UK has particularly weak management.”[xcii]

  Leaving the UK’s problems aside, the upheavals expected in the future will result in calls to regulate and protect jobs. On the surface this may seem like a sensible move considering how quickly society will have to adjust to mass redundancies. The trouble with this approach is that companies in other countries who have automated successfully will provide a better service and cheaper products than in countries where jobs are being protected artificially. Trade barriers could be raised (as they have already for other reasons) but these will cause export markets to be closed in retaliation – and the downward spiral starts.

  However, in my opinion, the worst thing about artificially protecting jobs that are repetitive in nature is that it delays the inevitable and sucks the spirit out of those working in those industries. One of our offices is in Andalusia, Spain. It is frustrating dealing with the Andalusian administration as it appears that jobs are maintained and created regardless of whether they are required. This creates employee disenchantment which results in poor service.

  For those who do not accept the change that technology will bring, an anti-technology movement will arise over the next few years. This movement will be like the luddites who destroyed looms in the industrial revolution – and may become as violent.

  Unless we find a third way, we will have either a large unemployed group of society bitter about the onset of Artificial Intelligence or a large disillusioned swathe of society in protected jobs. Both scenarios will result in a mass of restless and unhappy people.

  The most likely scenario is an ever-decreasing number of people with jobs. As more and more jobs become processed, and therefore replaced by a computer, unemployment will increase. This will cause a downward pressure on existing salaries. The only good thing about a decrease in salaries is that job losses will slow for a while because it will be cheaper to employ people than to rely on automation. However, innovation will continue its march forward and at some point, the use of computers will again become more cost effective than using people.

  There is an argument that workers need to be compensated differently, perhaps by becoming part of the ownership class. Various countries (such as Germany) have or are pushing legislation to encourage this. However, this does not necessarily solve the problem – even if workers become owners, if there are no workers employed, there are no workers to be owners.

  This will create envy against those with a job. Those who can add value above that provided by a computer will continue to be employed. However, those who will benefit most are the owners of companies that become more and more efficient and profitable – mainly by automating more and cutting jobs.

  Or would they? If you own a company making products or selling services, there is one thing that you need. Buyers. Removing a working class also removes a consumer class. Ford understood this when he paid his workers sufficient such that they could eventually become buyers of the Ford motor car.

  If you remove the consumer class, then companies tha
t make products, profit and therefore pay taxes will eventually end up with no customers, no profit and pay no taxes. At this point there is no money in the government coffers to provide services for those who are unemployed and need to survive. Under our existing method of capitalism, it is therefore vital that, however it receives the money, a consumer class continues to exist.

  With 3D printing and the ability to sell globally, one option for increasing employment is the creation of cottage industries to provide bespoke goods and services – anything from a one-off shirt to an individualised medical device or provision of entertainment services for elderly people in retirement homes. Human beings have huge initiative and creative ideas – the problem is providing an environment to put those ideas in practice.

  Step forward the Universal Basic Income.

  E)

  UNIVERSAL BASIC INCOME

  “Basic Income is not a utopia, it’s a practical business plan for the next step of the human journey”

  Jeremy Rifkin – Economic and Social Theorist

  The Universal Basic Income (UBI or Basic Income Guarantee) was originally suggested in the late 1800s in England as an alternative to what we now know as the welfare state. Since then there have been some experiments – but no programme has caught hold. The list of those advocating the UBI is growing and includes Richard Branson, Elon Musk, Mark Zuckerberg and many more Silicon Valley moguls. Various politicians on both the left and the right have skirted around the idea – but politically it is a divisive issue. Think of it another way: despite the overwhelming evidence that reform rather than incarceration reduces re-offending amongst prisoners, few politicians are willing to appear to be soft on criminals. In the same way, they don’t want to appear soft on employment issues.

  The idea around the UBI is very simple. The state provides a fixed amount to every adult in the country (often with an additional amount for children). A UBI would replace the myriad of welfare benefits that are paid. Welfare payments are complicated, benefit some over others, are open to abuse and cost a lot to manage. The UBI removes this complication and reduces the cost of administrating a welfare system. However, it has never been introduced on a large scale because of two assumptions: 1) it will cost too much; and 2) people are inherently lazy and will therefore choose to stop working.

  Regarding the cost, if every adult were to be paid enough to live on, there wouldn’t be enough in the government budget to cover this. So, taxes would have to be raised in the hope that the economy would grow sufficiently to cover this. Given that jobs, and therefore economies, could crash over the next 15 years, relying on future tax collection to fund an unknown programme is risky.

  However, there are statistics which suggest that it may be worth the risk; for example, a report from the Roosevelt Institute in November 2017 predicted the USA could see a $2.48 trillion increase in the nation’s GDP within just eight years if it implemented a UBI.[xciii] Various trials have taken place that appear to strongly suggest that the UBI could work.

  In 1968, Nixon instigated a trial in which 8,500 people were given a basic income of around $1,600 a year for a family of four (equivalent to $10,000/£8,070 today). However, shortly afterwards he axed the programme having been persuaded by right-wing advisers, quoting a report from the English Royal Commission 150 years earlier that ‘proved’ UBI to be a failure. Historians have since reviewed the report and found that those who had commissioned the report had pre-determined that as people were perceived to be idle, the scheme would not work. The report writers therefore fixed the results to suit their masters’ political goals.

  More recently, a trial in Finland has been instigated which pays a guaranteed income to 250 unemployed residents. Similar trials have begun or are starting in Canada, USA, The Netherlands and the UK. Others have taken place in India and Africa. From those that have been completed, feedback has been positive. As people don’t have to focus solely on surviving, recipients have the time and motivation to take responsibility for their lives.

  The other hindrance to introducing the UBI is the assumption that people are lazy.

  In a Gallup conducted poll worldwide asking about attitudes to work, 63% of people were not engaged with their work and a further 24% were actively disengaged,[xciv] suggesting that 87% of workers are demotivated at work. This appears to be a worldwide problem which is perhaps slanted more to younger people, especially millennials where two thirds want to change jobs in the next 12 months.[xcv] Disengagement can easily be mistaken for laziness.

  Leaving aside the bigger issue of how we motivate people to enjoy their work, trials do not suggest that UBI encourages laziness – in fact the opposite.

  Canada ran a trial in the 1970s, giving 30% of the people in the small town of Dauphin, Manitoba, $15,000 each. Analysis of the trial by Evelyn Forget, an economist at the University of Manitoba, found that high school completion rates increased and hospitalisation rates dropped by 8.5%.[xcvi] Employment rates amongst adults did not change at all. Similar findings appeared in the Nixon trial before it was stopped, when most of those who received money continued to work similar hours, and when working hours fell, the recipients undertook socially beneficial activities. Nixon’s trial also found that young people tended to spend more time in education when they were not working.

  So financially, how could this work? Let’s take the UK as an example.

  Each year in the UK, £114 billion is spent on welfare (including Family & Children, Unemployment, Housing, Social Exclusion and Social Protection). Pensions and health are separate budgets. Twenty-three million people of working age do not pay taxes in the UK – because they earn under £10,000. If this £114 billion were paid out as a UBI to each of these 23 million, it would equate to nearly £5,000 per annum per person. This is more than is currently paid for unemployment benefit and wouldn’t have strings attached. It could be more if those whose total earnings already exceed £5,000 received less. Some adjustment may be needed to pay an additional amount for disability and supporting children, but otherwise it is simple compared to the current complicated welfare payment system. Anthony Painter, a director at the RSA think-tank, commented on what would happen if a UBI of just under £4,000 were paid. .“By itself, it wouldn’t be enough to take someone out of poverty, but it could give them the flexibility to re-train or the breathing room to wait for a job that has prospects rather than being forced into taking the first vacancy that comes along.”

  And this is the point – the object of the UBI is to remove the link between receiving welfare benefits and proving that you have been looking for a job. The task of (constantly) looking for a job is extremely time consuming and frankly depressing – if unemployment benefit depends upon showing that you have either been looking for or have taken part time jobs, you will be limited in time and motivation to find other ways to generate cash. Alternative employment could include making products (bespoke or otherwise) to sell. Jobs taken in order to survive rarely lead to personal or career development, and this leads to greater depression, more social problems and increased cost on society.

  One of the greatest social problems we face today is mental illness – which is also one of the biggest expenditures for public health systems. How much of this is caused by people being forced to do jobs that they hate in order to survive? As shown in the Canadian trial mentioned above, a UBI has the potential to reduce hospital visits and therefore reduce health care costs.

  The UK mental health charity – MIND – has calculated that 10% of GDP is lost to stress and sites four aspects at work that contribute to this: poor working conditions; unclear roles; personality factors; and poor relationships. Unfortunately, no company can resolve all these problems for all their workers, but giving more control and responsibility to each individual (whether employed or not) will allow people to take control of their own lives and therefore reduce their own stress.

  Godfrey Moase, activist and assistant general branch secretary at the National Union of Workers in Melbourne,
Australia, gave a good vision of where UBI could lead. “Imagine the creativity, innovation and enterprise that would be unleashed if every citizen were guaranteed a living”, he wrote. “Social enterprises, cooperatives and small businesses could be started without participants worrying where the next pay cheque would come from.”

  The speed of innovation, whilst leading to a loss of jobs has also led to the creation of the 3D printing machine. Described as the next most important disruptive influence after the internet, 3D printing creates a technological solution for those citizens who wish to unleash their creativity, innovation and enterprise. This will displace jobs from factories as products will be created on a printer at home. By manufacturing locally, waste will be reduced and transportation costs cut.

  3D printing is particularly good for creating one-off products. As manufactured goods (mainly from China) become more homogenised, there will be an increased demand for bespoke products. Approximately two thirds of new jobs are created by small businesses. Therefore 3D printing (combined with a different mentality towards employment as set out in this book) provides the opportunity for a myriad of cottage industries to be created. Combine this with the UBI and, instead of spending time looking for meaningless jobs, people could be creating bespoke products to be sold locally or for which the design could be sold to a customer half way around the world.