28 January 2016

Technology bargain betrayed—where have all the rewards gone?

Early in the Industrial Revolution, many workers were concerned about being replaced by machines. The most well known group were the Luddites, British weavers who smashed mechanical looms that threatened to replace them with low-wage labourers, leaving them without work. Today we look with disdain upon the Luddites, applying the term as pointless resistance to change.

The Luddites lost their fight, of course, and ultimately the replacement of worker by machine turned out to be beneficial for workers. Technological progress allowed for increased efficiency and that in turn allowed workers to be more productive. As a result, as a sort of bargain for accepting the change, workers were better paid, gained more benefits and, of no small importance, spent less time working. Early in the Industrial Revolution people commonly worked twelve to sixteen hours a day, six to seven days a week. After WWII, this had dropped to eight hours a day five days a week.

In the last few decades we have experienced one of the most remarkable periods of technological progress in history, including four computer revolutions, from the computers that transformed business in the 1960s, to the personal computer, to the Internet and World Wide Web, to the smartphone. Consequently, workers should expect the rewards of such progress—substantially higher wages, better benefits and perhaps a three or four-day work week. In fact, we have seen none of these things. The incomes of the middle class have stagnated, benefits have been threatened, and we are working nearly as many hours as we did fifty years ago. It appears technological progress has betrayed its bargain.

Why? Did the computer revolutions fail to increase efficiency? Indeed they did not. According to the Conference Board of Canada, Canadian labour productivity in constant dollars increased by about 60 per cent from 1975 to 2012. Joel Rogers, director of the Center on Wisconsin Strategy, predicts that if wages tracked productivity, “Median family income in the U.S. would be about $20,000 higher today than it is.”

So where has the new wealth gone? According to an OECD study, 37 per cent of income growth in Canada over the period 1975-2007 was scooped up by the infamous top one per cent of income earners. James Henry, a senior advisor for the Tax Justice Network, claims that, “The world’s super-rich have taken advantage of lax tax rules to siphon off at least US$21-trillion, and possibly as much as US$32-trillion, from their home countries and hide it abroad."

The computer revolutions have been very generous to the rich. For the rest of us they have provided us with some nice stuff—we love our laptops and our smartphones—but they have betrayed the promise of financial and time rewards to balance the workplace downside.

And the downside is real, in some cases as a direct result of computerization. For example, Amazon's sweatshops have taken the workplace back to the 19th century. Uber, the ride app, allows its owners to make billions off the exploitation of cheap labour. And as the computer revolutions continue, we increasingly see well-paid workers replaced by robots.

The answer to this betrayal is not Luddism. Technological progress is still to be welcomed for its promise. The challenge is political, to ensure the promise is enjoyed by everyone. Labour had to fight Capital for its share of wealth and spare time throughout the Industrial Age; now the struggle continues into the Information Age. Some things, as they say, never change.

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