How Robot CEOs Could Save Capitalism and Help Close America's Wealth Gap
This story was originally published by OneZero.
In 2016, only four years after billionaire CEO Terry Gou notoriously complained that managing “one million animals” gave him a headache, Taiwanese electronics manufacturer Foxconn replaced 60,000 of its workers with something that did not come from the animal kingdom at all: robots. In a public statement announcing its massive layoffs, the global industry leader — whose staggering revenues topped $175 billion in 2018 — declared it had “tasted success in reduction of labor costs.”
Foxconn’s story is not unique. In 2013, researchers at Oxford University predicted that as many as 47% of American jobs had a high probability of computerization. Over the last decade, many corporate giants in the U.S. have placed robots in jobs traditionally held by an already meagerly paid human workforce. American companies like Amazon, Target, Walmart and even Chipotle have started to utilize robots that can complete the same tasks as humans for a fraction of the price, while business tycoons have used technology’s productivity and cost-saving potential to make thinly veiled threats against raising the minimum wage for humans.
In 2011, American CEOs were bringing home over 200 times more than the average worker — even in the wake of the financial crisis only three years earlier.
We live in an era when incomes have failed to keep up with inflation, the real average wage of most American workers has about the same purchasing power it did 40 years ago, and wage growth occurs mostly for those already in the top 10% of the wage distribution. Corporate attitudes toward the labor force could pose a very real problem for the future of the United States.
According to the Economic Policy Institute, CEOs in major U.S. companies earned around 18 times more than a typical worker in 1965 — a handsome figure, but certainly not detrimental to the public interest. By 2011 though, American CEOs were bringing home over 200 times more than the average worker — even in the wake of the financial crisis only three years earlier.
America’s economic divide today is wider than ever. According to the Federal Reserve’s Survey of Consumer Finances, shares of income and wealth held by affluent families in the U.S. reached “historically high levels” in 2016.
None of this is good news. Beyond the obvious economic implications, wealth inequality also impacts public health and safety. Richard G. Wilkinson, a social epidemiologist whose research focuses on poverty and health, charted data about global income inequality for the book he co-authored in 2009, The Spirit Level. Using statistics from the UN, Wilkinson found that economic inequality is closely tied to a number of important social ills ranging from violence to mental health and social mobility. In stark contrast to data from more economically equitable Scandinavian countries, Wilkinson learned that social mobility in the U.S. was associated directly with wealth — affluent children grew into affluent adults, while children from poor families remained poor. Speaking about his research in a 2011 TED Talk, Wilkinson joked, “If Americans want to live the American dream, they should go to Denmark.”
In 1959, economist W. Allen Wallis attempted to tackle the problem of wages, capitalism, and the public interest while addressing the National Industrial Conference Board. An economic advisor to four U.S. presidents, Wallis described himself as “apolitical” and earned a reputation over his career as a staunch advocate for free markets. Unlike some of his peers, Wallis believed that tying wages to productivity was both impractical and inequitable, arguing that increases in productivity arise “from the efforts of people in all walks of life” — not just from specific individuals or industries.
He asserted that “the key to a proper [economic] environment is to maintain a legal and institutional framework such that the self-interest of each party is either consistent with the public interest, or else is balanced and checked by opposing interests of other parties,” adding that “where excessive concentrations of power in the hands of labor or business produce too many results or an average result contrary to the public interest, remedies should be sought through eliminating the power to injure the public interest, rather than through direct control of unions, businesses, or collective bargaining.”
History has taught us that the decisions we make today — as consumers, entrepreneurs, workers, citizens, and leaders — influence our world’s future like nothing else.
Wallis understood that capitalism can be susceptible to concentrations of power that can threaten its ability to thrive or benefit the public interest. To remedy those situations, he recommended using the free market’s inherent system of competition and innovation to increase the health of the economy in lieu of government-imposed rules on the market.
In the wake of Big Tech, as questions about ethics dominate national conversations and the technology industry focuses on more ethical approaches to A.I., Wallis’ recommendation that the private sector fixes itself through the checks and balances of competition could prove to be a valuable and effective solution to rebuilding America’s middle class.
While America’s largest companies begin to deliberate a new definition for the purpose of corporations, technologists and startups seeking to create ethical technology would be wise to explore ways A.I. can improve our economy while doing the least harm to the human workforce. By creating new technology to replace exorbitantly paid CEOs with A.I. that can do their jobs more efficiently while potentially offering more stability to companies, America’s corporations could benefit while the overall workforce remains intact. In turn, billions of dollars that would have gone to CEOs could be freed up to be redistributed through the economy directly, allowing companies to pay sensible wages that can keep pace with inflation without borrowing from the Federal Reserve.
History has taught us that the decisions we make today — as consumers, entrepreneurs, workers, citizens, and leaders — influence our world’s future like nothing else. As we stand at the brink of a new era in ethics and technology, what kind of future will we choose?
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