What’s needed presently is the means and methods for navigating the transition from a working world where humans have done the heavy lifting, to one where human creations take over much of this labour.
Does this mean mass unemployment? Does this require governments to develop new tools and projects to absorb the restless human masses? If governments don’t intercede, will we witness a rise of humans against their creations and those responsible?
Peter Diamandis writes: “The economic literature on prolonged unemployment is unambiguous….it destroys identity, erodes mental health, and generates political radicalization. A generation without economic footing is a generation without a stake in…the system.”
The Lessons History Teaches
History shows us that governments that are indifferent to labour during a period of massive job losses, such as the Great Depression, don’t last. If workers can’t earn a living, feed their families, buy a home and live a life equal to or better than that of their parents, ugly things can happen. The Nazis in Germany rose on the backs of massive unemployment. The Russian Revolution was a response to the elite ignoring the state of the working masses.
There are historic examples of how governments responded to severe economic disruption and job loss. These include:
- In the U.S., Franklin Delano Roosevelt’s New Deal offered a series of programs to reduce mass unemployment that by 1933, his first year in office, had reached 12.8 million or 25% of the country’s workforce. The New Deal included the Works Progress Administration, Public Works Administration, Civil Works Administration, and the Civilian Conservation Corps. The latter employed young men to work on reforestation, park development, and flood control projects.
- In Canada, 27% were without paid work. Canada’s Conservative government was slow to respond. It first introduced the Unemployment Relief and Farm Relief Acts, providing vouchers, work-for-food programs, and relief camps in remote areas to provide work in forestry and infrastructure projects for 20 cents per day plus food. By 1935, the federal government introduced unemployment insurance, borrowing the idea from the United Kingdom.
- In Germany, the unemployment peaked at 30% in 1933. Under the Nazis, who came to power that year, Germany launched the Reinhardt Program and the National Labour Service. Conscripted workers built the Autobahn, other infrastructure, and rearmament industries. In Germany, if you were able-bodied and male, you worked or ended up in a labour camp.
- In the United Kingdom, unemployment peaked at 25% in 1933. The British government’s response was to expand its, until then, weak unemployment insurance program. It passed the Special Areas Act to fund projects in those areas of the country most affected by unemployment, and it launched Instructional Centres that were essentially work and retraining camps.
The COVID-19 Case Example
The COVID-19 pandemic provides a more recent example of how modern governments responded to the widespread disruption caused by economic shutdowns. Monetary and labour-market policies were instituted to keep economies from collapsing.
Here are examples from the aforementioned countries:
- The U.S. federal government enacted direct cash support to households, expanded unemployment benefits, and provided subsidies to preserve jobs. Stimulus cheques were sent to households for every adult, with additional amounts given for their dependent children. Both the unemployed and self-employed received government monthly cheques, with small businesses getting loans, many forgivable, the rest at low interest, to keep employees on the payroll. Sector-specific programs supported those hardest hit, such as the airlines, other transportation, and healthcare.
- Canada enacted several temporary programs, including an emergency response benefit of $2,000 per month for 24 weeks to employed and self-employed Canadians who lost income because of the pandemic. Other programs included benefits to those who were not eligible for employment insurance after losing a job, federal wage subsidies for employers to retain staff, sickness and caregiving benefits, student benefits for lost summer job opportunities, rent and wage subsidies, expanded credit and tax deferral relief.
- Germany’s federal government reimbursed workers for reduced hours of employment, providing up to 80% of lost wages for a period of 21 months. It also instituted grants and loans to businesses, and provided guarantees to banks for them to continue to lend to small and medium-sized firms. The Value-Added-Tax (VAT) percentage was reduced, social benefits were expanded, and hospitals received funding to preserve health-sector jobs. Other critical infrastructure also received funding.
- The United Kingdom instituted a furlough, wage-subsidy scheme to support the self-employed and larger businesses. The UK government offered companies up to £2,500 per month to retain staff. It offered grants and payouts to the self-employed to replace lost earnings. Billions were loaned to ease access to working capital. Employers received incentives to employ youth through a kickstart scheme, with the government picking up salary costs.
Hodgepodge Programs and Policies Will Not Do
One thing is clear in looking at how governments have dealt with job-disrupting crises in the past. These programs, in many cases, appear to be knee-jerk, piecemeal, and cobbled together. The Great Depression lasted a decade. The impact of the COVID-19 pandemic lessened as the 2020s unfolded.
The advent of AI and humanoid robots this decade and beyond will be permanent, not temporary. Workers and governments will feel the impact, the former through lost income and the latter through lost tax revenue.
So, what to do? People need to find a replacement for work in their lives. Governments need new sources of general revenue.
In Part 4, we will look at these issues and consider very different approaches for society and governments in responding to the rise of AI and humanoid robots.
