ARE ROBOTS GOOD FOR THE ECONOMY?
FOR many decades there has been an assumption that globalisation is inevitable and unstoppable. The world is going to continue to be more connected and products will have gone round the world before they reach the consumer.
The move to manufacture goods cheaply abroad, particularly in China, has had a devastating impact upon industrial communities in the UK, and Wales has felt the sharp end of that trend.
But there is a growing school of thought that globalisation in manufacturing, the trend of outsourcing production, may be coming to an end.
The reason for this is robots. Not the bloodthirsty robots from films like The Matrix, Terminator, or AI, but robots making our everyday products.
Why do experts think this is happening?
One of the leading academics in this area is Dr Finbarr Livesey. He is a senior lecturer in public policy at the Department of Politics and International Studies at the University of Cambridge.
His basic argument is that the more automation there is in production the less need there is to produce goods thousands of miles away from the consumer.
Since you don’t have to pay a robot there is no point having a factory in a place with cheap labour and goods could instead be made in the west.
“The main contention is ‘the way we make dictates where we can make’,” said Dr Livesey.
“Yes, in the past, we decided to offshore lots of manufacturing but there are four trends that are changing what is possible.
“First there are new production techniques like 3D printing – although its impact has been overblown.
“Secondly, automation changes the dynamics of production regarding labour costs.
“Thirdly, there is increasing uncertainty about moving things around the world. The oil price may be low now but emission regulations are coming.
“Finally customers expect things yesterday and we want it customised. So customised and fast are becoming very important.
“Put that together and basically we will see more regionalisation of the supply chain.”
Will this mean manufacturing jobs come back to Wales?
There is the potential for Wales to see more manufacturing jobs as part of this move but that is far from certain.
The production could come to Wales but it may not be in the form of people on an assembly line.
“It could have a potential impact on places like Wales,” said Dr Livesey.
“It is cheaper to be in Wales than a lot of places in terms of ground rental.
“However, that asks the question of will you see lots of jobs if these are highly automated production lines?
“Few people can give you an idea in terms of jobs.
“Automation is going to work in different ways in different sectors but it doesn’t mean no jobs.”
One of the first industries to feel the pinch of automation will be lorry drivers.
Dr Livesey said: “Automated vehicles is something that was always ‘10 years away’ and suddenly it came.
“Especially for things like haulage, which are just getting goods from depot A to depot B. We have an opportunity or problem, depending on how we view it.
“There will still be people in haulage who will be the maintainers of these systems.
“In the short term there may be drivers in the cabs overseeing the initial stages. However, pushing into the medium term a lot of those jobs will go and what do we do to help these people?
“An automated economy will have jobs but there will be a transition period.”
This transition period carries with it lots of risks. A s there are fewer and fewer jobs in the production of things we use, eat and drive, it could hit people hard in terms of unemployment.
So how can we deal with this problem as a society? One of the big issues for governments associated with robots is that robots do not pay tax. If a product is made using lots of robots instead of lots of people, the government is losing the income tax from all those humans who are no longer working. According to Dr Livesey, there are ways around this. He said: “Nobody has a solution yet to taxing robots but some of the positions are: the owners of capital (robots) pay more tax and we then disperse that to the rest of society. This basically means that a company gets taxed on how many robots it has. “Or you literally pair robots with people and that robot’s earnings go to that person. “Or you don’t connect them at all. Instead go for as much economic growth as possible and have a universal basic income for everyone.” It is this last point that Dr Livesey thinks has potential. A universal basic income is when every adult in the country gets paid a basic flat income, regardless of whether they are in work or not – which has raised concerns that people would simply stop working. “The vast majority of evidence shows that isn’t the case,” said Dr Livesey. “It is a flexible mechanism to deal with a very complex society.
“All the trials in Finland and the smallscale pilots show people don’t stop working and it actually frees them up.
“The problem with a small-scale pilot is does that scale up?”
Supporters of universal basic income say that it enables people to pursue more creative and innovative career paths, thereby creating more prosperity and giving people freedom over their lives.
It also means that they would potentially be able to quit work to care for a loved one – taking the pressure off the state in the process.
Dr Livesey said: “You can argue the UK has been risk-averse and not risk-taking, although that is starting to change.
“In Silicon Valley risks and failure are worn as a badge of honour. This change would be a massive societal decision.”
Could this sort of trial happen in Wales?
Dr Livesey said: “It would be fascinating for Wales to do a universal basic income trial.
“It would be very interesting to see if those people are freed up to do the creative things, to form new companies and create industries that don’t exist right now.”
How will more automation affect consumers? If more and more of our products are produced by robots will we see a difference when we are shopping, for instance? “In terms of change we will only see more automation if companies can sell in the market at a price point,” said Dr Livesey. “The end consumer will see very little change initially. “In the long term, as it continues to evolve, you will see the ability to customise – so potentially more control for the consumer in that sense. “If you are on a very low wage and going paycheck to paycheck you will not worry about this as you have things you are prioritising. “If, however, you are on a higher income you will be looking at things like longevity of a product and the impact of that product on the rest of the world. “We have already seen that, with high-end brands like Stella McCartney never using feathers.
“She does that because she believes that is the biggest differentiator from her competition apart from her ability as a designer.
“Some companies really understand. The more consumers understand that the more companies have to get it.” What can Wales do to get ahead of the curve?
In this changing world there are threats but also opportunity. According to Dr Livesey, there are steps Wales can take to ride the wave of automation.
“Firstly, it is not easy but you have to understand the connectivity of Wales as a country – that means sea, road, air and digital.
“To run this kind of manufacturing operation you need to be connected physically and digitally.
“Growing Welsh companies will need to consider the international marketplace and how they will trade.
“Will you ship or will you have a factory nearby to meet that demand?
“Companies need to understand it is not just about the ‘exporting’ that we hear from [President of the Board of Trade] Liam Fox.
“It is about whether Welsh companies can get abroad to produce.
“Are governments equipped to deal with this?
“One would politely say no. Brexit is distracting every policy area. It dominates the policy process. But this issue is coming and needs addressing.”