Let’s not forget the fate of the ferrymen

The largely forgotten fate of London’s watermen, who ferried passengers on the Thames for centuries before faster forms of transport stole their jobs, would seem of marginal relevance today. But the lessons of the past can often inform the decisions of the future. And as we fret about the rise of robots and the effect of artificial intelligence, the history of London’s water taxis can teach us something about how to ease disruption caused by new technologies.

For many years, London’s watermen were the most numerous workers in the city. But complaints about their abusive practices forced parliament to pass a law in 1514 to regulate the trade. Another act followed in 1555 establishing the Company of Watermen. Colin Middlemiss, present-day clerk of the company, admits some of his predecessors probably had it coming. “We were a fairly unruly lot,” he says. “We were not averse to putting up the fare halfway across the river.” (A medieval practice reminiscent of Uber’s “surge” pricing today.)

But as well as protecting passengers’ rights, the company acted as a workers’ guild, helping to defend their livelihoods.

In later centuries, whenever a new bridge or tunnel spanned the Thames, the company petitioned parliament to ensure the builders compensated the watermen for lost earnings. Even the builders of the Millennium Bridge, opened in 2000, paid a symbolic sum into the company’s charity. Technological progress was bought by means of a social dividend. “The watermen always got some form of compensation,” says Middlemiss. “As technology developed it was a way to sort out a problem.”

We have a similar problem today. The twin forces of globalisation and technological upheaval are rendering many traditional jobs in developed countries obsolete. Although both these forces bring much generalised gain, they also result in localised pain. That pain has been identified by some politicians as the cause of the electoral convulsions that led to the pro-Brexit vote in Britain and the triumph of Donald Trump in the US presidential elections.

In a recent Financial Times blog post, the economist Gavyn Davies concluded economics urgently needed to catch up with that runaway politics. “How to compensate the losers from globalisation will be the big story in macro in 2017,” he wrote.

Some economists argue the simplest and most radical solution would be to provide all citizens with a universal basic income, a guaranteed state handout paid to everyone, irrespective of work, wealth or social contribution. Last year Finland and the Netherlands launched localised experiments. In June, Switzerland even held a referendum on whether to introduce a basic income of about $30,275 a year, but it was heavily defeated.

Some of the Silicon Valley crowd also back the idea of a “digital dividend”.

Supporters of a basic income argue it would boost our economies and revitalise our societies, empowering citizens to make their own life choices. Its opponents argue the basic income is too simplistic, costly and ill-targeted and would corrode the linkages between effort and reward. It is, at best, premature, if not wildly utopian. Properly adjusted, current welfare states can provide more effective compensation mechanisms.

A report on technological change published by the White House proposed a checklist of cheaper alternatives that could, in theory, be more easily implemented. The report, Artificial Intelligence, Automation and the Economy, recommended raising the minimum wage, strengthening union bargaining power, providing cheaper housing to improve labour mobility, shifting taxes from labour to capital and massively increasing funding for job training and re-education.

Stressing that technology was not destiny, the report argued it was too soon to abandon the possibility of almost full employment. “The issue is not that automation will render the vast majority of the population unemployable,” wrote Jason Furman, chairman of the Council of Economic Advisers. “Instead, it is that workers will either lack the skills or the ability to successfully match with the good, high-paying jobs created by automation.”

The surge in US stock prices since Trump’s election suggests capital rather than labour will be the big winner under the new administration. Indeed, Trump’s nominee as labour secretary is a big fan of robots and a fierce critic of the minimum wage.

The new administration’s strategy appears to be to let the economy rip through big tax cuts and spending increases, allowing the spoils to fall where they may.

However that plays out, it is hard to avoid the conclusion that, sooner or later, for the sake of social stability we are going to have to figure out smarter ways to compensate the ferrymen. /© Financial Times 2017

THE WATERMEN ALWAYS GOT SOME FORM OF COMPENSATION. AS TECHNOLOGY DEVELOPED — IT WAS A WAY TO SORT OUT A PROBLEM