Read How Technologies Will Transform Our Economy

If policymakers and the public can purge themselves of the false scenario perpetuated by the Luddites and Marx, exponential technology can turbo-charge future prosperity. But the fear just keeps on coming. Before the pandemic and continuing today, we see headlines like:

• “Amazon is going to kill more American jobs than China did.”
• “Robots Could Steal 40% of U.S. Jobs by 2030.”
• “Within 20 Years Automation May Take the Place of About $5.1 Trillion/year in Labor With More Than 98% of Savings Going to Those Who Are Already Multi-Millionaires.”
• “America’s Retailers Are Closing Stores Faster Than Ever”
• “Robots won't just take our jobs – they'll make the rich even richer.”

One fear-based solution to these fears is seen in the headline “European lawmakers want robots to pay taxes.” The idea has circulated in the U.S. and elsewhere. While “saving jobs” is often the reason for this proposal, it is sometimes premised on the idea that some of the huge increases in wealth would be used to compensate unemployed workers and to retrain them for other positions, om the further fiction that government is competent to predict what jobs will be needed in the future.

Of course, taxing, that is, punishing the use of robots would simply slow production and purchasing of those devices. Further, the most basic economic literacy tells us that if government so taxed machines centuries ago, the incredible wealth and, thus, prosperous middle classes they created would have been delayed.

Since they come in so many varieties, shapes, and sizes, how would the taxmen define a robot? What about the hundreds of thousands already in use for decades in factories, warehouses, and other facilities?

Another proposal to deal with the feared explosion of unemployment is a Universal Basis Income. One popular version would simply have taxpayers, via government, turn over to each individual $1,000 per month as an income floor. For 330 million Americans, this would cost $4 trillion per year. But federal expenditures in 2020 were $4.7 trillion against only $3.7 trillion of revenues. Where would this magic money to double the federal budget come from, d=with debt quickly bankrupting the country?

Some suggest the federal government should sell off its vast land holdings in the West. This is a good idea it itself, but would not generate even a fraction of the needed UBI revenue. Most of the that land is desert or wilderness, with little apparent commercial value. Further, where it could be of value, for mining for example, government regulations restrict or bar such productive efforts. (Such restrictions should be lifted in any case.) Finally, there is no chance that individuals and businesses would or even could hand over to the government each year $4 trillion in wealth annually—Apple, Amazon, Google, and Microsoft stocks, 401ks, IRAs, houses, and alternative, promisingly profitable uses—for that government land.

Would this spending be on top of the over $1 trillion federal spending each year targeted to help the poor? The UBI is a prime example of “counting your chickens before they hatch,” of assuming wealth that has yet to be created. This solution in search of a problem is a non-starter.

While many fears about exponential technology are unfounded, there is an important issue we must face. With the Industrial Revolution, economic sectors and whole economies had a century or two to adjust to new productive realities. With exponential technology, adjustment times will only be a few decades or years. Thus, workers will need to break out of antiquated ways of thinking about themselves, a shift that should have taken place decades or centuries ago.

The distinctions between “worker,” “manager,” “investor,” “entrepreneur” and similar categories are, in fact, artificial. This is because:

• All workers are investors in their own skills and capacities;
• All workers are managers of their own time, short-, medium-, and long-term financial and life goals, and the strategies to achieve them;
• All workers are entrepreneurs, deciding what fields they should go into and watching for opportunities in a fast-changing economy.

Long gone are the days from the 1950s when most individuals might possibly have careers with a single company, doing the same job for 40 years. Gone soon will be the possibility of individuals ensuring their prosperity and career satisfaction in an exponential future if they’re trapped in nineteenth century, self-limiting mindsets.

While different sectors with needs for workers with different skill sets will change at different rates, the exponential future is coming fast and current laws, regulations and institutions are unable to meet even current demands much less those of the future. For example, before the pandemic, there were 1.6 million more job openings than unemployed Americans, so poorly does the government dominated schooling system prepare individuals for future careers. But there are a number of reforms that will help the transition to a future economy.

• Expand apprenticeships.

In the U.S., apprenticeships historically have involved individuals learning valuable trades for which there has been strong market demand—for carpenters, electricians, plumbers. But in the U.S. in 2018, while some 585,000 workers were registered in apprenticeship programs, that was only .45 percent of the workforce.

By contrast, some 70 percent of kids in Switzerland go through apprenticeship programs. Further, 40 percent of Swiss companies offer apprenticeship opportunities, covering some 230 professions, including banking and finance, pharmaceuticals, communications technology, and the like. These are “job tryouts” when students in late high school usually work part-time at companies while continuing classroom instruction, with those needing further education often going on to college. As important, these students earn money while they learn, and are imbued with a work ethic and just the entrepreneurial mindset needed to succeed in future careers.

By contrast, some 40 percent of American students go on to some form of secondary education after high school and about one-third receive a four-year degree. But many do so with government-backed loan guarantees. They often develop an entitlement mentality at universities, graduate with degrees of little market value, and are burdened under huge debts and resentment.

Swiss-style apprenticeships that connect education, training, and labor market needs are now gaining attention in the U.S. For example, CareerWise Colorado is modeled on the Swiss approach to match the needs of local businesses with local schools. It was founded in 2016 by Noel Ginsburg with then-governor, now U.S. Democratic Senator John Hickenlooper as co-founder.

Policy changes at the federal, state, and local level would help connect young people directly wit the real career opportunities for the future.

• Replace “unemployment insurance” with an “employment opportunity” system.

Currently, federal and state government, mostly through payroll taxes imposed on workers, fund unemployment insurance. These state-administered programs provide temporary support, with levels varying by state, for workers who are out of work. But just as individuals only “benefit” from current “health” insurance programs only when they get sick, so they only “benefit” from unemployment insurance when they lose their jobs.

Just as a true healthcare system would create mechanisms to prevent individuals from getting sick in the first place, so converting the current unemployment system to an “employment opportunity” system would, at minimum, shorten the time individuals are out of work and help them better transition into even better jobs.

For example, individuals could be allowed to invest some of the funds currently taken out of their paychecks into 401-K or IRA-style accounts. These could give them greater returns than current government guarantees and could be used for retraining when they lose jobs or, even better, continuing upgrading of skills ahead of possible downturns in the sectors in which they are employed. Further, individuals could be allowed to make tax-free donations to these accounts beyond the amounts currently taken from their paychecks for unemployment insurance.

• Robot-proofing and life-long learning

The example above and the probability that exponential technology would require more retooling of skills in the future points to the need for every individual to understand the need for life-long learning. Putting workers in charge of their own accounts as in the above scenario would create an incentive for entrepreneurs to look for ways to attract some of those funds by offering attractive.

Life-long learn could help address another issue. Today, colleges and universities are seeing registration levels stagnating even as their costs have been skyrocket; college tuition since 1980 has jumped by 1,184 percent compared to an overall inflation rate of 228 percent. As individuals more and more see that in so many cases a college degree is just not worth it, colleges might retool to offer “employment opportunity” subscriptions services with ongoing courses to keep individuals not only up on their skills but up on emerging sectors and opportunities—in nanotech, biotech, AI. Robotics—that will allow them more seamlessly navigate the exponential economy.   

It is a longer discussion to deal with the sci-fi-type fears of rule by AIs and bio-mutate masters.

But it is important to note that ignorance breeds fear and impotence. Therefore, as more individuals are in careers in exponential technologies, as the level of cultural knowledge about these technologies expands, as institutions are changed to facilitate their emergence, understanding will ensure control and vanquish fears.

While it wasn’t fear exactly, many individuals experienced angst as personal computers began to spread from the mid-1970s and when the internet took off in the 1990s. Some of it was just learning the new technology. What are all those buttons and function keys? But has we began this examination by saying, anyone under 40 has never experienced a world without personal computers, smartphones, internet access to nearly all the world’s knowledge, and instant, face-to-face virtual visits with anyone, anywhere on the planet. Children are competent in these technologies and embrace rather than fear them.

And as we noted, exponential technologies will major drivers of the economy, public policy, social institutions, and culture in decades to come. Let’s embrace and create this future!