Whatever it does to people, automation is going to make most places worse off

OPINION: Whether automation ushers in an era of unemployment or plenty, it will exacerbate trends both in regions that are already doing well, and in those that are hurting
By John Michael McGrath - Published on Jun 16, 2017
A recent report warns that new waves of automation may make existing regional inequalities worse. (Spencer Cooper/Creative Commons)

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There’s a debate bubbling away in books and magazines, and even on television current affairs shows, about the looming threat posed by a new wave of automation across the economy.

There are at two main positions on the subject: the view that automation, driven by novel artificial intelligence technologies and more capable robots, will replace human labour in a wide array of jobs and business creating mass unemployment, and the competing theory, pointing to history, that technology has created more jobs than it has destroyed. Blacksmiths lost jobs as car tires replaced horseshoes, but carmakers hired more than enough people to make up for those losses, and paid them better, to boot. (There’s a third camp, that thinks the whole issue of automation is overblown, and that if anything we’re seeing productivity slow down. That’s a totally different problem, but not as many people are writing in alarmist tones about it.)

But even if the optimists are right, there's another possibility that should concern us: automation may leave most people better off, while leaving most places worse off.

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A recent report from the Brookfield Institute for Innovation and Entrepreneurship examines cities across Canada, large and small, the industries that make up their local economies, and how susceptible those industries are to automation. The results are grimly predictable: Places that rely on agriculture, mining, and manufacturing are most vulnerable to automation-driven job losses, while places that rely on government administration jobs, health, education, or finance are at much less risk. Brookfield’s analysis doesn’t say what level of job loss any particular city can expect from automation, but it’s a useful map of how vulnerable some places are.

The report doesn't predict how many jobs will actually be lost to automation, just pointing out who and what is most vulnerable to it. To use a different looming threat as a metaphor, it’s not a prediction of how much sea levels might rise in a warming world, but a depiction of who’s living well above the high-water mark and who’s right at the shoreline.

As far as Ontario goes, the analysis suggests that the places that are already doing well are the least likely to suffer. Diversified city-regions like the Greater Toronto Area and the Ottawa Valley will keep doing just fine, as will smaller cities that have government as major employers (university and military towns, for the most part). But the manufacturing and resource-based southwest and north of the province, which already have had a rough time over the last decade or so, are arguably in for more pain.

This is the “two Ontarios” problem again, except instead of describing history it’s predicting the future.

The data in the Brookfield report at least implicitly implies one solution: if smaller cities with large government employers are going to be most resilient in an automated future, maybe the answer for more vulnerable communities is more government employment.

While the Liberals want to test-run a universal basic income in Thunder Bay, Hamilton, and Lindsay, there’s a competing policy some progressives are proposing to deal with inequality and (perhaps) the threat of AI-induced labour unrest: a universal job guarantee. (In essence, a universal income that comes with a job attached.) There’s a substantial debate between the guaranteed-income and guaranteed-jobs camps, over everything from fairness (can you guarantee jobs to people with disabilities?) to cost (if the government can just mail cheques to people, why complicate things?) and more.

But if there’s a desire to literally spread the prosperity around the province, and mitigate inequities by maintaining economic activity across regions, a jobs guarantee tied to bringing work to communities around Ontario may offer government more leverage than a simple universal income. The simplicity of cutting people a cheque is appealing on a number of grounds, but recent events, whether the vote on Brexit in the U.K. or the election of Donald Trump in the U.S., make an argument for keeping a place-based lens on policy. There’s no shortage of work that could be done in the province. If nothing else, the government could build more and better hospitals and universities in the parts of the province where a diploma or a doctor’s appointment currently means taking a long trip to Toronto or Ottawa.

Of course, either solution assumes that political parties and voters will be willing to pay the substantial costs involved. But both the present and future look grim for a big province with a small government.

Photo courtesy of Spencer Cooper and licensed for commercial use under a Creative Commons licence. (See the uncropped version.)

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