Will Business Leaders Save The American Dream?

We’re on the leading edge of a technology tsunami. Coming technology and scientific advances in the areas of artificial intelligence, the Internet of Things, virtual reality, advanced robotics, nanotechnology, deep learning, and biomedical, genetic, and cyborg engineering, along with quantum computing power and global connectivity, will fundamentally change how most of us live and work.

The Digital Age has the potential to be as disruptive and transformative for us as the Industrial Revolution was for our ancestors. If not proactively and preemptively managed, that disruption will threaten our capitalist system and our democracy and destroy what’s left of the American Dream.

The Technology Tsunami

Over the next two decades, technological advances have a high probability of displacing as many as 80 million U.S. workers (according to the chief economist of the Bank of England) or 47 percent of the U.S. workforce (based on a 2013 study by leading researchers at Oxford University). According to a study by McKinsey & Company, by adapting technologies already demonstrated as of 2015, as much as 45 percent of current U.S. job tasks could be automated now — that includes 20 percent of a CEO’s work activities. Not even the most highly skilled or paid jobs are safe. Coming automation will impact every sector, including service and professional jobs. The totality of disruption likely will far exceed — by a magnitude approaching ten times — the loss of manufacturing jobs to globalization and technology in the last two decades. Globally, job losses due to automation will be massive as well. For example, the OECD average percentage job loss is predicated at 57 percent; in India, it’s 69 percent; and in China, it’s 77 percent.[1] This will give rise to major global social challenges and further fuel political populism.

Some experts (“techno-optimists”) say not to worry because advancing technology will generate plenty of new, better jobs to replace those automated jobs, because that’s what happened during the Industrial Revolution. In other words, they believe history will repeat itself. I’m very skeptical of the techno-optimistic view for two reasons. First, that prediction downplays the widespread human havoc created by the Industrial Revolution, which in England lasted 60–80 years before society adjusted. Can our diverse and divided society withstand decades of turmoil? That’s a risk with a huge downside. Second, the techno-optimists assume that technology will produce tens of millions of new jobs that technology itself won’t be able to do. That’s highly questionable based on consensus predictions about the arc of AI innovation. And it ignores the fact that any new jobs created for humans by technology will inherently require new, highly advanced skills that displaced workers won’t have and may be unable to attain.

In the Digital Age, no longer will human scale be necessary for business value creation in most fields. Without question, technology will transform how most businesses operate. In the near future, most organizations likely will be staffed by some combination of smart robots, smart machines, and humans, and the jobs and skill requirements of each will be in flux continually. In addition, the kind of long-term employment at stable organizations, which characterized previous generations, likely will be rare.

Employable people will be those who can continuously upgrade their skills to stay ahead in the frantic race with perpetually advancing technology. Those upgraded skills will require the highest levels of human cognition and emotional intelligence — skills that our public education system generally does not teach to a majority of the population.

It’s highly possible that work as we know it simply won’t exist for most citizens. Without jobs, how will they meet their needs for food, shelter, health, and human dignity? During the Great Depression unemployment reached 25–29 percent. We’re talking about levels that may double that. How we deal with that challenge will determine in large part what the United States of America will become. We as a citizenry will create that future story either proactively or by default.

It’s not out of the question that over the next 50 years we’ll see Homo sapiens evolve into a technologically enhanced species — Techno-Homo sapiens — as human bodies can be equipped with nanotechnology, genetic engineering, and brain enhancements to improve mental processing. Will these upgrades be limited to the elite? What will people do with these enhancements? In the coming decades, we’ll be able to fight wars with smart robots, cyber technology, and artificially intelligent weapon systems. Food production will become increasingly engineered and automated.

We may yearn for a past that’s gone forever, and ironically, the cultural values from our earliest history may provide us with a key to adapting. The Mayflower Compact, the ways in which Native Americans governed themselves in tribes and nations, and even our ancient hunter-gatherer communities shared a common trait: a focus on the Common Good. Recently, however, we’ve allowed and in many cases systematically encouraged a highly individualistic culture of social Darwinism to dominate our society to our increasing detriment. For the good of us all, we may need to actively and systematically resurrect a culture of “we” to weather the technology tsunami.

Social Disruptions

The Digital Age will dramatically disrupt our political, educational, governance, and social systems, and challenge our consumption-based economy. It will exacerbate income inequality, which already is at its highest level since the late 1800s[2] in part because of the reversal and dilution over the last 40 years of social, governmental, and business policies that had led to the Great Prosperity era after WWII. We’re currently experiencing magnitudes of income and wealth inequality that exceed the Gilded Age. Today, the likelihood that a child born into poverty will escape it during his or her lifetime is already very small.[3] Even for middle class children the likelihood of earning more than their parents has declined from 90 percent to only 50 percent, as middle-class families essentially have not participated in income growth over the last 30 years. In fact, the bottom 50 percent of income earners have lost income share since 1980.[4] All the income growth has been captured by the very wealthy.

This lack of upward social mobility will only get worse in the Digital Age because:

(1) The future of work is a future of temporary, part-time, and freelance for many — and that’s assuming people continue to upgrade their skills. For many, it could be a future of no work.

(2) Our public education system is not designed to teach students the skills they’ll need to get jobs in the Digital Age, and it’s not designed to retrain current adults who need new skill sets. It was built to supply workers en mass for factory jobs. The Digital Age needs different skills, requiring a different education system. If we don’t address this, it will lead to increased tension between economic “winners” and a larger population of economic “losers.”

(3) Our healthcare system is not designed to insure good health care for all our citizens. In recent history, most jobs came with health insurance. That’s been changing as more and more Americans work as independent contractors or freelancers and employer-provided health insurance has become more limited. With predicted increases in “jobless” numbers, many Americans in the Digital Age will have no or very limited health insurance. What happens then? Could it mean a society in which a minority of techno-enhanced elite live to 150 years or older while the masses die out at much earlier ages?

(4) Our political system has become more divisive and dysfunctional due to “blame” politics that reinforce individualism and “survival of the fittest” ideologies rather than the Common Good. In the last 50 years, our governance system has been overtaken by elite interest groups who believe overwhelmingly in social Darwinism, limited government, and maximum individual freedom even if that means lots of people lack opportunities to live the American Dream. In reality, this issue goes back to when our founders struggled to design a constitution reconciling the Common Good with individual freedom, and we’ve encountered the clash of those competing philosophies over and over again: in the saga with our Native American ancestors and in confronting slavery, child labor abuses, and the discrimination of minorities.

(5) Through campaign finance and lobbying our governance system has been monetized and thus representative democracy has been diluted. Today the top 1 percent of income earners — the “1 percent” — and large corporations heavily influence governmental policies through political contributions and lobbying activities, and in many cases, this has accentuated the demise of the Common Good. It’s a system in which wealthy individuals and big businesses fund Political Action Committees, politically-motivated think tanks, and “made to order” academic research to favor the interests of the few not the many.

(6) Our system of public taxation is broken and can’t adequately fund social programs to increase opportunity and bring the Common Good back into play. Tax rules, breaks, and loopholes favor investment income and Wall Street, leaving government squeezed for the resources to mitigate the downsides of excessive laissez-faire individualism. This is not coincidental.

The Digital Age will further inflame these systemic problems, forcing us to directly decide whether we’ll reinvigorate a concern for the Common Good and do what it takes to be a “land of opportunity” or instead allow ourselves to devolve into an aristocratic feudal system concerned only with the good of the 1 percent. We’ve made this choice before. The Progressive movement and the political leadership and laws passed under President Teddy Roosevelt’s administration ended the Gilded Age of the robber barons and as previously mentioned, President Franklin Roosevelt’s social programs and increased spending during WWII reversed the Great Depression ushering in policies that fueled the Great Prosperity — the most equitably shared era of economic growth in U.S. history.

The social dilemma we face is one that’s in fact over 2000 years old. As historians Will and Ariel Durant state in their book The Lessons of History, “The concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution.”[5]

The high likelihood that technology advances will automate tens of millions of more jobs will only exacerbate social inequalities and necessitate a response, either violent or peaceable. To return to an era of shared prosperity and upward social mobility, we must reform the entire system. Before we can do that, however, we must revisit a critical cultural issue: the role of business in society.

Our Cultural Challenge: The Role of Business in Society

During the Great Prosperity, the business community viewed its purpose as broader than just making money for shareholders and included a social responsibility to workers and communities. During this time, workers’ wages increased alongside productivity. Since 1980, however, many businesses operate with the sole purpose of creating shareholder value — society and workers be damned. That philosophy was advocated by Milton Friedman and others and promoted by Wall Street’s non-scientific focus on short-term quarterly earnings, which, along with the advent of executive stock options, has caused record levels of disparity between executive compensation and worker pay. During the Great Prosperity, the ratio of CEO compensation to worker pay ranged between 20 and 30 to 1. By the end of the 1990s, the ratio was 376 to 1 and has fluctuated between 185 and 345 to 1 ever since, far exceeding growth in S&P 500 stock prices.[6] In contrast, worker pay has stagnated over the last 40 years and employee retirement and health benefits have greatly decreased.

This demise in business’ social duties to workers and society and the lack of regulation to stop it is not an inevitable situation, however. It’s not based in scientific or natural law, but rather supported by a libertarian philosophy underlying man-made rules and choices. Proponents of this view shrewdly built a system and aligned think tanks, higher education research, and political fundraising to support it and have done so to such an extent that we’ve lost our Common Good heritage as a counterbalance. Instead of a culture of “we” we’ve become a country of “big me.” Instead of a culture of the “Common Good”, we have become a culture designed to benefit primarily the 1 percent and big global corporations.

The Digital Age is going to exacerbate the conflicts between these philosophies, and we as a society must decide how to respond. Do we double down on individualism and “survival of the fittest” attitudes or do we take a more balanced approach between individual rights and the Common Good and preserve the American Dream?

A New American Story: The American Dream 2.0

The “land of opportunity” and the American Dream already are myths for many, and the coming technology tsunami will generate even greater social strain — on levels we’ve never experienced. To address this requires a systemic approach that will take time to implement. We can’t wait. “We the People” must start this process now, because our political system is too dysfunctional. We need business, education, and public service leaders to join together to fund a We the People, American Dream 2.0 initiative.

We as a country need to create a new story that’s inclusive of all Americans. It must provide realistic opportunities to find meaning and purpose in a technology enabled and technology dominated society in which work will be transformed and unavailable to many. It must include individual rights, responsibilities, and opportunities, and it must include renewed support for the Common Good.

This story needs chapters on transforming our education, tax, and healthcare systems; eliminating the dominance of “financialism” and “short-termism” in our capital markets; revising how we finance the election of public officials at all levels; minimizing the role of money in making laws and regulations; and making businesses a true part of our society by going back to the values of the Great Prosperity.

This story must overcome the seeds of divisiveness and identity politics and embrace diversity. It must be a humanistic, people-centric, “We the People” story that balances individualism and the Common Good. That story has to reverse our excessively laissez-faire attitudes, our increasing selfishness, and the trend of minimal government in order to protect and implement the Common Good with legislation.

These discussions must begin today at all levels — in local communities, public company board rooms, state government, Congress, and the White House. Business leaders were integral to the Great Prosperity, and they must step up now to address the coming automation of tens of millions of jobs. It’s the patriotic thing to do in my opinion. We need business leaders to take the lead to create the American Dream 2.0.

Thought leaders already have put forth ideas and raised important questions for this new story:

Will we need a universal basic income (UBI)? Higher tax rates on the wealthy? Revised patent laws?

Should we turn our schools into lifelong learning and maker-innovation centers for current students and adults?

Should the public share in the ‘fruits” of the Digital Age through ownership of the companies that create the job displacement? Or as Bill Gates has suggested, should we “tax the robots”?

Do we need universal healthcare?

Are we as a country so divided that we need to look at regional governance based on the different cultures in our nation?

Should we require two years of public service by every citizen to rebuild Common Good values and mitigate divisiveness?

If we need UBI, should we revise our immigration policy to limit immigration while not forgetting the historical contribution immigrants have made to our country commercially, artistically, scientifically, and socially?

Do we outlaw private lobbying and enact public financing of all political campaigns?

Do we change the capital markets’ focus on “short-termism” and regulate CEO compensation ratios to worker compensation?

If ever there was a time that our country needed strong leadership, it’s now. This may be our second civil war.

Yes, it’s that important. The good news is that a growing number of business and academic leaders already are raising alarms about the major societal challenges of the Digital Age, including Elon Musk, Nicholas Bostrom, Stephen Hawking, Tim O’Reilly, Bill Gates, Warren Buffett, Jeff Bezos, Robert Reich, Joseph Stiglitz, and Mark Zuckerberg, as well as numerous leading AI researchers, UBI advocates, and some politicians.

The Digital Age likely will be more disruptive for us than the Industrial Revolution was for our ancestors. Now we must take action, because if not properly managed, the Digital Age has the potential to destroy the American way of life as we’ve known it. This is a defining moment for our country.

© Ed Hess October 30, 2017

[1] Carl Benedikt Frey and Michael A. Osborne, “The Future of Employment: How Susceptible Are Jobs to Computerisation?” Technological Forecasting and Social Change 114 (2017): 254–280; Citi and Oxford Martin School, “Technology at Work v2.0: The Future Is Not What It Used to Be,” Citi GPS: Global Perspectives & Solutions (January 2016); Michael Chui, James Manyika, and Mehdi Miremadi, “Where Machines Could Replace Humans — And Where They Can’t (Yet),” McKinsey Quarterly, July 2016, http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet.

[2] Peter H. Lindert and Jeffrey G. Williamson, Unequal Gains: American Growth and Inequality Since 1700 (Princeton University Press, 2016).

[3] “Moving On Up: Why Do Some Americans Leave the Bottom of the Economic Ladder, but Not Others?” Economic Mobility Project, Pew Charitable Trusts, November 7, 2013, http://www.pewtrusts.org/en/research-and-analysis/reports/0001/01/01/moving-on-up.

[4] Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, “Distributional National Accounts: Methods and Estimates for the United States,” Cambridge MA: NBER Working Paper, December 2016, http://gabriel-zucman.eu/files/PSZ2016.pdf.

[5] Will and Ariel Durant, The Lessons of History (Simon & Schuster, 1968): 57.

[6] Lawrence Mishel and Jessica Schieder, “CEOs Make 276 Times More than Typical Workers,” Economic Policy Institute, August 3, 2016, http://www.epi.org/publication/ceos-make-276-times-more-than-typical-workers/.