of a new labour
Technology disrupts labour and then empowers it anew
By Jean-Luc Burlone
World economies are expected to enjoy a synchronized and decent growth of 3.9% in 2018 (IMF). After being whacked by the 2008 crisis and then fed by central banks’ accommodative policies, economies are crawling back to normalcy. Though economic growth is a necessary condition, it is not sufficient to reduce inequalities.
Inequality persists when economic growth is shared disproportionately among the population. Commendable efforts to raise wages and employment do not solve the problem of inequality if the creation of wealth is not substantially distributed to the middle class or to a large segment of the population.
Inequality persists when economic growth is shared disproportionately among the population
In India for example, the top 1% of the population grabs a third of the country’s economic growth. This enduring level of inequality throttles Indian middle class and nullifies efforts of well intended antipoverty policies such as the 2005 Mahatma Program that guaranteed 100 days of paid employment per year per worker in rural area.
The German inequality ratio has increased for the past ten years. Though it is the strongest European economy with an unemployment rate of 3.6%, the population expressed its frustration in the last election and the extreme right (Alternative for Germany) has entered the Bundestag. Though Germany needs immigrants to reinvigorate its demography, the bold acceptance of one million people was a costly decision and a perfect outlet for popular frustration.
The United States’ inequality ratio has risen since the financial crisis even though its unemployment rate now stands at 4.1%. The expectation that the tax cut will reduce inequalities is wishful thinking. When unemployment is at the full employment level, boosting the economy to create jobs makes little sense.
True, the business community applauds the tax cut. Walmart raised its minimum wage, American banks did as well and all have improved their social benefit package. Undoubtedly, better working conditions help workers; it favours hiring, the retention of good employees and the image of the company.
‘Neither globalisation nor immigration is the root of inequality. Robots and AI are, and will remain for the foreseeable future, the main culprits for the persistent inequality in most economies.’
However, these commendable efforts beat around the bush, as they do not integrate labour into an economic growth propelled by technology. Neither globalisation nor immigration is the root of inequality. Robots and AI are, and will remain for the foreseeable future, the main culprits for the persistent inequality in most economies.
The economy favours technology over labour as a production factor mainly because technology is dependent on capital, which is plentiful and cheaper. Since the closer a solution tackles a problem, the more efficient and the less expensive it ends up being. Inequality would be mitigated efficiently if labour were financially tied to technology. The link between technology and labour is well known. First, technology displaces blue and white collars employees alike. Second, it creates new job opportunities that labour may or may not have the skill to execute.
The new labour
Interestingly, economists are now considering that a “new labour” is already working for today’s economy. The new labour could be defined as the unintended service all Internet users perform when they supply Internet networks with their data.
The service offered by large networks, like Amazon, Google, Facebook and many others, appears to be free for users when, in fact, users are paying for it by the data they give away. Their data can be so precious that networks are now launching new free applications for the sole purpose of harvesting more specific data from their users.
‘The new labour could be defined as the unintended service all Internet users perform when they supply Internet networks with their data.’
Aggregate data have become the input or the intermediary product networks analyse and process for their business model. They represent the essential information, always up to date, for marketing purposes and for feeding AI – the highest level of usage of data.
The giant networks strive to be monopolists in their respected fields, where they make most of their revenue: shopping on Amazon, searching on Google and so on. Now, they process data to compete among themselves in AI services that are rented or sold to economic agents.
The unavoidable premise
It is acknowledged that aggregate data have more commercial value than the value of the service offered to individual users. The data of one individual have no marginal value but the available aggregate data have created a new market with sellers and buyers and, thus, with upcoming rules and guidelines.
The usage of individual data by networks has become a legal issue. The Right to be Forgotten is currently discussed and the General Data Protection Regulation will be operative in May 2018 in Europe. The timing seems right to discuss how users can share in the benefits their input generate for the networks.
‘The data of one individual have no marginal value but the available aggregate data have created a new market with sellers and buyers and, thus, with upcoming rules and guidelines.’
Although individual rights can be protected, the discrepancy between individual data and aggregate data must be dealt with. Individual data have no value and must therefore be aggregated with others so the new labour can negotiate with networks. But it is hard to imagine how a union, however reinvented, could secure and represent members dispersed around the world.
Since networks benefit from the aggregate data, a direct financial link must be found and implemented between them and individual users to share profits adequately. The first possibility that comes to mind is the participation of users in the equity of networks.
It is hardly thinkable that Facebook, for one, would manage two billion new shareholders. But it is conceivable to accredit all individual users to a class of units that would distribute income according to the value of the data they provide.
As the principle of Data Portability takes ground, both users and networks can move data from one platform to another. Traceability is a given but the usefulness of the data should be assessed. For instance, a datum would loose value with time, as does a carbon credit on a climate change market.
‘In a new economic era, inequalities must be dealt with new approaches that tackle the distribution of wealth wherever wealth lies.’
Also, one can foresee a time when AI would no longer need data to be able to evolve. In the meantime, both networks and users would gain by such a scheme. Networks would entice users to supply better data and bond them to their platform while users would be rewarded for supplying the essential input.
An efficient market for aggregate data would then exist that integrates all users in the economic growth spurred by technology. Not a panacea no doubt and one should explore such a possibility further. Throwing ideas is easy – analyzing the pros and cons and successfully implementing them, if the analysis is exhaustive, robust and positive, is not.
The point is made nonetheless. In a new economic era, inequalities must be dealt with new approaches that tackle the distribution of wealth wherever wealth lies. Inclusive economic growth and social cohesion depend on it.
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Jean-Luc Burlone, Ms. Sc. Economy, FCSI (1996)
Economic Analysis – Financial Strategies
The text above is my personal view, based on a review of the economic and financial press on the subject. February 10, 2018. – JLB
Fellow of the Canadian Securities Institute (FCSI), Jean-Luc Burlone has an excellent knowledge of financial product management and holds a Master’s degree in economics from the Université de Montréal with a dual specialization in development economics and International economy – finance and trade.