Stacking the Deck for Workers over Machines

New York City Mayor and Democratic presidential candidate Bill de Blasio is promoting a novel idea.  He wants to create a new federal agency to oversee the transition from human jobs to tasks managed by machine automation.

This proposal is:

1. Good Politics
2. Good Policy
3. Neither
4. Both?

I would suggest that the concept and de Blasio’s promotion of it is clearly good politics. First, when was the last time in this crowded race that anyone mentioned de Blasio for more than half a sentence-probably the announcement of his candidacy, and nothing since. So a highly unusual idea breaks him from the pack, at least for a moment.  Much better than Joe Sestak is doing and he both served in Congress and was an Admiral in our Navy.

In addition, while other once promising candidates like Pete Buttigieg and Amy Klobuchar have been slowed by negative news, de Blasio can see Elizabeth Warren successfully navigating past past her initial controversies and now maintaining a top tier position in the race by focusing on new ideas. so de Blasio wants to enter the fray of interesting ideas gaining traction and garnering free coverage.

In a broader sense, talking about how to protect American blue collar jobs is a winning strategy.  There is a perception that Trump focused more on jobs than Clinton in 2016, and there are many who are genuinely worried about the impact of globalization and automation on their job prospects at home, not to mention the prospects of their children. And while Trump blames foreigners and undocumented immigrants for these losses, the more natural (and accurate) position for Democratic candidates is to target the blazing advance of technology. de Blasio is taking Trump’s primary stated theme - job protection from dangers in our society, co-opting it for himself, and targeting a very real fear of technology getting out of control and using it as the scapegoat, rather than minorities and foreigners.

So, good politics? Absolutely.

Good policy?  Not so much.

I examine this policy from both the basis of the idea itself and then the suggested implementation. The concept of stepping in to penalize private companies for becoming more efficient by automating processes is a terrible idea. The economy improves when the products consumers need/want is produced less expensively, so saving huge costs through automation ought to be encouraged. Plus the move shifts jobs elsewhere – people need to make those machines, maintain and fix those machines – but the company becoming more efficient shouldn’t need to spend huge money to offset those efficiencies simply because a welder is no longer needed. Shoving a stick into the spokes of technological progress is similar to wage and price controls; de Blasio would be creating an artificial drag on the market that would more likely deter investment or drive the business to produce in Canada or Costa Rica where power is plentiful and no such efficiency penalty exists. Or make US companies less effective at manufacturing than competitors in the rest of the world. Unnaturally squeeze a company at one place and natural economic principals offset the move in a different place.

When I was first starting to work as an intern at a major U.S. industrial company, I was shocked that I received a reprimand from the employer for moving my computer monitor five feet across my desk.  Apparently the union had a rule that 3 people were needed to move the monitor and it would take them an entire afternoon – idling my time while they were paid for wasting their own time. While well meaning, we all know that these types of policies stifle the natural functioning of the economy and natural cost-saving instincts of businesses just to protect specific classes of workers whose skills may be obsolete, and will ultimately devolve like fourth generation union rules of the 1970s and ‘80s into a baroque and Byzantine set of intricately pointless burdens on common sense and efficient practice.

Which brings us to the specifics of de Blasio’s plan. Of course, being a self-proclaimed“severely progressive” Democrat, de Blasio has proposed an entirely new and expensive arm of the government to, in his words, “create a permitting process for any company seeking to increase automation that would displace workers.” And the new agency would condition approval of those plans “…on protecting workers; if their jobs are eliminated through automation” and the company would be required to “offer their workers new jobs with equal pay, or a severance package in line with their tenure at the company.” So at least he understands that a severance package might be necessary, and that not all workers replaced by automation can be retrained for jobs in the same company.

Adding significant costs onto the act of improving efficiency essentially turns a company into the nanny for its employees, making a private enterprise responsible for its employees’ long-term welfare.  France has a similar system and the general inability to terminate employees means that companies run lean and don’t hire people unless they are essential, and workers are disincentivized to secure a different job which clogs the economy from productive movement of labor and capital.  But at least they get 5 months of vacation each year.

To make matters worse, de Blasio doubles down on this concept by proposing to close tax advantages for equipment investment and depreciation, discouraging companies from taking steps that our public policy has correctly encouraged since deep into the last century. AND, Bill de Blasio would

“institute a “robot tax” on large companies that eliminate jobs through increased automation and fail to provide adequate replacement jobs. They’d be required to pay five years of payroll taxes up front for each employee eliminated. That revenue would go right into a new generation of labor-intensive, high-employment infrastructure projects and new jobs in areas such as health care and green energy that would provide new employment. Displaced workers would be guaranteed new jobs created in these fields at comparable salaries.”

In other words, slam the breaks on the economy, punish businesses for trying to survive in a post-industrial technological age and drive manufacturing overseas.  Just what the workers need. It seems we can achieve the end goal by simply investing a reasonable amount in national infrastructure and providing those jobs without otherwise clamping down on U.S. companies investing in efficiency.

So my answer is “A: Good Politics.” But bad policy.  Maybe some of de Blasio’s competitors will take this initiative and find a better way to improve a society moving rapidly toward automation of nearly everything.  de Blasio slams Andrew Yang’s proposal for a basic income for all Americans, but that might be a positive way to deal with a post-work order, rather than, to paraphrase William F. Buckley, standing athwart technological progress and yelling “Stop!”