The annual showing at the Davos, Switzerland World Economic Forum is always a spectacle. It is usually due to the who’s-who list of billionaires, celebrities and world leaders in a beautiful location. In 2019, it also featured stupid ideas led by the “progressive” views of worker protection and entitlement.
A Progressive View of Automation
One of the important themes discussed at the WEF was the consideration of the “Future of Work.” The Forum put forward three alternative views of how a world of digitization and automation could develop in the future. The considerations revolved around efficiencies, how to improve the value to customers, and how technology will require a new set of skills as it transforms the job market. The discussion sought to consider the future dynamics of competing aims of shareholders, workers and customers.
While progressives tout the concept of “fairness,” their actual concern is about a particular type of “equality,” which is the equal distribution of money. The status of “wealth inequality” and “income inequality” drives the proposed progressive agenda and thereby hijacks the definition of “fairness” to be one that reaches the conclusion of wealth and income equality.
In such an orientation, the holders of mass wealth – typically owning large stakes in companies – are afforded no leniency. If the future of automation brings an accelerated and inflamed debate of competing interests between shareholders, employees and consumers, the discussion is concluded as soon as it was introduced.
The progressive rag, The New York Times had an article written about the WEF called “The Hidden Automation Agenda of the Davos Elite.” As the title suggests, the article reviewed how the “elite” – those evil one-percenters – were hatching nefarious plans to destroy the workers of the world. The corporate titans at Davos were marketing how automation was going to bring all sorts of new inventions to the world with lower prices for consumers, however, the real goal was to replace people with robots, and hoard all of the economic gains for themselves.
“Automating work is a choice, of course, one made harder by the demands of shareholders, but it is still a choice. And even if some degree of unemployment caused by automation is inevitable, these executives can choose how the gains from automation and A.I. are distributed, and whether to give the excess profits they reap as a result to workers, or hoard it for themselves and their shareholders.
“The choices made by the Davos elite — and the pressure applied on them to act in workers’ interests rather than their own — will determine whether A.I. is used as a tool for increasing productivity or for inflicting pain.”
The progressive argument is plain: the elite / executives / shareholders will hoard the gains from digitization and automation, unless pressure (or new progressive tax and corporate laws) force the benefits to be distributed to workers.
A Progressive View of Employee/ Shareholder Protections
The progressive view of wealth is that it is essentially “immoral” as the recent progressive political star Alexandria Ocasio-Cortez said in an interview. It is a view shared by many progressives who view capitalism as evil at its core.
The notion that someone could build and own a business and become ridiculously wealthy – say Howard Schultz who created Starbucks – is inherently wrong according to the far left-wing. The hard work and risks which Schultz took along the way to create a company that employed tens of thousands of people and produced a product that millions of people enjoy is somehow negated by the tremendous wealth he personally amassed. According to progressives, his earnings and wealth should have been stripped along the way and passed on to the people who made and served the coffee. The salary of the workers was clearly inappropriate compensation if the company became so profitable. For progressives, the redundant task of making venti lattes all day which requires limited skills, no education and no risk – a task that will soon be automated – is not the essence of the discussion. The objection is that the person who owned the company made thousands of times more than the average worker, a conclusion, they believe that is immoral.
This progressive logic takes a bizarre turn when employees don’t help create value but destroy it.
Consider the electric utility PG&E which is being sued for causing the forest fires that killed people and destroyed billions of dollars in property value. Employees at the company are accused of committing a series of terrible errors, including not cutting the power in dry areas suffering from high winds (when the power lines came down from the wind, the electric sparks ignited the dry brush).
Who “paid” for the worker errors? Were thousands of employees fired? Was the employee pension fund stripped? Were line workers lined up before commissions and denounced in the media? No.
The executives and shareholders took the heat. Shareholders – many “women and orphans” who own utility stocks for the “safe” dividends – paid the price. On November 8, 2018, PGE stock closed at $47.80. One week later, on November 15 it stood at $17.74.
Did progressives cry fowl that the economic “windfall” wasn’t being shared equitably? Did they suggest that the workers who caused all of the death and destruction should bear the costs? No. They passed legislation meant to protect customers from rate hikes. Democrat State Senator Bill Dodd said his bill was needed because “without it, ratepayers will be left holding the bag and communities will needlessly suffer.”
The Democratic Senator from California, Kamala Harris, who just announced her intention to run for president hasn’t said a word about the large corporate bankruptcy in her state. Any ideas why she would remain mum on such an enormous story? (Please don’t suggest it’s her ties to Democrats aligned with PG&E).
As the Democratic party lurches leftward, it is swaying deeper and deeper into an economic policy based on wealth redistribution over capitalism. The progressives have determined – and are demanding – that a worker whose job can be automated should not only not be fired, but be entitled to profit-sharing.
Progressives are seeking to dramatically revamp the notion of private ownership. They are advancing an economic system where we will collect fixed payouts as determined by federal officials. Workers, one and all. Equal and protected.
Private ownership will only be at the nod of the government. Strict limits will be imposed on compensation, capping salaries and demanding a set number of worker representatives sit on the board of directors. “Private” enterprise will be managed aggressively by politicians through heavy regulation and taxes, not by market forces.
The progressive aim is to strip people of the equity of their efforts and replace the return on their passions with interest payments as bondholders of the state. An “equitable” economy liberated and succored by a large government.
Such a system stymies equity investment and risk taking. It shrinks the economy and hurts innovation. No matter.
US President Ronald Reagan once said “this country is too great for small dreams.” For progressives, the great dream is a small country.
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