Why we need to embrace chaos

Inequality and robots are making a lot of headlines. Various academics, Oxfam, the IMF and the World Economic Forum at Davos have all warned that growing inequality, the inexorable rise of the top 1 per cent, represents a danger to social cohesion. In addition, robots, we are told, are going to take all of our jobs.

The two themes are related: one reason why the incomes of the 1 per cent are accelerating away from the rest of us is that a hyper-educated elite get to do all the interesting and remunerated work; others are stuck in what LSE professor David Graeber calls "bullshit" jobs, with stagnant or falling earnings.

The first industrial revolution was mechanical, the second, today, is digital. Just as the first revolution eliminated many jobs, today's technological change will do away with work that requires knowledge of facts and/or consists of repetitive tasks, even sophisticated ones. Doctors, lawyers and accountants beware: a study by Oxford University academics reckons that 47 per cent of current jobs could be automated. Dentists, therapists of various kinds and gym instructors should be okay, say researchers at MIT. They say economists are toast

On this line of thinking, most of our education system is also defunct

– stuffing mere facts into impressionable minds. We need to teach students how to work with facts – machines will have the knowledge and know the facts, but will lack the creative skills necessary for high-level interpretation or innovative manipulation. Somewhat lamely, many commentators conclude that we need to teach our children how to be computer programmers. This seems to ignore the fact that coding is a simple task that machines are learning to perform . . . as are two billion or so Asians and eastern Europeans. Suggestions about other skills that might prove useful are thin on the ground.

That we are unsure about the future should come as no surprise. Things are as uncertain today as they have been before. Many of today’s jobs were unimaginable a few years ago; we have never been able to predict what happens next, where the jobs of tomorrow are likely to come from.

What we do know is that new ways of doing things will crop up. Maybe futurologists are right about change, that it may be about to accelerate. The socio-economic implications of this are drawn from experience. If enough people get to share in the benefits of technological change, the implied expansion – or relative stability – of middle class incomes makes for a happy society. On the other hand, if the 1 per cent grab everything, we could see social upheaval or revolution.

All of those clichés about innovation and creativity are actually spot on. Such processes involve taking risks. But we are now a risk-averse country. We need to embrace chaos, we need more risk-takers. None of this is amenable to centralised direction or control. Another cliché, equally valid, is that we need more entrepreneurs. We need lots of different people and firms, trying new things.

Failure is inevitable – and, in a sense, desirable. We need to grow our tolerance of failure: one national newspaper recently added up all the losing investments made by Enterprise Ireland over the last decade to come up with a cheap and misleading story: begrudgery at its most damaging.

Our education system needs to adapt, it has to foster elusive creative skills, the entrepreneurial mindset. How to set up a business should be part of the curriculum; so should learning about the process (stigma free) of entering and leaving bankruptcy. Technology will transform education in terms of what we require from it and also how we teach. We can continue to watch others take a lead or start to participate.

If the machines really do take over, countries such as the US will have to look again at income redistribution; the owners of the machines will have to pay more taxes of one kind or another. Minimum wages are rising in the US and UK, the first of many likely responses to growing inequality. With a marginal tax rate of 55 per cent on entrepreneurial incomes and a plethora of high taxes on capital, we have less to worry about when it comes to redistributing the spoils of our own plutocracy (in any event, most are offshore). Our priorities should lie in creating more home- grown profits.

That’s the way we get jobs and taxes.