Robert Reich in NZ #futureofworkNZ – future of work

Robert Reich will be known to many readers of this blog as the author of “Inequality for All“. That documentary came out in 2013 and while it focusses on the U.S story it examines the implications of widening inequality in a way that is cogent and relevant to many countries including New Zealand.

The Labour Party of NZ this week had a conference called the Future of Work held in Auckland over the past two days. Robert was a keynote speaker and his comments and insights are extremely worthwhile. I watched some of the event on a live stream – parts of which have been archived now.

He starts off by noting that what happens in the U.S sets trends around the world and that inequality is growing.

He focussed on what he called 3 major factors ( or forces for change) which combine to influence and shape the political environment around the world. Here are some of my notes. At some point there will be a transcript but that is not ready yet.

1. Globalisation – trade is part of that but it is (now) much more about direct investment. Global corporations investing around the world. TPP is an investment agreement. The impact of TPP will be to make it more difficult for democracies to protect health, safety and environmental quality of life around the world. And to protect housing stick from wealthy foreigners. That will all be “compromised in the name of international investment.” See my post on TPP from last year.

2. The rate of technology displacement has outpaced the ability of education systems to adapt. The rate of technological displacement from jobs is rising. The service based jobs which remain are not well paid. In this section he also argued in favour of vocational technical education. Life long learning will become more important and very necessary.

3. Changes in capital markets. Unfriendly takeovers that changed the purpose of the corporation away from corporate social responsibility. After the 1980’s the shareholders interests became the dominant ideology to the exclusion of all else. When payrolls are 70% of your costs this drives management to push those costs down by reducing pay, outsourcing and generally reducing the quality of employees work in favour of independent contractors. On demand workers.

The Uber example. He made the point that Uber’s advantage comes not from the platform advantage but because if Uber was the employer; then employer rules would apply and a huge part of their work risks (and costs) have been shifted onto their employees. They pretend those employees are independent contractors.

Reich says “look at the power structure – look at who is calling the shots“… All of the risks are being shifted to the employees.

What does all this mean in terms of trends.

Reich says we are heading towards a spot auction market with no predictability around earnings. That is not going to work for those of us with bills to pay. We are heading towards a world with no job security.

The unspoken risk is that we heading towards a world where technology can provide all kinds of wonderful things but we won’t be able to afford them. Which is a paradox and and opportunity at the same time. He name checked the Henry Ford story about how paying his staff well enough so that they could buy Fords was an important contribution at the time.

He mentioned a visit from the head of a very large tech company who was concerned at those trend lines. What happens when jobs disappear who will buy the products.

About market design – how do we re-circulate the money? That led on to mention of a “guaranteed minimum income” (or Universal Basic Income – UBI) which he quite rightly noted spooks people right now but is a policy direction that governments have to look at in the next 10-20 years.

My Analysis
The three global factors that Reich talks about are all very much present in New Zealand. Historically we have had an egalitarian with strong ideas about fairness for all. That egalitarian culture is under concerted attack from the 3 forces.

The current PM has gone on record to say that a UBI is “barking mad”. Ironically in my view John Key is the best leader the Labour Party has never had. His support for the Labour Party “working for Families” allowances and tax credits is definitely a form of UBI even though he doesn’t recognise the policy intent.

It was a Labour Party policy not a National Party one and a policy that allowed National to grab the centre vote and win control of government in NZ. Update: 27 March Bernard Hickey: Key Fickle on Minimum Wages which includes superannuation in the UBI calculation.

What Reich doesn’t mention about Uber is that ultimately they don’t want any drivers at all. The Uber of the future is heading towards self driven cars.

If I was giving the Reich address I would have added a fourth factor and that would be the absolute destruction of the fourth estate as a force for public analysis and debate. The local newspaper in Auckland is the NZHerald.

Their home page is dominated by click bait from such untrustworthy sources as the Daily Mail, Reddit and Buzzfeed. It is not news – it is populist meme culture auto collated by content bots.

Bernard Hickey mades this point extremely well on twitter a few days ago. He tweeted this comment

“The sooner NZME & Fairfax NZ face reality and call off their online-ad-funded-free-site suicide missions the better.”

The link there The media’s five revolutions (and counting) is a truly frightening piece about the devolution of the media. It deserves a separate post – over here ; but for now the key point is that the media, by and large does not hold politicians to account because it has been sucked into a race to the bottom which is driven by clicks and a dead business model.

There are a few obvious exceptions and Matt Nippert’s series on multinational tax rorts has to be one of the best media stories of the present time but out rated by stories on kittens and tv trivia. That no one can joint the dots between out of control corporate greed and TPP is unbelievable.

Stories like the Pfizer* one on tax inversion
How Pfizer has shifted U.S. profits overseas for years need to receive more urgent attention from public leaders everywhere. Reich did mention Pfizer during question time. They had $US50b in cash stashed offshore like many other U.S based companies who manipulate tax rules in their favour. Those are the companies who will benefit the most from TTP or TTIP.

*Update: 10th April – “new Treasury Department rules have effectively thwarted Pfizer’s attempt to evade its U.S. tax obligations by using its proposed merger with Allergan to do a tax inversion

Reich did make a couple of comments later on during question time about the U.S presidential nomination races which indirectly reflected on some of this. He also argued very much in favour of tertiary education as a public good rather than a private benefit.

At around 2:12 on the video Reich talks about meeting with conservative voters in red states (conservative republican states.) He met many people who said they are trying to decide between Trump and Sanders – because.

The true contest is between establishment and anti establishment not between Republican and Democrats.

Voters are so disappointed by the establishment that they are voting for Trump or Bernie Sanders in very large numbers. Voters are extremely concerned at the “rigging of the political and economic system in favour of the wealthy”. It has changed the debate in the U.S and is becoming a rerun of the Occupy – 99% protests.

The future of work is an extremely important topic that needs to be debated and worked through by all of us.

Personal Disclosure: I worked directly for David Lange back in the 80’s (before he became leader of Labour) as a law student at the time and since then I’ve voted for Labour and much more recently the Greens.

Here are a few tweets that capture the flavour of Robert’s talk at the time.

The clip below starts from when Reich got to the stage. From around 1:04. I recognised some of the jokes from previous video clips. ( the embed function seems to have been removed. It should start at 1hr 4 mins – which is when Reich is introduced – use slider to cue if needed.

Earlier related posts on this blog which explore some of these themes are:

BTW this is tweet from Tanvi Gautam is unrelated to the local event but also very worthwhile.