The Future, This Week 24 February 2017

Introduction: The Future, This Week. Sydney Business Insights. Do we introduce ourselves? I'm Sandra Peter. I'm Kai Riemer. Once a week we're going to get together and talk about the business news of the week. There's a whole lot I can talk about. OK. Let's do this. 

Sandra: Today we look at why Bill Gates and others think that robots that steal your jobs should pay taxes, how the world has changed over the last hundred years, and why batteries aren't boring. 

Sandra: I'm Sandra Peter. I'm the director of Sydney Business Insights.

Kai: I'm Kai Riemer. I'm professor here at the Business School. I'm also the leader of the Digital Disruption Research Group.

Sandra: And we've decided that every week we're going to get together and discuss the most interesting the most challenging the most disappointing news of the week. 

Kai: The most ridiculous maybe and we're calling this The Future, This Week. So Sandra what happened in the future this week. 

Sandra: So Bill Gates and a few others think that robots that steal our jobs should pay taxes and given that artificial intelligence and robotics are about to disrupt so many industries and displace hundreds of thousands of workers, Bill Gates and quite a few European lawmakers think that these robots should now pay income tax. 

Kai: Yeah he says if a robot comes in to do the same thing, you'd think that we'd tax the robot at a similar level. Right. So if someone loses their job and the robot comes in they should pay tax instead. I guess that's a great idea from the point of view of governments who want to have a continuous income tax stream but it raises so many questions right Sandra? 

Sandra: Yes. For me the first question would be around the assumptions that he is making that these robots will indeed displace this many workers and this is an assumption that these robots will destroy jobs rather than make people change jobs so in the same article, the same interview, he makes the argument that a lot these people who are displaced could now be working in health care or child care or aged care or nursing or any of the jobs where you need high human touch. 

Kai: Yeah. Well so the assumption that we actually have fewer jobs once the robots come in - so that can be challenged. What I find even more staggering is that he seems to assume that you know someone leaves their desk and next day a robot rolls in and sits in their place. Well that I find it hard to believe. Most of what we're talking about is work that will be done by algorithms or by machines. So it would be very hard to pinpoint that there's a one to one relationship because isn't the whole idea that an algorithm would be able to do the work of many people and you know have we not learned from the past that technology rarely ever just mechanises a task that existed before but allows us to do a whole slew of new things right. So how will we ever be able to say you know who's going to pay tax there. So it's not like we are displacing five people and we get five robots off the shelf who are sitting in their place. So this will be much more messy than that so I can't really see this as a practical idea. I think there's some real problem there that he points to but it seems to me awfully, oh what's the word, a polite way of saying this a little bit... 

Sandra: Flawed? 

Kai: Yes very good. 

Sandra: Flawed. I think it's also the assumption that this is the first time that this has ever happened. I mean in the Industrial Revolution we had the same thing. It wasn't what we would perceive these days as robots, but it was machines, software then came along and replaced a lot of jobs. And again we are not taxing. Maybe we should tax Microsoft Office for doing a lot of calculations that we used to do, that people used to do, by hand. 

Kai: Yes really practical. Also we're doing quite the opposite right. So we have for a long time we made it tax deductible to buy machinery to displace workers, right, so we're not actually...and maybe he's pointing to this that there's a problem there with the system. It's a little bit curious that it comes up now that it might hit a particular part of the working force. But I have a much more practical question to ask. Why do we pay taxes? I think we pay taxes because we need to pay for shared infrastructure like roads and swimming pools and libraries right. So my question is will robots use those infrastructure? And if not why should they pay taxes? Why should you know...the robot would probably say hey I'm not going to the swimming pool why should I pay for your damn swimming pool right?

Sandra: Now I think just in case this airs later on and our robot overlords are listening. They are perfectly entitled to use our swimming pools should they want to.

Kai: So you're referring to the point that once they develop consciousness we might not want to tax them because they might not like this.

Sandra: I just want to be on the safe side in case that happens. I think there's also this assumption of you know we want to put robots in so that we get increased productivity or increased efficiency. But then we want to tax that efficiency making it less efficient to get the robots in or to get automation in in the first place.

Kai: So I think that depends on who you ask right. I think this discussion is a little bit of a distraction. I think it's good to point to the social problems and the social fall out that this supposed next industrial revolution might create. But I think we have you know we're missing the point if we're starting to tax robots as if they were people. I think there's a tendency to anthropomorphise machines as robots and to treat them as human like. But I think it's a little bit flawed as you said to assume that there's a like for like replacement of workers with robots and that we could ever figure out how to practically tax them.

Sandra: I think even engaging with Gates' premise let's say we don't anthropomorphise them but then we do try to tax the fact that they have been introduced. Who are we getting to pay this tax if it's not the robot themselves? Is it the owner of the robot? Is it the operator of the robot? When and how do we tax them at what point do we tax them forever or for their life span? So time horizon, speed of replacement, there are so many problems with this idea and regardless of how you...

Kai: I agree and it also misses the fact that income tax is not the only tax right. So there's other ways of recovering this from the producers of machines from you know new jobs and software development but also from potentially you know corporate tax that might come from revenues that are generated by the kind of works that we do with algorithms. I think the whole idea that machines will replace humans is missing the point anyway. I think we need to talk about how machines, algorithms can be useful in helping us do new things in the world rather than looking backwards and say OK this is what the world is like. Now the robots are coming. What are they going to take away from us? I think it's not the forward looking conversation that we should be having about this.

Sandra: Maybe we should give companies tax breaks for putting robots in rather than tax them for having them.

Kai: I'm not sure you'll be popular with this but I'm sure there'll be there will be more news in the coming weeks about robots and algorithms and I think this is not the last time this will pop up but it was just a good opportunity to have a chat about this because the proposal is so...it has got picked up in the news a fair bit. Maybe precisely because it's a bit of an outrageous claim and maybe that was the idea in the first place to have this conversation.

Sandra: Unfortunately I think the conversation that it sparked was very much on the side of let's entertain this idea and see. 

Kai: It is quite staggering how many people picked up on the ideas and started ways of how to tax robots. But hey you know it's a conversation to be had and you know we're having it right now. Anyway I think this is not the only thing that happened in the future this week. There's been an article by Singularity hub. It's probably not the most widely read magazine but they did what we all often do, they look back right. They look back into the past and say oh you know looking back 100 years how has the world changed. Right now I think there's an important topic because if we want to talk about the future there's nothing better to learn about you know predicting the future than looking back to the past. So it's quite interesting to look at what they compare. So they looked at you know what would a burger have cost back then what were literacy rates what was travel times. Right it took so long to go from A to B to go from London to Australia took three and a half months. We can do this in 24 hours now you know it's slightly more comfortable than back then but it's certainly much faster. I think it's quite interesting in and by itself the things that they focused on. I don't think it was the top priority in 1917 how long it takes to go from London to Australia. So that tells you something like looking back at the average price of a car. I don't think that was top of mind for most people in 1917 what a car would cost because it was beyond the reach of most people and it wouldn't have occurred to you as an everyday spending item. So I think that tells you a little bit about what looking back at the past how this standpoint from today makes you look at the past in a certain way and it also tells you a little bit about what it means to look forward because if we put ourselves back in 1917 would anyone have believed if someone told a story from 2017 what the world would be like. 

Sandra: I think it's an excellent news story to start out with because this is basically the future not this week but this century. Looking back we think were some of the most important things and as you mentioned some of the items that are here the average price of a car in 1979 I'm not even sure most people knew they could buy a car at that point. Looking at things in hindsight and thinking oh how we could ever think this would be an issue. And foresight, we have I think very little of that and probably what springs to mind for me and it's one of my favourite examples that I talk about when we make predictions about the future is the great horse manure crisis of 1894. So back in 1894 and London and New York and to some extent Sydney as well maybe a few years later around the beginning of the century.

Kai: When you say horse manure what we really mean is horse shit right?

Sandra: Yes. This is a story about shit. The streets of London and New York were literally knee deep in shit. There were thousands and thousands of horses pretty much every economic activity and social activity relied on horses for transport. Each one of these horses was creating between 10 and 15 kilograms of this shit every day. 

Kai: Yes that's right.

Sandra: Every day. So this actually became at a crisis level. They couldn't clean it up fast enough they couldn't travel around it. Horses were dying in the streets and were left to rot there.

Kai: So if we turned this into a great student project and we set the brilliant young minds towards solving the big horse manure crisis that faces us in 1879 was it 18..? 1894. What would the likely solutions be and what would we think the future looks like in 20 years. You know with population growth and even more horses on the streets right. So what would the solutions be like? 

Sandra: So this is what actually the great plans of that they did as well and the solution was to build houses that had a lot of stairs and the entrance was almost at the first floor level so that you could get out of your carriage and go up the stairs.

Kai: That's what they looked like don't they in New York?

Sandra: Yes they do. Most of their houses from the beginning of the century the end of the last century and the beginning of the 20th century in New York have the stairs and the entrance high up so that you would not have to walk through the.....

Kai: So architecture was literally influenced by shit.

Sandra: Yes sewage was influenced by shit the way that we developed sidewalks and the way we put the lighting in the street was influenced by shit.

Kai: And then how did we solve this crisis?

Sandra: Well we never did solve this crisis. In 1886 Carl Benz patented his first automobile and he began production of the first series exactly in 1894 at the peak of the great horse manure crisis. 

Kai: Yes and people didn't know it back then. But bad news for horses. 

Sandra: People didn't know shit.

Kai: And that's the point right. So in predicting the future those disruptions that really changed the world in hindsight quite significantly, they're very hard to predict or I should say impossible. So this is why when I'm called by a journalist and say can you know envision what the future of business would be like in 100 years even in 10 years. My point always is let's go back a hundred years. Let's go back 10 years right before the invention of the iPhone or iPad or any of those devices. And let's have a chat about what the people back then would have imagined the world to be like in 10 years. Right. So these things are utterly unpredictable. But it is good fun to talk about.

Sandra: And I think it's also important to think about this at every single level. We tend to only observe this with things like cars versus horses. But they're just as valuable at the grand scale because if people are asked to name the country that is the richest nation in the world and has the highest standard of living, the biggest military force, the most advanced educational system, the language that's spread around the globe, the country that is the centre of global finance or the centre of innovation and its currency is the standard in the world. Everyone today would say well it's probably still the US but the answer to that question can just as well be its Great Britain. If you're looking at the beginning of the century. And at that point the British Empire was the largest in the world. 

Kai: We might come to a very different answer there. Who knows?

Sandra: Who knows?

Kai: Well I have one more topic for us: batteries. Well there was an article just the other day it mentioned like every third sentence that really batteries are not a very sexy topic but kind of an important one and the thing with batteries is that we haven't really made progress. Not progress that keeps up with progress in the development of information technology for example where you know if we double the speed of the processing power every year every other year batteries certainly haven't kept up with that pace. So the performance of batteries hasn't kept up. But batteries are... they're important right but they're not front of mind because they generally don't really allow us to do all of these great new things. They're not the shiny things. They don't you know they're not like smartphones which allow us to connect in new ways and all of these things. They make things possible but kind of in the background. 

Sandra: Yes. And as Wired magazine says they kind of suck when you talk about it. 

Kai: No pun intended of course. 

Sandra: No pun intended. And so the conversation really was around the types of batteries that we have now. 

Kai: Yeah. And I think they're making advances not just in advancing the battery technology that we know today but actually thinking outside the box right. So really batteries are not these metal little things that store electricity it's really about storing energy in all kinds of creative ways. For example you produce a lot of solar energy during the day but then you want to have electricity at night. So who says that we need to use conventional batteries? Right. Why not just heat up certain materials like salts and capture energy in the form of heat that we can then release during the night to create a baseline power. That's something that scientists are working on which is actually not too far off from becoming mainstream reality. But my favourite example is one that is actually not a new one. Back in Europe, the Swiss have an ingenious idea. They buy electricity from Germans during the night when it's cheap and they pump up water up the mountains. And then during the day they released this water it streams down the mountain side and they generate electricity and sell it back to the Germans at double or three times the price. I think that's an ingenious battery. 

Sandra: How do the Germans feel about this though? 

Kai: Well I think the Germans are quite happy because it allows them to have a base load power without building more power stations so I think it's a pretty good win-win and it's a creative use of the landscape to actually creating a battery of a very different kind. 

Sandra: And I think this idea of what it takes to develop a battery or to store energy and release it at the right time will be a critical question if we think about Internet of Things if we think about connected devices a lot of the very interesting stories that we've seen the media rely on the fact that we have already solved the battery problem which we haven't yet. One of my favourite examples of ingenious ways to solve the battery problem is again the Swiss. And I think this is the week that we're going to get to the Swiss.

Kai: Yeah don't you love the Swiss in their ingenious way of dealing with technology. 

Sandra: Mechanical watch engineers who have worked with cardiologists and have developed a new way of capture of using the mechanism that you have in mechanical watches using them in pacemakers. Pacemakers suffer from the problem that you had once a year or once every two years is very costly and actually quite dangerous to change the batteries in the pacemakers using the mechanical devices that you have in watches to actually use the heartbeat to power the battery in pacemakers and never have to them change again. 

Kai: So they're getting rid of the battery altogether by inventing something in its step that's quite good.

Sandra: Quite ingenious. Got to love the Swiss. 

Kai: OK. Well I think that's all we've got time for today. See you next week for another The Future This Week. 

Sandra: See you next week. 

Kai: If you have any ideas for you know good ingenious ridiculous or otherwise interesting and relevant stories about the future just send them to us. See you next week.

Outro: This was The Future, This Week brought to you by Sydney Business Insights and the Digital Disruption Research Group. You can subscribe to this podcast on Soundcloud, iTunes or wherever you get your podcasts. You can follow us online, on Twitter and on Flipboard. If you have any news you want to discuss please send them to sbi@sydney.edu.au.