I’ve just returned from taking part in the 2nd Irish Sailing and Mountaineering Adventure Challenge (ISAMAC), a sailing race from Kinsale to Dingle which also includes scaling three mighty mountains.
During some of the 92 hours that we took to finish the race, we had some interesting discussions. One of the gentlemen on board, a very accomplished guy who has sailed across the Pacific, has a pilot’s licence and can tie a one-handed bowline knot, had recently been made redundant from his job. He was pleased to hear during the race that he had been offered another one, but he was quite emphatic that we are already in the first throes of an AI revolution. Jim-Lad, as we shall call him, told us that lawyers of his acquaintance were already obliged to train the machines that will soon take their jobs. Each week, the lawyers are required to sift through contracts line by line, teaching the AI what is acceptable and clear, and what is ambiguous, unclear and unacceptable. In the future, the AIs will scan the contracts for themselves and will immediately be able to tell which clauses require discussion and which are standard and require no further attention. Hence, those requiring the services of the law will be able to avoid the ruinous charges of the today’s lawyerly class (and likely of accountants and some doctors’ services as well).
Or will they? After all, the services of an AI will not be free. Even today there are financial services ‘robots’ (such as Nutmeg) that are fed with all of the information on products, interest rates and inflation and which can tell you, according to your appetite for risk, where you should put your money. These algorithm-based AIs are cheaper than expert humans, especially since they can be sold to multiple users at the same time, but they are not free. Indeed, as time passes and they build up a track record, the best AIs may command a premium to those with less stellar performance. At that point in time, we can expect the owner-operators of those AIs to increase their prices to reflect the additional value added by their services. Such a scenario will eventually apply to the cement industry, when providers of effective AI services for efficiently-operating your cement plant will tend to increase their prices, from the ‘starter-prices’ currently being levied, to a ‘you-can’t do-without-us’ level of price and profit.
However, as we also discussed on board our chartered yacht as we were tossed about by storms that swept over us, on our way to the next mountain, the operators of the AIs will not have it all their own way. All technology has tended to become commoditised. The early pocket calculators were considered near-miraculous (remember the early Texas Instruments ‘pocket’ calculators? They are now museum pieces1), but they are now plastic-wrapped and can sometimes be found in the checkout-aisle, next to the bubblegum and candy-bars. The same with iPads: their near-magical properties have now become commonplace, and the same goes for smart-phones. I recently saw one phone described as ‘ultra-smart,’ making all other just ‘smart’ phones look a bit ‘dim’ in comparison. The same will eventually apply to AIs - they will become commoditised and the fat profit margins that their creators will be able to enjoy on them will eventually dissipate.
This led us on to the next topic - one that another of our crew, a corporate tax lawyer we can call ‘Peg-leg,’ was well placed to comment upon - of how robots and AIs will be taxed in the future, once they have usurped ‘human’ jobs. Given that income tax on employees will wink out of existence when the robots take our jobs, governments will need to try to find new tax revenues (and cost cuts). It is likely that there will be increased taxes on capital, and on company turnover, whether that turnover is profitable or not. This would certainly be a wake-up call for any ‘zombie’ companies out there that are just going through the motions, for example to just profit from free emissions allocations or to pay off long-term debts without making real profits. Low-debt companies will certainly be in a strong position in the future digitalised economies. However, ‘Peg-leg’ mentioned that there will still be ways of avoiding taxes, even on capital and/or turnover, and that companies such as his own would be ready and waiting to help corporate entities to lower their tax bills.
In terms of government cost cuts, ‘Jim-Lad’ was convinced that government-provided pensions will not only be cut in value, but that they will eventually be eliminated. With fewer workers paying into government coffers (possibly enjoying only four-, three- or two-day working weeks), and the number of older people not only increasing but also seeking expensive medical and care interventions, the sums just won’t add up. A radical transition to more leisure, generally lower spending power and probably lower CO2-intensive lifestyles is coming over the horizon. That would suit us in our low-carbon human-powered ISAMAC race (apart from the flights). By the way, we won the race!
