In A.S. Byatt’s 2009 masterpiece ‘The Children’s Book’, the reader has one horrible advantage over the predominantly young characters in the novel. As they gradually grow and mature through the closing years of the 19th century and the Edwardian decade that followed, the carefree youngsters are surrounded by art and privilege, several poignantly attending the first night of J.M. Barrie’s Peter Pan in the West End in December 1904. Only we, the readers, know that they and their world are inexorably heading for disaster with the events of the summer of 1914.
That novel has often come to mind when reading the pronouncements of economists and commentators in the years since the world extricated itself from the 2008 crash and climbed back on the growth track. Debt-to-GDP ratios, balanced budgets, the creative destruction of the capitalist economy, supply and demand chasing each other – the wonders of the freer economy. Yes, there is always that nagging problem of the Gini Coefficient and gaping inequality, but as Thomas Pickety points out in ‘Capital and Ideology’, every generation has its unique justification for that, ours being that everyone is better off than in the past.
Meanwhile, as distinct from A.S. Byatt’s protagonists, we are all aware of the upheavals awaiting us or our children in the not-too-distant future courtesy of Artificial Intelligence. But, much of the economic world just seems to close its eyes and carry on. That is nothing new. Indeed, as Nasim Nicholas Taleb pointed out in ‘The Black Swan’, a few days before the outbreak of World War 1 bond markets showed no indication of the impending conflict.
Thanks to Coronavirus, the world has been forced to pause and reflect. As governments come to terms with the situation, they look to emergency solutions. The British have just abandoned fiscal orthodoxy, effectively jacking up the debt- to- GDP ratio and abandoning any thought of a balanced budget in the short term. An inflated budget for the National Health Service is life and death – but beyond that the government will be picking up sick pay of employees and offering easier access to welfare payments for the self-employed and those in the gig economy. Property taxes will be suspended for affected small businesses, they will be given more time to pay their income taxes, while small cash payments will be available. Were the situation to continue indefinitely (Heaven forbid) the natural corollary would be for taxes to be raised on individuals who could afford to pay, and large companies. If the demand by which the economy thrives is to be approximately maintained, individuals laid off or unable to find work need purchasing power, while competitive companies need the ability to survive. It doesn’t take a stretch of the imagination to compare the current situation with at least one scenario of what the AI world has in store for us.
Is it too much to expect that governments use this crisis to think ahead to the disruption that AI is most likely to cause to employment and, hence, national economies? The answer is probably ‘Yes’. On the other hand, as The Economist pointed out a few weeks ago, following a major London Underground strike in 2014 that involved partial closures of stretches of line, it was estimated that some 5% of commuters stuck to their newfound routes, leading to greater economic savings to Transport for London than the costs of the disruption.
Neverland is, after all, entirely fictitious.