Opinions on Automation: Looking at the IPPR’s Economics Prize
19th August 2019
How is the working world changing and what ideas do people have to adapt to it? Should digital companies face greater tax burdens? Bertie Wnek’s submission to the IPPR’s Economics Prize answers these questions and more in a paper that won the Under-25’s prize.
What is the paper about?
Wnek covers many Economic concepts and points of discussion in his overall radical argument. He explains how taxation of large digital firms and the use of this revenue (which could be over £2bn with a tax rate of 5%) to fund the UK’s move to a 4 day working week could help solve many of the UK’s economic and social issues, including the ‘productivity gap’ (you can read about the productivity gap here).
Looking at the UK’s economy
http://https://www.bbc.co.uk/news/business-48928782His paper is split into four sections. First, he assesses the current state of the UK’s economy. Topics covered include the diminishing power of trade unions and workers in the labour market, productivity, and over-reliance on household consumption.
Wnek then turns to digitalisation. Digitalisation covers both the use of online data as well as physical technological developments; he explores its impact in terms of the power that these companies have and continue to gain. The market value of the five largest digitally orientated companies – Amazon, Apple, Alphabet, Facebook, and Microsoft – is greater than the GDP of 90% of the world’s countries (read more about the pros and cons of tech companies).
DIGITAL COMPANIES AND OUR CHANGING WORLD
The power that these companies hold has several knock on effects, as digital companies are advantaged by the fact that they can access markets without the same tax burdens. Moreover, they can scale to block new market entrants, hindering innovation. The concepts of social and economic justice are also threatened, according to Wnek, when there is less government revenue (you can read more about economic justice, prosperity, and the IPPR’s 2017 paper here). His solution to this is a tax which is then reinvested in funding a reduced working week.
ADVOCATING A FOUR DAY WEEK
The third section of Wnek’s proposal covers the benefits of a reduced working week, which he again links to many key economic concepts and metrics. Mental health affects productivity and output, costing an estimated £33-£42bn each year (Deloitte).Wnek links this to overwork. A four-day week not only provides opportunities for the workforce to be healthier through exercise, but could benefit the environment through lower levels of travel.
The fourth section of the proposal tackles challenges which might arise from such a transition. A four day week requires some big administrative changes, and may feel like a big risk to take. However, he uses the adoption of the living wage to show how attitudinal shifts can be speedily taken up (read a Parliamentary Briefing Paper on the NLW here).
LOOKING AT THE LONG TERM
Wnek ends with a case for making private data public, in order that it can be used for economic, social, and political benefit. ‘There are crucial decisions to be made about how to prevent an exacerbation of existing inequalities of wealth and power'.
The paper asks for significant changes to be made in taxation and working hours policy. While Wnek argues that the UK should see no change in its output as a result of the four day week, business leaders may be less comfortable with the idea. Taxing digital companies is also difficult politically and administratively.
Big data and digitalisation have both seen extreme growth in the last 20 years (read more here), and Wnek’s proposal is one response to these changes in the makeup of our global economy. There is also the question of whether economic models are still useful given their rise (read more here).