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Government policies in the age of artificial intelligence

Government policies in the age of artificial intelligence

By Agrata Gupta

Artificial Intelligence (AI) is now dawning upon us. It can help us better understand economic data and in return make apropos policies on the economy. In India, we need to choose the correct labour policies, focus on the growth of our manufacturing sector and at the same time remain competitive in the global market.

Leading nations’ scramble for power

China is ascending rapidly to match the United States’ AI policies and score a vantage point. According to the Wuzhen Institute’s December 2016 survey, US has the highest number of patents in the world at 26,891 and China is next with 15,745 patents. As part of its February plan, China will now set up national engineering labs for deep learning across the country. During 1965 to 2005, the US steel industry lost 75% of its workforce (around 400,000 jobs) due to technological advancement. However, its shipment did not decline and the total factor productivity (TFP) still grew by 38%.

In China, Changing Precision Technology replaced 590 workers with robots. It now has 60 workers who monitor the machines. Since then, it produces 21,000 pieces per month from 8000 earlier and the product defects have fallen from 25% to 5%. The wages are increasing in China, as robotics become cheaper. However, manufacturing is not improving in countries with cheaper labour like Vietnam and Bangladesh.

Where India stands in the race

India, to stay competitive, has to join this global wave. Manufacturing is 15% of the GDP in India. In order to reach 20-25%, automation has to be an inevitable part of the growth process. However, India will have to perform better. For short term solutions, taxes, electricity, power and transportation need to be cheaper. The labour has to be adequately trained. These, however, do not compensate for the loss of jobs. In the long term, the government should give the displaced workers a ‘survival stipend.

This should be given to only two categories of people- those that have been displaced and are trying to reenter the industry and those who have or are acquiring skills to fit in. In order to achieve this, there will have to be easy and cheap access to quality schools and colleges. The government needs to set the minimum requirements but will have to broadly decide on the skills that fall under this category. The selection of people for survival stipend, too, will be done by robots and not humans. The government will have to engage more people in jobs that cannot be automated.

The government has a major role to play

The long term solution to jobs lost is not taxing robots. This defeats the purpose of robots being cheaper. However, if we do get more robots and have large scale job displacements, it will eventually hamper consumption. This will hurt the automated businesses. Once automation is used in businesses, we will have to grow a self-regulatory attitude amongst them. If the government plays a regulatory role in the decision making of a company’s profits, it will lose business to other countries.

So, it will have to establish industry focused hubs where similar companies can discuss solutions to stimulate demand in the economy. The government needs to be a supervisor in the process so that companies don’t misuse the freedom or shift to a different market. In order to protect wrecking of the economy, the government will have to establish strict exit policies for well-established businesses.  

Digital evolution has shown an exponential growth. It is not bounded by machine intelligence. AI is a powerful technique—a machine can now learn from itself. It is already changing the landscape of many industries and thus, we need to adapt to intelligent machines and build an inclusive economy. 


Featured Image Source: Visual Hunt

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