Robots: not actually all that

Maybe our tin-headed overlords will just become another set of tools on the job.

The hopes and fears prompted by workplace automation has been a favourite topic of ours. Will we end up living in a utopia where no-one has to work? Will all the gains go to the rich? What are the implications for the policy arguments of today?

But at their heart, all these questions rely on one key assumption: that the automation of the early to mid 21st century will be different from that of any period preceding it (except maybe the peak of the industrial revolution). Crucially, the change has to be quicker and wider than previous waves. Quicker, because otherwise people displaced from old jobs will just be absorbed into new ones smoothly and painlessly; and wider, because the hopes and fears rest on automation spreading far beyond simple mechanical tasks, into areas we consider innately human. Journalists, lawyers, doctors and researchers have all seen their jobs replaced by machines doing the same thing.

A wonderful feature in this week's Economist, however, suggests that the "don't panic" crowd have more going for them than they are given credit for. It turns out, just as with every other transformative technology, that robots are far more useful working with people than working instead of them:

Last December, in a company first, German carmaker BMW introduced a slow-moving collaborative robot in its factory in Spartanburg, South Carolina, which co-operates with a human worker to insulate and water-seal vehicle doors. The robot spreads out and glues down material that is held in place by the human worker’s more agile fingers. When this is done without the help of a robot, workers must be rotated off this uncomfortable task after just an hour or two to prevent elbow strain. Today four collaborative robots work in the facility, and more are coming, in Spartanburg and elsewhere…

No matter how flexible, easy to program and safe they are, collaborative workers may not be welcomed by human workers to begin with. The experience of Alumotion, an Italian distributor of UR’s robots, is illustrative. Workers fear being replaced by robots, says co-owner Fabio Facchinetti, so his salespeople carry demonstration units in unmarked cases and initially only meet a potential client’s senior management behind closed doors. But rather than firing workers, Alumotion’s clients often end up adding shifts because production costs drop.

Collaborative robots do have some obvious problems to overcome, and some of the lines in the feature are moderately chilling; the fact that the International Organisation for Standardisation is in the process of publishing "pain-threshold standards" reminds us that when robots go wrong, they can go very wrong. Similarly, when the Economist quotes advice that "humanoid robots should generally be no larger than a six-year-old, a size most adults reckon they could overpower if necessary", the "reckon" is telling. If that robot decides to take you on, size can be misleading.

Maybe robots won't transform the world, put us all out of work, or build out utopias. Maybe they'll just be another set of tools which make us ever more effective at doing our jobs, slowly increasing living standards further and further for the same amount of labour. That would be nice.

Co-operation. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation