Everything I have read so far about in the robots are taking jobs debate - some suggesting it is really serious and other suggesting it will be alright are both forgetting one thing.
Society hangs together on the pillars of trust and the power of the state to use force. If people start to BELIEVE their futures are in danger then watch out.
It is not just about what is a rational expectation of the future but the emotional understanding of body mind and soul as well that is important in this situation. Governments need to rapidly get their heads around this SINGLE fact about the digital future. Determining whether new technologies will create jobs is almost impossible for a government to analyse and foretell - it is an act of hope or faith.
But, governments can begin to develop policies that engage society in building trust that they will help navigate their economies through what changes occur. This is big picture but it is the work of innovation policy.
Tuesday, June 30, 2015
The Robots and Jobs debate
This is quite a good discussion about jobs and technology. Its long but worth watching.
Wednesday, June 24, 2015
Taxing the digital economy: more complex than imagined
One of the most challenging areas of regulating the new digital economy is in the area of tax.
Digital economy firms are some of the most adept at paying virtually nothing in tax to anybody.
Surprisingly this didn't get a mention in the 'innovation policy' statement that was commented on earlier in this blog.
OECD criticises tech firms over tax
Technology companies need to stop "extremely aggressive" tax planning, the man charged with reforming global tax rules has told the BBC.
He says these "push the boundaries of what is legal".
Pascal Saint-Amans, who runs the OECD's Centre for Tax Policy, said that new standards would require companies to pay more tax in the countries where they sold goods or created revenues.
He also said companies should not use tax havens to shelter their profits.
Mr Saint-Amans' intervention comes after years of complicated negotiations and endless summits on reforming the toxic issue of where large multi-national companies pay their taxes.
He revealed that there should be international agreement on new tax laws ready for the G20 summit of global leaders in November. The implementation phase should then mean the rules are in place "well before" 2020. And, according to Mr Saint-Amans, that should mean technology companies such as Facebook, Apple and Google paying more tax to the UK Treasury. They will also be required to pay more tax in a number of other countries and publish, country-by-country, how much they pay.
The OECD is doing great work at coordinating new tax rules, but I don't envy their task.
of the Digital Economy there are lots of interesting comments.
[base erosion and profit shifting (BEPS)]
Because the digital economy is increasingly becoming the economy itself, it would be difficult, if not impossible, to ring-fence the digital economy from the rest of the economy for tax purposes. Attempting to isolate the digital economy as a separate sector would inevitably require arbitrary lines to be drawn between what is digital and what is not. As a result, the tax challenges and BEPS concerns raised by the digital economy are better identified and addressed by analysing existing structures adopted by multinational enterprises (MNEs) together with new business models and by focusing on the key features of the digital economy and determining which of those features raise or exacerbate tax challenges or BEPS concerns. Although many digital economy business models have parallels in traditional business, modern advances in ICT have made it possible to conduct many types of business at substantially greater scale and over longer distances than was previously possible. These include several varieties of e-commerce,
online payment services, app stores, online advertising, cloud computing, participative networked platforms, and high-speed trading.
Work on the actions of the BEPS Action Plan will take these issues into account to ensure that the proposed solutions fully address BEPS in the digital economy. These include:
- Ensuring that core activities cannot inappropriately benefit from the exception from permanent establishment (PE) status, and that artificial arrangements relating to sales of goods and services cannot be used to avoid PE status
- The importance of intangibles, the use of data, and the spread of global value chains, and their impact on transfer pricing
- The possible need to adapt CFC rules to the digital economy: Although CFC rules vary significantly from jurisdiction to jurisdiction, income from digital products and services provided remotely is frequently not subject to current taxation under CFC rules
- Addressing opportunities for tax planning by businesses engaged in VAT-exempt activities
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This is a complex subject but the report is perhaps more informative about the complexities of the digital economy that the usual stuff that gets written about from an innovation perspective.
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More info is available in here but it is 'a bit' technical.
(PREVENT THE ARTIFICIAL AVOIDANCE OF PE STATUS)
http://www.oecd.org/tax/treaties/revised-discussion-draft-beps-action-7-pe-status.pdf
Tax challenges of the digital economy
http://www.oecd-ilibrary.org/taxation/addressing-the-tax-challenges-of-the-digital-economy_9789264218789-en
Wednesday, June 17, 2015
An UBER court ruling for Uber Inc
Court ruling goes against Uber - drivers are employees - at least in California.
http://uk.businessinsider.com/california-labor-commission-rules-uber-drivers-are-employees-2015-6?r=US
The California labor commission has ruled Uber drivers are employees, Reuters reports. The decision was made after a San Francisco driver, Barbara Ann Berwick, filed a claim against the company. The commission sided with her largely because it deemed Uber was "involved in every aspect of the operation."
It's potentially a huge blow to Uber's business model, at least in California......Let's keep in mind that this ruling is only in California. Uber, which was last valued at ~ $50 billion, has more than 1 million drivers world wide. While California is Uber's largest market, the company operates in 311 cities and 58 countries, so this is a small percentage of Uber's global business. If this ruling stays confined to a single state, Uber's problems will be much easier to overcome. Also, this ruling is far from official. This could all be tied up for years in court.
Both Uber and Lyft have been hit with lawsuits from drivers asking to be made official Uber employees. The companies insist their drivers should be independent contractors. By the way, this ruling isn't just a huge deal for Uber and Lyft. There have been a lot of "Uber for X" startups to follow in their wake: $1 billion startup Instacart, for example, has contract workers deliver groceries; $250 million startup Shyp has regular people mail things for customers. If these companies, which are referred to as the 1099 economy, can no longer have independent contract workers, all of their business models are shot.
Read more: http://uk.businessinsider.com/california-labor-commission-rules-uber-drivers-are-employees-2015-6?r=US#ixzz3dL6Y9yHt
Friday, June 12, 2015
OECD Ministerial on Innovation Policy - Gets it wrong
Sorry Andy (Wyckoff) but this latest document from the OECD just gets it wrong.
OECD INNOVATION STRATEGY 2015 AN AGENDA FOR POLICY ACTION
Meeting of the OECD Council at Ministerial Level Paris, 3-4 June 2015
I assume that member country Governments had a big say in this document.
a quick overview.
(p2) New sources of growth are urgently needed to help the world move to a stronger, more inclusive and sustainable growth path following the financial crisis. Innovation – which involves the creation and diffusion of new products, processes and methods – can be a critical part of the solution. While not a goal in itself, innovation provides the foundation for new businesses, new jobs and productivity growth and is thus an important driver of economic growth and development....
Governments play a key role in fostering a sound environment for innovation, in investing in the foundations for innovation, in helping overcome certain barriers to innovation, and in ensuring that innovation contributes to key goals of public policy. The OECD Innovation Strategy 2015 sets out a concrete agenda to strengthen innovation performance and put it to use for stronger, greener and more inclusive growth. The Strategy sets out 5 priorities for policy makers that together provide the basis for a comprehensive and action-oriented approach to innovation, much of which can also be applied in the context of fiscally constrained economies. These priorities are:
1. Strengthen investment in innovation and foster business dynamism
2. Invest in and shape an efficient system of knowledge creation and diffusion
3. Seize the benefits of the digital economy
4. Foster talent and skills and optimise their use
5. Improve the governance and implementation of policies for innovation
(p7) OECD analysis suggests that innovation thrives in an environment characterised by
the following features, all of which are explored in detail in the OECD Innovation Strategy 2015:
- A skilled workforce that can generate new ideas and technologies, bring them to the market implement them in the workplace, and that is able to adapt to technological and structural changes across society.
- A sound business environment that encourages investment in technology and in knowledge-based capital, that enables innovative firms to experiment with new ideas, technologies and business models, and that helps them to grow, increase their market share and reach scale.
- A strong and efficient system for knowledge creation and diffusion, that invests in the systematic pursuit of fundamental knowledge, and that diffuses this knowledge throughout society through a range of mechanisms, including human resources, technology transfer and the establishment of knowledge markets.
- Policies that encourage innovation and entrepreneurial activity. More specific innovation policies are often needed to tackle a range of barriers to innovation. Many of these actions include policies at the regional or local level. Moreover, well-informed, engaged and skilled consumers are increasingly important for innovation.
(p7ff)
- A strong focus on governance and implementation. The impact of policies for innovation depends heavily on their governance and implementation, including the trust in government action and the commitment to learn from experience. Evaluation of policies needs to be embedded into the process, and should not be an afterthought.
Priority 1: Strengthen investment in innovation and foster business dynamism ... Structural reforms in product, labour, and financial markets are important to get the most out of investment in KBC, by enabling resources – capital and labour – to flow to the most productive, often KBC-intensive, firms ...Priority 2: Invest in and shape an efficient system of knowledge creation and diffusion
Government plays a critical role in providing some of the foundations for innovation. New
OECD research shows that basic research, in particular, drives long-run productivity growth by enhancing
the mobility of economies to learn from innovations at the global frontier (OECD, 2015c). Public fundingis needed to address the inherent under-investment in basic research of private firms, linked to the largeknowledge spillovers of such research ...
Priority 3: Seize the benefits of the digital economy
Priority 4: Foster talent and skills and optimise their use
Education and training systems are core to innovation and productivity, including in realising the benefits of the next production revolution (OECD, 2015a). However, OECD assessments show that on
average, only one-third of all adults have the skills necessary for a technology-rich environment (i.e. levels2 or 3 in the OECD Survey of Adult Skills, see Figure 8). Many disciplines are relevant, as are broadercompetences such as creativity and critical thinking. A key principle should be the creation of anenvironment that enables individuals to choose and acquire appropriate skills and supports the optimal useof these skills at work
Priority 5: Improve the governance and implementation of policies for innovation
To be effective, innovation policies and the related governance system need to be adapted to the specific challenges faced by each country. Countries differ considerably in their basic conditions for innovation, such as the level of economic development, the structural make-up and trade specialisation of
the economy, as well geography. They also differ in their institutional characteristics and approaches topolicy, e.g. as regards the role of government and different private and public actors in the economy. As aresult, policy needs and policy agendas will differ across countries and specific challenges.
So lets summarise.
1. deregulate labour markets and financial markets etc to increase productivity.
2. invest in basic research
3. invest in broadband but watch the downsides of privacy, oh and "Promoting a culture of digital risk management across society" which is the least scary possible way of saying cybersecurity - which it happens is basically the No 2 reason for a lack of investment in the digital economy in Canada.
4. invest in education
5 improve governance and evaluation.
This is a doing nothing different strategy.
Nothing here about:
1. digital companies avoiding tax;
2. digital technologies and companies creating significant disruption to regulated industries from bitcoin to Uber and creating massive levels of precarious employment;
3. reforming market shaping policies such as carbon pricing, energy buying practices (micro-energy generation) etc;
4. massive technological change that is now changing industries - autonomous vehicles (the ones already operating), e-commerce delayering retail etc etc;
5. you can't create policy without measuring the right things and currently we we are getting further from that than ever.
The big challenges - meaningful job creation and sustainability and understanding the velocity of change - when to act and when to hold off.
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