Bernard Hickey | 24 Jan 2015
This week’s report on The Future of Jobs for the Davos economic talkfest in Switzerland has refocused attention on whether the wave of technology change sweeping around the globe will actually make most people richer.
The unsettling conclusion from the report is that a fourth Industrial Revolution will destroy millions of white- and blue-collar jobs over the next four years alone, but create far fewer jobs. It will also put downward pressure on wages for many of the remaining lower-skilled workers who have the jobs robots can’t do – yet.
It poses deep questions about how we educate, train and retrain our young and old, how we tax the winners who take all, and how we support those who can’t get jobs in this brave new world.
It also forced me to look more into the history of an insult.
I have been called a “Luddite” at various times over the past couple of decades by my geekier friends who saw me as a late adopter. No one is quite sure who the Luddite movement was named after, but legend has it that a young unemployed weaver from the north of England called Ned Ludd smashed a mechanical knitting machine in 1779 in a fit of rage after being whipped for idleness.
Artisans and skilled craftsmen adopted the legend of “Captain Ludd” to inspire them in their protests against the rise of mechanisation from 1811 to 1817. They organised themselves into groups to break into factories to smash the machines that had cost them their jobs. As the industrial revolution progressed over the following 200 years, hundreds of millions of new jobs were created in areas that no one had thought possible. Some of those artisans changed jobs and their children, once educated, went into new skilled jobs that made them richer.
Some never recovered and sank into poverty and the first industrial revolution’s progress towards prosperity for most was no smooth process. Eventually the industrialised world settled on a mixed economy model, where the state provided education and other social safety nets to make sure the sons and daughters of those weavers were trained and healthy and able to participate in (and vote on) the techno-future.
The debate over whether new technology is a net creator or destroyer of wealth and jobs appeared to be over.
Fast forward to 2016 and now the question is being asked again: does all this technological change make us richer? It is not about whether to try to stop the progress, but about how to adjust our education systems, training regimes, tax and benefit systems.
The Future of Jobs report concluded that this Fourth Industrial Revolution would destroy 7.1 million jobs by 2020 and only create 2.1 million jobs. The report’s authors recommend new training and education regimes, but stop short of looking at tax rates or benefits.
These will be the debates of our age. How do we include all our citizens in this brave new world and ensure they have a decent wage to support themselves or that they are provided for from taxes paid by the hyper-wealthy? The other report to dominate the debate at Davos was from Oxfam, which showed the world’s richest 62 people have the same amount of wealth as the world’s poorest 50 per cent. The Luddites may be as wrong in 2016 as they were in 1811, but this new winner-takes-all global economy could do with a few tweaks.