We live in a time of fear.
Workers everywhere fear lost jobs and wages. Citizens fear surging waves of strangers who change the face and voice of the country they know. They fear terrorists and criminals who kill for reasons no one can understand. They fear that their governments cannot or will not protect them.
Then the call for help is answered. Donald Trump tells an excited crowd that he will take them (back) to the promised land. Champions of Brexit tell voters they must reclaim control of Britain’s borders and reject laws and rules forced on them by Europeans. Populists in Italy, Germany, Poland and Sweden promise to protect patriots from outsiders. All these leaders tell citizens they’ve been cheated of their chance to succeed, and that the media is in on it. They promise to comfort the afflicted, afflict the comfortable and burn down the houses of power.
Populists have a gift for drawing boundaries between people. They offer a compelling vision of separation, of “us versus them,” of the worthy citizen fighting for his rights against the entitled or grasping thief. Depending on the country and the moment, “them” may mean rich people or poor people, foreigners, or religious, racial or ethnic minorities. It can mean supporters of a rival political party or people who live in other provinces. It can mean politicians, bankers or journalists.
We can attack the populists, mock them or dismiss them, but they know something important about the people they’re speaking to. They understand that many people believe that the cross-border flow of people, money, goods and services has stripped them of their chance to get ahead. The refusal of the political, business and media elites to recognize the downside of cross-border interdependence confirms the suspicions of those losing their sense of security and their living standards that elected leaders, and many non-elected ones as well, don’t care what happens to them.
There’s a larger crisis coming. Many of the storms creating political turmoil in the United States and Europe – including job-killing technological change in the workplace and a sense of grievance at income inequality – are now crossing into the developing world, where governments and institutions are even less prepared than their Western counterparts. Developing countries are especially vulnerable, because their institutions and social safety nets aren’t as strong as in wealthier countries. They face an even bigger gap between rich and poor. They are less prepared for the downsides of technological change.
How will emerging-world governments respond? The weakest will fall away, leaving more failed states, such as Syria and Somalia. Some governments will build walls – actual and virtual – that separate people from one another and government from citizens. Those still hoping to build or simply maintain open societies will adapt to survive, attempting to rewrite social contracts to create new ways to meet the needs of citizens in a changing world.
HOW AUTOMATION THREATENS A VIRTUOUS CYCLE
An important factor that’s likely to exacerbate inequality in both wealthy countries and poorer ones: next-generation automation. In a study published in 2016 for the National Bureau of Economic Research, and written by Daron Acemoglu of the Massachusetts Institute of Technology and Pascual Restrepo of Boston University, the authors predicted that the net effect of automation and other technological changes in the American work place would ultimately prove positive as they create new kinds of jobs, which also pay higher wages, to replace existing lower-wage work.
But in 2017, they revised their views based on more detailed research. They found that industrial robots were responsible for as many as 670,000 lost manufacturing jobs between 1990 and 2007; that this number was likely to rise as the number of robots quadruples in coming years; and that other sectors weren’t creating enough jobs to offset the losses in manufacturing. Therefore, even if overall employment and wages recover, it will take a long time for affected communities to recover.
The increasing automation of the work place, advances in machine learning and the broad introduction into the economy of new forms of artificial intelligence will ensure that the new jobs that do get created will require ever higher levels of education and training. People who can pay will get the education, and those with the attendant knowledge and skill sets will have opportunities to secure jobs that pay well. Those who lack these things face a dark future.
Nowhere will it be darker than in emerging countries. In November, 2016, the United Nations warned that while automation and innovations in machine learning threaten 47 per cent of all existing jobs in the United States, the number is 65 per cent in Nigeria, with a population of 186 million people; 69 per cent in India, home to more than 1.3 billion; and 77 per cent in China, a country of 1.4 billion.
Successful emerging-market countries follow a pattern of development. They begin poor, with large numbers of people living in the countryside. The young begin moving toward cities, where they hope to earn higher wages for themselves and their families. They arrive ready to work, but are in no position to command high wages. This sudden surge of inexpensive labour attracts the attention of manufacturers who own factories in countries where workers are much more highly paid. New factories appear, and word of new jobs makes its way to rural areas, generating an even bigger wave of poor young people headed for the big city. This story has played out countless times in China, India and across Southeast Asia, Latin America and sub-Saharan Africa.
The next stage of development begins as these once-poor workers demand higher wages and better working and living conditions. Consumer classes appear in countries that have never had them. Higher pay for these workers means the country is no longer as attractive for foreign companies, but some countries – those with capable, reform-minded governments – can adapt. New technologies – purchased, invented or stolen – allow the companies operating within them to get more productivity from each worker, who then produces more sophisticated goods and services, with higher value added, that continue to push wages upward. A sea change that began with low-cost manufacturing ends with the birth of a true middle class.
But the virtuous cycle that depends on favourable demographics, labour mobility, economic growth and political reform is beginning to break down. The introduction of robotics and AI across the globe, even on a limited scale, will sharply reduce the low-wage advantage that helps poor countries and poor people become middle-income countries and middle-class consumers.
Where do all those energetic, ambitious young people go? The youth bulge we see in many developing countries can move from economic advantage to political threat as their path out of poverty is blocked. If they never join the active work force, they will never have access to the education and training needed to earn 21st-century jobs, and they justifiably fear that their children will fare no better. Those able to keep their jobs may discover they must work for lower pay and fewer (if any) benefits.
If automation slashes jobs and reduces wages in developing countries, it may become impossible for workers to gain the education needed to succeed in a world where advanced AI generates a much bigger share of the economic growth. Lower growth means less government revenue – and less money to spend for education and services, for infrastructure and for all the other things that middle classes expect from government. The virtuous cycle becomes a vicious cycle.
In 2018, it’s still too soon to know for certain whether the tech revolution will kill more jobs than it creates. But as in the rich countries, we can be sure that the new jobs will be very different from the old ones, that education and training for these new forms of work will be fundamentally different as well and that large numbers of workers won’t make the leap from the old order of things to the new. It’s an open question where those who lose from this next wave of change will declare their political allegiance – or whether they will declare war on the entire system.
WALLS EVERYWHERE, NOT LEAST ACROSS THE WEB
As governments try to “safeguard” the lives and livelihoods of citizens – and to protect themselves against public anger when their safeguards don’t work – we can expect both old and new forms of economic protectionism. Here, Mr. Trump has led the way with the announcement of steep new tariffs on China. They’re more bark than bite at this point. That said, Beijing has already begun to bark back.
But in most countries, protectionism is no less real, even if it’s less obvious to the naked eye. Many governments have sharply increased the number of non-tariff barriers, such as import quotas and stricter product-safety standards. They provide subsidies for domestic industries. To protect their affluence and advantages, wealthier countries treat science and technology as “strategic” economic sectors, restricting the export of new intellectual property.
Anxiety over immigration, as well, will create new kinds of walls and new technologies to buttress them. We can expect more infrared sensors and cameras to update border controls, as well as wider use of biometric tools that allow governments to admit more of “us” and fewer of “them,” however each of those is defined in each country.
The newest forms of walls are on the rise in cyberspace. During the Arab Spring, Hosni Mubarak in Egypt, Muammar Gadhafi in Libya, Bashar al-Assad in Syria and other leaders disconnected the internet in their countries. To avoid major unrest during politically sensitive events, India has shut down the internet so often that the issue has become the focus of a protest movement. In Turkey, President Recep Tayyip Erdogan’s government has sometimes blocked Facebook, Twitter and other social-media tools that amplify the words of his critics.
Iran announced plans several years ago to create a “Halal internet,” which Reporters Without Borders describes as a system in which “content is controlled and all users are identified, an intranet that can be completely disconnected from the World Wide Web when the authorities so decide.” In August, 2016, Iran announced the opening of the National Information Network, a move accompanied by the shutdown of many news agencies and websites – and the arrest of more than 100 internet users.
In Russia, the state maintains a registry of banned web pages. It also forces media outlets to formally register with authorities and demands that companies store data within Russia’s borders. In November, 2017, the government ordered foreign media to register as “foreign agents.” It is also finding new ways to manage politically sensitive content. Many Russians were never able to read about massive anti-corruption protests in March, 2017, at least not while they were happening, because Yandex News, the country’s largest news aggregator, uses an algorithm that prioritizes stories according to the Russian government’s attitude toward the media outlets that publish them.
To create walls intended to safeguard “cybersovereignty,” China’s leaders use the Great Firewall, which blocks access to tens of thousands of websites the government doesn’t want citizens to see. The Golden Shield is an online surveillance system that uses keywords and other tools to shut down attempts to access politically sensitive content. More recently, China has rolled out the Great Cannon, which can alter content accessed online and attack websites that the state considers dangerous to China’s security. It does so by employing a “dedicated denial-of-service” attack that can overwhelm servers to knock them offline.
Now, China’s government is experimenting with a social-credit system.” Imagine a credit report that reveals whether you’ve ever committed a felony, have traffic violations, been fired from a job, signed a petition, been photographed at a protest or written something on the internet that had to be censored. A good score can get you a raise, a better apartment, the right to travel, a generous pension as well as access to approved dating websites, better stores and better doctors.
The plan is to go nationwide with an early version of this system by 2020. We can’t know yet how intrusive the information requests will be, or who all the plan will affect. Nor should we underestimate the technical challenge in building it. But the potential for intrusion into 1.4 billion personal lives is unprecedented.
TIME TO TRY OUT A NEW SOCIAL CONTRACT
Other governments – those with the will, the means and the inclination – will experiment with new ways to meet the needs of the public, by rewriting the social contract that binds citizens and the state. Inequality will be a prime target of these changes. This means rethinking assumptions about the purpose and content of education – and how it’s provided. It means preparing people to compete in a fast-changing economy and providing for their basic needs when they can’t make the leap. It means changes in the way governments collect taxes. This project requires that government work with, or clear space for, others to play a role.
Opportunity begins with education. Multiple studies have shown that access to early education is a critical component in battling income inequality, and solutions can’t come from government alone. Canadian Tariq Fancy is founder of the Rumie Initiative, an ambitious non-profit project designed to give children in developing countries a chance to learn. Rumie provides children who live in areas with limited or no access to education, including refugee camps, with tablets preloaded with textbooks, interactive lessons and other teaching tools. An article he wrote, called From Books to Bytes: A Learning Revolution for the Poor, explains how the smart use of crowdsourcing technology can help people in the Arctic Circle use their computers to help Syrian refugees living in camps in Turkey get an education.
But education must extend far beyond youth. The increasing speed of technological change ensures that workers must learn new skills quickly and often, and that they will be asked to shift jobs, and even industries, much more often. By providing access, or incentivizing others to provide access, to training and retraining on an historically unprecedented scale, governments can help citizens make the most of the opportunities that change creates.
Given the increasing speed of automation in the workplace, and other trends, some governments will experiment with incentives for participation in the “gig economy,” one in which individuals accept a life of freelance work because they can’t find (or sometimes don’t want) full-time work from a single employer. The need has become urgent. In Europe, half of all jobs created between 2010 and 2016 were based on temporary contracts. As people working in gig-economy jobs – as Uber or Lyft drivers, or part-time workers in any field – struggle to build families, buy homes, educate their children, find affordable health insurance, care for aging parents and save for their own futures, governments, citizens and companies must find ways to help them succeed and provide a strong social safety net.
If we believe the gig economy will be the future of work for large numbers of people, governments must find ways to help people accept this kind of work. Some unemployed people refuse to look for part-time work because the salaries on offer are less generous than the benefits they must give up in order to take these jobs. So they remain on the dole and pay few or no taxes. Their services are provided almost entirely by the state.
What if the state provides these people with enough income to survive, and assures them that the cheques will keep coming even if they take a job? In that way, people can afford to take part-time or freelance work to contribute to society, generate economic growth, pay taxes and provide for themselves and others. Or maybe the income allows them to care for their sick children or aging parents, work that clearly has value for society.
Will a person who receives guaranteed income still look for work? Knowing that benefits won’t be lost might help, but until variations of this are tested, adapted and tested again, we won’t know whether it can work on a large scale.
All these solutions, large and small, can only be implemented in societies where government is willing and able to experiment, institutions are capable of executing these plans, and citizens believe they share basic values with their fellow citizens, even if it’s only a common patriotism.
A TIME OF WIDENING DIVIDES
When we focus our criticism on Donald Trump’s many shortcomings or the hypocrisies of the world’s fast-expanding roster of populists, we ignore the underlying emergencies that lifted them onto the global stage. We make it easier for governments to build walls and harder to help those who need help most.
We live in a time of widening divides – between wealthy countries and poor ones, and between rich and poor within each country. But history reveals that people give their best when their best is required. Human beings use their natural ingenuity to create the tools they need to survive. In this case, survival requires that we invent new ways to live together.