On a day in 1764, the mood in the parliament of Great Britain was especially tense. The overnight vandalisms were becoming fiercer and more numerous. Interestingly, the attention hadn’t yet shifted to the culprits. The parliament jostled with the question of why just the machines?
As the chimneys started dotting the landscape of London ,machines started replacing men in the fields, a people’s revolution was underway to resist the change. The overnight events ensued heated political debate with many predicting apocalyptic mayhem due to mass unemployment and hunger.
For more than two centuries, the technological revolution has led to greater prosperity. Each leap brought gains in productivity, expanded the scope of things that could be produced and consumed, giving rise to more jobs of different types, each requiring different skill sets and levels of expertise. The progeny of doomsayers underwent a slow extinction.
Not long ago, China was a third world country, much like the rest of Asia with the notable exception of Japan. It is a large country and had the world’s biggest labor force by a big margin. Enticed by “free” labor, unlimited land supply, and “no nonsense” environmental protection laws the western factories sent a demarche to China. The arrangement was especially harmonious. The Chinese communists wanted factories, western companies looked to make a profit and their governments were happy to export their smoke and soot to far off places envisioning utopia in their land.
The miracles of technology were about to be revealed again. The western replication had commenced, helped by an influx of technological giants. The Chinese economy saw massive gains in productivity at a more rapid pace than the rest of the world. The chimneys dotted the Chinese landscape but this time there were no debates and no night time mischiefs. Helped by a suitable economic environment, China achieved in two decades what others did in two centuries.
The harmonious marriage of three (I repeat three) pulled millions out of poverty, pulled many more out of subsistence farming to sprawling cities where chinese dreams could unleash, beginning with cheap labor, land, and lax laws that facilitated the western exodus. China had turned into a dreamland where only the selected few had the might to own something new and shiny.
The levers of technology also moved our country (India). Although ,muted in comparison to the Chinese run. Still, we had a good walk, leaving a lot less to boast about but our political leaders had a good shout anyway.
In a nutshell, the onslaught of the technological revolution brought in prosperity, fair to say, increased continental equality. Expanded employment opportunities and gave millions a chance at life that wouldn’t have been possible without it.
Alright. What’s our problem and what is the doomsday fuss all about?
We are, once again at the cusp of the technological storm. The wave of new technologies such as 5G, Artificial intelligence, blockchain, IoT, 3D printing is maturing and beginning to take hold in our lives. All these technologies offer to minimize or eliminate the need for human effort.
First of all some facts, China is set to spend $25.5 billion in 2020 alone to erect its web of INVISIBLE HIGHWAYS, a network of 5G towers to provide a pathway for the smooth transfer of petabytes of data that will soon be generated and used. 10% of Korea is 5G networked. Most of Europe and America already have some 5G penetration and are beginning to expand. But we are yet to auction the 5G spectrum. USA, China, Japan, and the European Union are the biggest spenders in research in general and AI in particular. Despite all the chest-thumping about our software prowess, we haven’t been able to go beyond servicing existing software. Relativity Space, an American rocket manufacturing startup aims to build 95% of its rocket through 3D printing, needing just one person in all to produce its parts. For comparison, the process usually requires thousands of individuals to spread over different firms each specializing in different parts. This trend of automation is set to be rapid. With rising labor costs threatening to erode the competitiveness of Chinese manufacturing, the government aims to automate the third of Chinese manufacturing by 2025. Likewise, with the abundance of required technical talent, managerial expertise and a conducive political environment many technological and manufacturing giants are planning a home return. Cheap labor, the very instrument of China’s rise and our competitiveness, seems to be losing its sheen. So are our chances of replicating the Chinese miracle.
The strengths of traditional technologies have been such that they have worked in favor of countries that can offer cheap labor and land since in the globalized world demand is unconstrained by the geography of production. The skill set required by new technical adaptations has generally been benign and easy to transfer and learn with most not requiring the knowledge of advanced subjects. This time it’s different. The new wave will create specialized white-collar jobs requiring advanced training. To develop an IoT application the firms will require expertise in computer science, mathematics, statistics, and allied subjects. The application in most instances will aim to eliminate the use of humans. For example, self-driving cars will render millions of drivers useless. Similarly, automation in manufacturing will eliminate millions of machining jobs. Watson, an AI-powered supercomputer sometimes does better in arguing cases in court than experienced lawyers do.
The trends in the next tech revolution present stark realities for us. With cheap labor and lax laws no longer likely to remain a competitive advantage, the norms of many decades stand upended. To thrive in the new world, we require an educated population, a robust and high quality physical and digital infrastructure, and the capacity to make heavy investments. All three ingredients seem to be missing. With the competitive advantage in the production of goods and services shifting back to the rich world, we need a new model of growth, a model of growth where we can establish an advantage and prosper.
So, what are the solutions that are generally given?
If you will ever happen to run through a search result on the web asking for the solutions, then you are likely to come with suggestions like increasing the quality of education, increasing enrollment, investing in research, and capability building. The authors will seem to present these solutions as a panacea to all the problems, as if these solutions are unknown to the countries in the situation. If technology and research are the primary factors for competitiveness in a production process, then developed nations will always have an edge over developing countries. Given that they are armed with many years of experience, well off the population, and a sizable government budget, they will always exercise advantage over a new entrant. The process of acquiring expertise in any technology is a long one and requires the building of an ecosystem that can innovate and sustain it.
So, let’s turn our attention back to 18th century England. The agitating peasants had a clear choice. To them, it was clear that the machines are demons out there to take their lives and their destruction was the only best response. For us, no such option exists. Having seen the marvels of technical progress and soon likely enough to face its wrath, we are both enticed and repulsed by it. On one side, the technology offers endless opportunities for progress, at the same time a reality check offers a clear warning for impending doomsday. As we wait on the sidelines, we must be mindful of the opportunities that exist. We are at the beginning and not all adaptations will happen instantly, at the same time we must keep vigil on the dynamics of change which may offer unseen opportunities. Until then we must continue to prepare ourselves for the new reality and thrive on the existing opportunities for as long as they last.
Vipul Gautam is a Student at Ashoka University, pursuing his masters in Economics.