The political upheaval seen in Britain and the United States — and to a lesser extent in other countries including Australia — is a result of damaging impacts of globalisation on people’s lives, according to an Oxford professor who has spent decades watching the evolution of the world’s economy.
Ian Goldin is professor of globalisation and development at Oxford, and runs the Oxford Martin Programme on Technological and Economic Change. He’s also a former executive at the World Bank.
Goldin equates the technology-driven disruption seen around the world to Europe’s Renaissance period, but notes that era “ended in tears”, with the rise of anti-intellectualism and authoritarian exercises like the Spanish Inquisition.
He is visiting Sydney and joined us for a special edition of our Devils and Details economics podcast to discuss the wave of political and technological change that is sweeping the globe, and offers some sobering insights on how the current trends in artificial intelligence and machine learning are likely to affect nations and workforces.
He believes the world is on the brink of a “premature de-industrialization” which will challenge conventional notions of how growth in the global economy will be supported by emerging economies.
“We’ll have many, many people in middle-income countries like China, like India, like The Philippines, I think, finding that this assumption [that moving from agriculture to manufacturing to services as a] development path is no longer there. This will be a production system that is determined by the price of capital, not the price of labour. And in that capital is much cheaper in the advanced economies than emerging economies, so it will be cheaper to instal robots and to have machine intelligence in the advanced economies than it will be in emerging economies.”
He also says that the anger in regional areas beyond the world’s major cities is based on real gaps in living standards. He says (emphasis added):
… it’s not simply that people are feeling psychologically left out. They are being left out. And if you look at things like life expectancy, which really matters, the life expectancy of people in many towns in the Midwest today for white American males – not Hispanics – is lower than their parents, which is quite extraordinary. And their rates of unemployment of higher, and their prospects of getting a job are lower than their parents.
So, when people are angry with the system, they have good reason to be angry. Basically, their lives are pretty miserable. There’s some really interesting data coming out on how their life expectancy has been damaged by all of this, what are call the “Diseases of despair”: Alcoholism, suicide, drug addiction, murder, crime. These are more prevalent than they used to be. And so when people say, “Globalisation hasn’t done anything for me; it’s ruined my life,” I think they’re telling the truth. And when they say that, “This is something which is benefiting the elites in the coastal cities, but not us,” that’s real. And you look at the inequality data; you see it. It’s rising in all countries.
And the more that countries globalise, the higher the rates of inequality, and that’s because the returns to being skilled, to being able to be in the right place at the right time, in the cities, to be able to change jobs, the returns to flexibility, the returns to be able to adjust are greater when societies change more rapidly. But people also get left behind more quickly when things change more quickly, and it’s that we need to grapple with as societies.
Unless we can manage that, I think we’ll see the pushback that we’re seeing, this rising tide against globalisation. That would be a tragedy, because it would not only slow down the prospects of growth and development, but also of dealing with the big problems, like climate change, like pandemics, like cyber attacks. All of these things require more cooperation and more understanding of what other countries are doing and how we’re going to work together, not a withdrawal from this international system.
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