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INTERVIEW: An Oxford professor on how robots will change work, politics, and the global economy

Professor Ian Goldin of Oxford University. Photo by Jeremy Sutton-Hibbert / Getty Images / File

Few people have followed the impact of globalisation and technology on the world economy over the past three decades as closely as Ian Goldin. Currently professor of globalisation and development at Oxford University, he was previously a World Bank vice president, and in the 1990s was an economic adviser to Nelson Mandela and CEO of the Development Bank of Southern Africa.

Goldin runs the Oxford Martin programme on technological and economic change, which brings together hundreds of academics and business people from around the world to share insights and inform policy formulation on the future of the global economy.

He has a sobering assessment of the shock technology is poised to unleash on the world, believing we are on the brink of a “premature de-industrialisation” that will rattle societies in developed and emerging nations, as huge amounts of industrial labour is “re-shored” to advanced economies with fully automated production systems. He says machine learning is a “total revolution” comparable to Europe’s Renaissance period which, he notes, “ended in tears”, with book-burning, the “hounding of intellectuals”, and religious war.

Here’s a quick summary of some of the key points Goldin makes in our interview, which you can read in full or listen to in podcast form below.

  • Machine learning and artificial intelligence will upend many aspects of established thinking on economics, from career paths and business models to investment markets and global trade;
  • A major risk is that there will be a “rapid widening of inequality” as large swathes of people find it difficult to get “decent jobs”;
  • On the rising anger seen in anti-globalisation politics, Goldin says people are not just feeling left out, but they are being left out – and it’s reflected in falling life expectancy and living standards in some places. “When people are angry with the system, they have good reason to be angry,” Goldin says. “Basically, their lives are pretty miserable.”
  • Goldin believes governments are stuck in a “pre-globalised age”, setting national policy independently, but insufficiently aware of the opportunities and risks of an ever-shrinking, ever-more-connected world, and
  • The risks from threats such as pandemics and cyber attacks that have only been enabled by discovery and progress are rising, but the challenges of dealing with them are not being met in policy. “When we connect, we become more interdependent and … more subject to contagion”, Goldin says.

Goldin is author of more than 20 books, including The Pursuit of Development and Age of Discovery – Navigating the Risks and Rewards of Our New Renaissance. The podcast is in the iTunes catalogue for our economics podcast, Devils and Details, or you can listen in right here:

Paul Colgan: You’ve spent your career looking at globalisation and how different patterns of migration and skills development are affecting national economies and the global economy. What do you think machine learning is going to do to the world?

Ian Goldin: Machine learning, I think, is a total revolution. This is not simply the Fourth Industrial Revolution, which implies it will be rather like the first, second, and third, and there will be a gradual move of people out of agriculture into new employment, etc. I think about this as really part of what I’m thinking about as the “New Renaissance,” or an age of discovery, dramatic in its content. And machine learning becomes more and more effective over time. These algorithms learn. And with that, there will be a growing range of things they can do.

And we will see, I think, the displacement of anything that’s routine and rules-based in employment that doesn’t require dexterity, so everything from, say, auto production or any manufacturing production, which is a production line type of system, but also things like call centres, translation services. There will be many back-office functions, the sorts of things that you do in banking or in law or in accountancy in back offices. I think these will all disappear very rapidly over the next 10, 15 years.

Paul Colgan: One of the questions about this is: that process of outsourcing some of those more routine tasks from back offices has been something that has helped profitability of companies in advanced economies, but also helped lift job skill levels in emerging economies. This is going back to The World Is Flat, Thomas Friedman’s book, that all of this stuff was increasingly done by – for us in Australia – Indonesia, The Philippines, and then for countries around the world in the likes of India, Pakistan. What do you think about the impacts now that that’s going to have? Will it be disruptive?

Ian Goldin: It’ll be extremely disruptive, and it really calls into question what we have as development models. The classic model of development is that societies go from being agricultural to manufacturing to services through taking on very routine-based tasks with relatively semi-skilled workers during most of this transition. I think that transition path is gone.

So, we’ll have premature de-industrialisation coming. We’ll have many, many people in middle-income countries like China, like India, like The Philippines, finding that this assumption that this will be the 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 install robots and to have machine intelligence in the advanced economies than it will be in emerging economies.

There will be a re-shoring of production to the advanced economies and of call centres and other machine processes. Of course, this won’t be a re-shoring which will be labour intensive; it will be capital intensive. So, it’s not going to create jobs. I see that one of the real downside risks associated with this is a rapid widening of inequality. Large swathes of people, I think, will find that it’s challenging to get decent jobs. There will be lots of jobs for unskilled and service people, things that don’t require much machinery.

Already in Australia, I think, there are more people employed in the fitness sector than there are engineers. And that sort of process will intensify. But within that, there will be increasing differentiation as well, because the supply of people going into those sectors will increase, and the number of people able to pay for these services is, I think, going to be the question. Who’s going to be the employed at high wages in these new economies? And that’s one of the great challenges I think we face, going forward, is: there’s always been disruption in labour markets, but the pace of disruption is accelerating, and I think also the de-skilling of many parts of the labour market.

Photo: Christopher Furlong/Getty Images (File)

Many, many things I don’t see machines doing for a very long time. I can’t see a machine cutting hair or doing massages or looking after elderly people or very young people for a long time. So, it’s not that there won’t be any jobs, and we’ll still go to great restaurants and there will be lots of things that people are valued for. But it will be creativity and things that machines can’t do. And in that process, there are dramatic implications for income distribution, and also for geographical location.

You mentioned Tom’s book. The world is not becoming more flat; it’s becoming much more mountainous. And there will be a heavy concentration of activities in certain places, particularly the dynamic cities. So, Sydney, I think, will thrive. Melbourne will thrive. But it’s the place left behind that don’t, and we see this dramatically in the UK. We see it dramatically in the US. Cities like New York, San Francisco, Chicago are doing very well, and of course voting for change.

It’s not that people are rejecting change when they vote for President Trump or when they vote for Brexit or vote for Marine Le Pen, or even Zuma in South Africa. People are basically saying, “We can’t change. We’re stuck. We’re left behind.” It’s not the dynamic urban centres that are voting for protectionism, nationalism, that are most against immigration, etc. It tends to be the rural areas and smaller towns. And that’s the big issue. That’s going to become more and more differentiated, because people can’t afford to go to the big, dynamic cities.

Paul Colgan: I’ve heard you say before in presentations, “Welcome to the slowest day of the rest of your life.” For somebody who has been watching this for decades now, does it surprise you, the speed at which this is gathering pace?

Ian Goldin: In some respects, but I’ve been arguing for a long time that innovation is accelerating. There’s a big debate out there. Many economists and many sceptics, like Peter Thiel and Garry Kasparov and Robert Gordon and others are writing books saying that innovation is slowing down. And I really believe that what we’re seeing coming out of the labs – and this is true of machine intelligence as well, we’re just seeing the tip of the iceberg at the moment – is just driven by an explosion of creativity and genius around the world.

And that’s because of globalisation. It’s because we move from a world of only about 400 million educated, connected people in the 1980s to a world now of over 6 billion literate people, of which over 5 billion are connected. And in that process, there’s just an eruption of a random distribution of exceptional talent. But much more significant than that, this connectivity leads to sparks, and diverse teams working together. So, whether it’s on new cures for cancer, or whether it’s on machine intelligence, or whether it’s on the latest hip-hop dances, the pace of innovation is accelerating.

Paul Colgan: It’s interesting that the question for cities and these environments are supposed to be competitive at unlocking that creativity, the platform that any city provides for allowing those skills and ideas to connect with each other and unlock new ideas, is something that San Francisco, the Bay Area, has been doing successfully for a long time. But it’s also probably one of the reasons why you see, politically, this division between the big urbanised centres and then, say, the classic example, the Rust Belt in the United States and the areas north of London like Sunderland that voted for Brexit.

Ian Goldin: That’s right. And 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 are 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. When they say, “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.

The more that countries globalise, the higher the rates of inequality, and that’s because the returns to being on the frontier, 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, which is 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.

Donald Trump supporters outside Trump Tower in Manhattan. Photo: James D. Morgan / Getty Images

Paul Colgan: This is a real challenge, isn’t it, though? Because while the forces of globalisation have long been positive for the global economy at an aggregate level, within domestic economies it hollows out particular types of jobs. We’re seeing this particularly in manufacturing — in Australia, for example, over the last decade, it has really shrunk as a component of the economy. This creates a tension between what seems to be a good idea at the macro, global level but might not be smart politics for a government or a political party that is seeking to get itself re-elected.

Ian Goldin: I think what globalisation does is it accelerates the opportunities as well as the risks, and that requires smarter government, smarter policies to be able to harvest the opportunities, ensure the country benefits from all the incredible things happening around the world, whether it’s new technologies that lead us to live longer lives, healthier lives; new technologies like mobile phones, which are totally a symbol of globalisation, built in 30, 40 countries; or whatever we can harvest from globalisation, the new jobs, the export markets, etc. That’s all globalisation.

At the same time, we need to recognise that there’s an underbelly to this, and that unless we are wide awake to the risks … And the risks come in a number of forms. One sort of risk is that when we connect, we become more interdependent and we’re more subject to contagion. We link up our financial systems. That’s very good. We’ll have better financial systems, etc. But we’re subject to global cascading financial crises. We link up our cyber systems. We cannot imagine our lives without that, and yet we’re subject to global cyber attacks. We link up our airports with other airports. We want that – cheaper travel, more travel – but we’re more subject to pandemics.

Because the super-spreaders of the goods of globalisation, be they banking hubs or cyber hubs or airport hubs, become the super-spreaders of the bads, like pandemics, cyber attacks, financial crises. So, that’s one sort of challenge, and that requires management.

Paul Colgan: Also at security policy level. So, diplomacy, and Westernisation, if you like. There’s the Five Eyes intelligence network. And then the broader interlinked countries that are Anglosphere and Western that are targets, increasingly, of the disaffected, the angry, those movements [like ISIS] coming out of the Middle East.

Ian Goldin: Well, not only good things connect. Really bad stuff connects, too, and that’s what we need to be aware of. When we open our trading systems, drugs and arms travel as well, sex trafficking, etc. And, of course, not only good people use social media. ISIS wouldn’t exist, really, as we know it without social media, and has become the biggest recruiter of foreign fighters since the Spanish Civil War, using social media.

That’s why I’m rather sceptical of the sort of Silicon Valley view of the world, which is, “There’s no problem an app cannot solve.” Institutions and politics matter. There’s a battle of ideas out and a battle of the use of these technologies that we need to engage in. All technologies can be used for immense good and immense harm.

Paul Colgan: Let me ask you about that. One of the great sources of political resistance that we’re seeing at a national level … We saw it manifested in UK, in Britain; you get streaks of it – American nationalism – in the broader Trump movement; we occasionally see it in Australia, too. This issue with supra-national legislative institutions, the European Union being the obvious one for Britain but also in terms of, say, managing climate change, you have the United Nations. People say, “Well, why should we partake of this, if these rules are getting telegraphed to us from these institutions in which we have only a marginal say?” What is your answer to dealing with that?

Ian Goldin: I think we all need to accept that as we live in a more and more joined-up world, where the spillovers of our actions affect other people, and their actions affect us more and more, and that’s a product both of wealth. If you’re poor a village in the middle of the country, what the world does doesn’t really affect you, and what you do doesn’t really affect the world. But as you become wealthier and wealthier and more and more connected, everything we do, whether it’s our choice to take an antibiotic, our choice to have a tuna sushi, our choice to drive a car and put up some carbon into the atmosphere, whatever our choices are, there are spillover effects: antibiotic resistance, elimination of the tuna, climate change, etc.

And we need to realise that our freedoms, which are freedoms to choose to do what we want, and that’s why we value democracy, and that’s why we want wealth, so we have more freedom, must come with constraints because of the spillover effect. And this is a very old story. So, I think we’ll find that as we live in a more integrated world with more and more people who are wealthy, that we’re going to have to accept that the cost of this is that we have slightly less decision-making. There will be basically limits on how much carbon we can put in the atmosphere, how many antibiotics we can use, etc.

Now, Australia has benefited immensely from being part of supra-national systems. The classic one is the World Trade Organisation, the GATT before that. As an export country, it would have been really hamstrung if barriers to trade hadn’t been reduced by other countries as part of global negotiations. So, I think we need to move to a world where we accept some constraints on sovereignty, that countries cannot decide to do whatever they want because it’s in the interest of everyone that there’s cooperative behaviour, whether it’s on nuclear weapons, whether it’s on pandemic management, cyber management, trade, or whatever.

Having said that, I don’t think that everyone has to decide everything, and I think the danger is then you go down to the lowest common denominator with people. And I think we should move much more to coalitions of the working. And what those coalitions are will depend on what the issues are. On climate change, about a dozen countries account for 90% of emissions. They’re the ones that need to act. New York State produces more carbon emissions than the whole of Sub-Saharan Africa, 54 countries.

So, getting the critical actors to be part of the solution … Of course you can’t put all the mafia bosses in a room and ask them to write a criminal justice system. So, you wouldn’t want to put all the big polluters in a room and ask them to write a climate change agreement. But if put the Maldives and Bangladesh in the room with them, you’ll most probably get legitimacy. So, I think this sort of representative multilateralism is where I think we practically need to go. And that means that countries that really have a bigger stake in something need to be amongst the first actors.

Paul Colgan: Let me take you back to something you touched on earlier, which was the comparisons to the Renaissance and where you had this funding of this great level of creativity in Italy, but it was also accompanied by huge amounts of social change. It was a time of great upheaval, and the politics of Europe continued to be shaped by it for centuries afterwards. Do you want to expand on some of that?

Ian Goldin: Well, it is the subject of my new book, Age of Discovery, and the subtitle is Navigating the Risks and Rewards of Our New Renaissance. And I do believe that it’s really necessary to try and make sense of this time we’re in. I wrote the book with Chris Kutarna, and together we’re trying to understand, “Why is it that we’re in such a tumultuous time? Why are people rejecting globalisation? Why are people rejecting change?” And what reference period makes sense, and we’re pretty convinced that the Renaissance is the most interesting period.

Now, it’s partly because there was an information revolution then. Before the Gutenberg press, basically only monks could read and write in Latin, handwritten manuscripts, very expensive, in monasteries. Less than 1% of Europe was literate. The explosion of this press led to 250 million books being printed in a 50-year period, and billions of political pamphlets. And ideas travelled like wildfire. People had a yearning to learn, to be literate in their own languages, and we had these explosions of science and arts that we celebrate 500 years later, from the da Vincis and Michelangelos and everyone to the Copernicuses, later, Galileo, etc. Circumnavigation of the world, from a flat world to Mercator’s projection. Unfortunately, only Australia was left out by Mercator!

But the rest of the world, they’re pretty much there. And in that process, everything changed. But it ended in tears. It ended in the bonfire of the vanities, the burning of books, the hounding of intellectuals, jihadists led by Savonarola, deposing the Medicis in Florence, the voyages of discovery spreading diseases that killed most Native Americans. These pushbacks and unintended consequences, the systemic risks, what I call in another book, The Butterfly Defect of globalisation was manifest then. And you had religious war as a result. You had the Inquisitions. In my college in Oxford, Balliol College, people were hung. It had been Catholic. It went through a massive, massive split, the Catholic Church.

And what we saw then was the use of new technologies to basically mobilise people against corruption. And to attack the elites effectively, who were totally out of touch. You could buy your way to heaven with indulgences in the Catholic Church then. The furs and spices and gold that came back from the New World didn’t benefit 95% of the population. They couldn’t afford it, and the scribes were put out of work. People basically said, “This period change is not for us. We’re losing our ethical basis of society. We’ve been laid out of work. We’re eating gruel, and we’ll depose the elite.”

Paul Colgan: The parallels are very clear to a lot of what we’re seeing in advanced economies and democracies today. For a long time, there’s been a fundamental optimism surrounding the forces of globalisation. But in drawing those parallels with the Renaissance, do you retain your optimism, particularly with what’s happened around the world in the last year?

Ian Goldin: I’m very optimistic, because my interest is primarily one of development, and the other book that I brought out recently The Pursuit of Development, shows how this period has been associated with the most rapid progress by far the world has ever known. Life expectancy in the world, on average, has increased by about 20 years in this period of globalisation. It took from the Stone Age to achieve that. Average incomes have gone up dramatically. The number of people in absolutely poverty has gone down dramatically. Literacy and virtually any indicator, except the environmental indicators, have improved dramatically.

An engraving depicting the Spanish Inquistion torture of prisoners. (Photo by Culture Club/Getty Images)

So, it’s very difficult to say this process has been bad, other than on environmental grounds. And that’s why I’m optimistic. I’m also optimistic because I believe in human creativity and ingenuity, and this has unlocked more of this than any process in history around the world. So, you have to be optimistic that there is more brain power going into problem-solving, whether it’s stopping cancer or whether it’s stopping climate change, than ever in history. The challenge is the disconnect between that and politics and our understanding of it.

And the reason that I’m so passionate and look to history and do the analysis on multiple dimensions of migration, of risk, etc., is I really think our political system is stuck in a pre-globalised age. It’s stuck in an age where governments think they can determine national policy independently, that they’re not up to speed with both the opportunities and the risks. They don’t understand the technologies. They didn’t in the financial crisis; that’s why we got a financial crisis. Young people were playing with things that audit committees and the global institutions and reserve bank and central banks were all meant to be very bright people. If you want to understand why people don’t trust experts in authority anymore, it’s because these are the people that brought you the financial crisis.

They let us down badly, and they are the experts. So, we need to re-skill. We need to re-tool. And it’s both about the expertise in managing our interconnected systems; it’s understanding the technologies; it’s having an ethical basis for this, which has completely been lost in this period by the greed; and we need to ensure that we vote for politicians who are able to navigate in this, very, very rapidly evolving world.

Paul Colgan: Because there’s a hugely challenging notion underlying this, which is that some sovereignty on some issues may need to be relinquished.

Ian Goldin: Yes. I think we … It’s in our long-run interest that we stop climate change. It’s in our long-run interest that we stop pandemic. It’s … This relinquishment of national interest isn’t a longterm self-sacrifice. But politics is a short-term game, and that’s the big challenge. You know, just stop these politicians kicking the can down the road so that our children will face massive crises, be they climate change or be they instability in the world of different times.

Australia is very fortunate, because it’s a relatively wealthy country, and it’s a very educated country. So, my hope is that … One of the paradoxes is that as people become wealthier and more educated, they don’t seem to necessarily be able to adapt more rapidly, and we need to really ensure that’s the case in Australia and the UK and the US. The people that are pro-globalization right now are not in the advanced economies. China is one of the most pro-globalizing countries in the world.

And even India is, now. And this is sort of a paradox, because these are the countries we used to try and convince to open up and to integrate and to play a role in global institutions and all of those things. Now, if you read President Xi’s recent speeches, he’s really the cheerleader not only for globalisation, but for global cooperation on climate change, on trade, on other areas.

Paul Colgan: Can I specifically ask you on China, about how you see their role now going forward? Because one of the big changes for China was following that process that you alluded to earlier, where you get this industrialization and growth of the middle class, and then its transition to a services economy has been a big theme for Beijing. But with all of this disruption that’s happening, and the fact that, in that process, they’ve become the world’s second-largest economy and also remain a hugely important strategic player, can I ask you just quickly to [explain] how you think about their role now?

Ian Goldin: China really has been a huge beneficiary of globalisation. I simply mean integration, opening up to not only products and services, but ideas, and ideas are the most important thing that flow across borders. So, China’s been an enormous beneficiary. No country has ever, in history, brought so many people out of poverty so quickly. You know, it’s just quite astounding from a development perspective. My own sense is one of great optimism about the future of China.

That’s really based on the capacity of the leadership, which I think is by far the smartest and most capable leadership in the world in terms of running a government. They basically are a highly developed civil service that experiments a lot, experiments at the municipal, provincial level, and then replicates and scales experimentation. By the time you get into central government, into a leadership decision-making position, you’ve spent your career understanding and working at all sorts of different ways and experimenting. So, there are many things that can be said against the political system.

But its ability to absorb ideas and to lead is greater than any other country in the world. And I think that makes me optimistic. It’s got a long way to go. Of course, if you read the financial press, you’d think that 6% or 6.5% growth, like they’re experiencing at the moment, is a disaster. It’s a bit slower than the 10+% they had ten years ago. But size matters as well, so 6% growth on a $17 trillion US dollar economy means they add more value every day than when they were growing at 10% on an $8 trillion economy ten years ago. And that really matters.

When you’re very big, you can’t keep growing very fast forever. You’d be the whole world economy before long. And so it’s extraordinarily powerful. It’s also very good for the world economy. The fact there are so many growth engines now, India is another one, other Asian countries, stabilises global growth and lifts global growth. So, we have a lot to thank that emerging markets, in particularly Asia, which would be … Asia is already 60% of global growth. It’s just quite extraordinary. And for countries in the region, this is an amazingly powerful force going forward. I think it’s sustainable for at least the next 20 years.

More at iangoldin.org and you can find Prof Goldin on Twitter: @ian_goldin.

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