Adrian Turner nailed it at the AFR Summit last week, saying that 40 per cent of Australia’s jobs will disappear in 10 years. “The fourth industrial revolution is under way and the winners will be so far ahead of the losers, Australia has no choice but to pivot to the new industries that will emerge.”
Turner, who is the chief executive of Data61, the big data unit of CSIRO, says we are thinking too narrowly about disruption. Going forward, it’s about Amazon competing with Woolworths, Apple into healthcare and Google into transport.
But this discussion about the coming loss of jobs because of technology (including in books such as Race Against the Machine, among others) is missing the big point: that in the long term, we are all the beneficiaries of the technologies, not its victims.
It’s true that many people will lose their livelihood in the coming shake-up. Look at London taxi drivers, who through absolutely no fault of their own (in fact they are very highly skilled) are in real trouble because of free mapping. Many are giving the game away.
It’s also true that there was massive social unrest with the invention and commercial introduction of the weaving mill, but the garment industry employs many more people today globally than it did in in 1761, when the cottage industry in textiles was first disrupted by technology. Same for cars relative to horses, and so on.
If technology really did destroy jobs, we would all have been unemployed for generations, as gross world product (the sum of the GDP of all the countries in the world) rose 62-fold from the US$1.7 trillion it was 100 years ago to the US$107 trillion it hit in 2014 (in purchasing power parity terms, according to the CIA World Factbook).
Instead, what has happened is that as we became 62 times more productive, mostly because of technology, we consumed more stuff, which kept ever more people in work (though not the same people, it is true, and not in the same work).
This ‘technology destroys jobs’ argument seems to have its roots in the writings of Thomas Malthus, who in 1798 predicted that the world’s supply of food would run out since its production was growing arithmetically, while population was growing exponentially. It didn’t happen.
But Turner lit up the argument again yesterday by saying that the interaction between computers and people would define the 21st century workforce, and that every industry will become data-driven. This may mean the loss of a lot of traditional jobs, but it also means the creation of a whole bunch of new ones. The world can’t get enough data scientists and social media experts, but it doesn’t need as many photo re-touchers.
Of course, jobs fear was already on the rise, fuelled in part by Donald Trump, but also Amazon which recently announced the roll-out of stores without cash registers (since your phone will sign you in and log your purchases). The company is also about to disrupt the call centre by building its own versions. Anyone who has used the Amazon model can’t help but marvel at the efficiency compared with those of, say, Telstra or Vodafone.
Meanwhile, the number of cashier-less checkouts at Big Grocery keeps falling and driver jobs are under threat as Uber and transport more broadly go driverless. Pressure is increasing on medical technicians as machine learning reads scans more quickly and accurately – even fund managers are under threat as algorithms parse every company statement and conference call for changes in outlook, and trade the shares to boot!
Trump’s argument is that he doesn’t want Americans disadvantaged. And some Americans will be disadvantaged – already have been – as jobs were exported to Asia – but in the long term GWP should rise and everyone, even those same Americans, will be better off. The critical question is how well it is re-distributed in the form of health care, education and the like. Memo – The Donald: This should be where the political focus should lie.
Its why we have built our product around the disruption thematic. As noted last week, it’s very difficult to invest with a view to the next thirty years if the core positions are built around fossil fuels and traditional carmakers.
Alex Pollak is chief investment officer of Loftus Peak, a fund manager that specialises in building listed global portfolios for self-managed super funds.