THE TURMOIL IN THE WEST COULD HIT INDIA
Workers everywhere fear lost jobs and wages. Citizens fear new faces crossing borders, and terrorists and criminals who kill for reasons no one can understand. They fear that government cannot or will not protect them. Then the call for help is answered. Populists like Donald Trump and right-wing politicians challenging establishment politics in Europe have a gift for drawing boundaries.
They offer a vision of separation, of “us vs. them,” of the citizen fighting for his rights and protections against those who would steal them. Depending on the country, “them” may mean rich or poor people, foreigners or minority groups, politicians, bankers, or journalists.
There’s a larger crisis coming. The storms creating turmoil in the United States and Europe — including technological change in the workplace and a deepening sense of grievance at income inequality — are now crossing into the developing world, where governments and institutions aren’t ready. Developing countries are especially vulnerable, because their institutions and social safety nets aren’t as strong as in wealthier countries. They are less well-prepared for technological change.
The increasing automation of the workplace, advances in machine learning, and the broad introduction into the economy of new forms of artificial intelligence will ensure that jobs of the future require ever higher levels of education and training. Those who can pay will get the education, and those with the knowledge and skill set will have opportunities for wellpaid jobs. Those who lack these things face a dark future.
As difficult as this transition may be in the United States and Europe, it will be much tougher on emerging countries. If automation 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 bigger share of economic growth. Lower growth means less government revenue — and, therefore, less money to spend for education and services, for infrastructure, and for all the other things that middle classes expect from government. The virtuous circle becomes a vicious circle.
It’s too soon to know whether the tech revolution will kill more jobs than it creates. But as in the rich countries, we know the new jobs will be very different from the old ones, that education and training for these new forms of work will make new demands on workers, and that some people won’t make the leap from the old world to the new.
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 workforce, they will never have access to the education and training needed to earn 21st century jobs, and they know their children will fare no better. Those able to keep their jobs may discover they must work for less pay and fewer (if any) benefits. 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.
The result may be a full reversal of the world’s most important story of the last 50 years: the wealth convergence between rich and poor countries. It is the wealthy countries that have access to the game-defining technologies, the education systems that prepare citizens to adapt to new economic and social realities, the resources to spend on retraining workers, and the strong social safety nets to cushion the blows inflicted by change. That may become the biggest story of our time.