SETTING A NEW AGENDA
The budget should, among others, prepare the country for the challenges of the 21st century
MUCH is expected of the 2019 Budget, to be tabled in Parliament next week, the first for the Pakatan Harapan government.
Besides the usual business of managing revenue and public expenditure, the government is confronted with the issue of optimising choices for the people’s needs on the one hand, and consolidating the debt level further, on the other. The not-so-sunny global economic outlook is not helping either.
The budget should position Malaysia as an economy which has achieved some level of maturity and must have the elements, features, and characteristics of a developed nation — we are only a few more years in approaching that target.
How will the government manage the next round of technological revolution, how will we face the disruption of such huge proportions never before seen in the history of humankind? These are some questions we should be asking.
Over the past few months, I’ve immersed myself in the works of historian and author, Prof Dr Yuval Noah Harari — his three bestselling books, which have sold millions worldwide.
The books are Sapiens: A Brief History of Humankind, Homo Deus: A Brief History of Tomorrow 21 Lessons for the 21st Century. Sapiens is basically a survey of humankind on how they have conquered the world today from merely an insignificant animal about 70,000 years ago; Homo Deus analyses some possibilities on where humans are heading 20 or 30 years from now; and the third book examines the present state of humanity and why we are where we are, what are the challenges we face, and what we should do moving forward.
The books explore many issues, and these can either excite or scare you. As an economist, my concern, as gleaned from the books, is the crucial topic of the job market. This is what I want to see being dealt with in the upcoming budget.
The books highlight that in a few decades from now, a new class in the labour market will emerge, due to the merger of biotechnology and infotechnology, and the rise of artificial intelligence (AI) and robotics, called the “useless class”.
Unlike in the 20th century, where the issue of the job market is the exploitation of labour, in the 21st century, it is much worse, as many workers will be not be needed, or rendered “useless”. From doctors to taxi drivers, and professions that deal with the abstract, such as artists — the possibilities of them being “automated” will become more real than ever.
What we will see is not merely an individual being replaced with artificial intelligence (AI), but rather, a whole new system of integrated network will take over. The books argue that the two main advantages of this network which makes it superior than the human is its connectivity and “up-dateability”, and hence, the new system is highly productive and efficient.
The emergence of a “useless class” will arrive, and to date, no economic theory or model can yet explain and make sense of such a phenomenon. The type of inequality which we are going to see is far more dangerous and different from what we face today, where it involves the elimination of economic value and the political power of most humans.
So what are we to do? As Harari has emphasised, the issue must be addressed now rather than in 2030 or 2040, because by then, it will be too late.
In preparing our economy to avoid this pessimistic, yet realistic scenario, there is a need for us to radically change our education system to provide a range of incentives and social safety nets to lessen the impact of “high unemployment” and “shortage of skilled labour”.
This will not be a one-time event where things will settle in a new equilibrium, say in 2050. The job market will continue to change even after 2050 at a more rapid pace than before as the technological change will cascade over time.
What I have mentioned here is just the tip of the iceberg. The budget should be designed in this particular direction, as this is the big thing now. In today’s race of AI and algorithms, the wealth of nations is no longer defined by land nor the amount of goods and services produced, but by those who own most of the data available.
We have missed the train in the industrial revolution of the 19th century. We should not miss it this time around.
The budget should position Malaysia as an economy which has achieved some level of maturity and must have the elements, features, and characteristics of a developed nation...
The writer is director of the Asian Research Institute of Banking and Finance, and associate professor of Economics, Universiti Utara Malaysia