A guest slot from CycleFree on globalisation
In her Mansion House speech, May said this about those who viewed the forces of globalization (“this agenda as the answer to all our ills””) in a different light to those who promoted it – “These people – often those on modest to low incomes living in rich countries like our own – see their jobs being outsourced and wages undercut.” She went on: “When you refuse to accept that globalization in its current form has left too many people behind, you‘re not sowing the seeds for its growth but for its ruin.”
Callaghan said much the same thing in 1979 when the last political/economic consensus started being torn up – “You know there are times, perhaps once every thirty years, when there is a sea-change in politics. It then does not matter what you say or what you do. There is a shift in what the public wants and what it approves of.”
It has been implicit in the acres of comments on Brexit and Trump’s election that there is some divide between urban and rural, between the rich middle classes and the working classes, between professionals and others, between those educated to graduate and post-graduate level and others and that, depending on which side of the divide a person falls, this will to a large extent determine their views on whether Brexit and/or Trump are or are not a good thing.
More widely, globalization is seen as having benefited some groups and not others and that the former are learning that they are not – for the time being – the majority. It is also assumed that if only those who benefit from globalization share their riches with those who don’t then all will be well again or, at least, better than now.
But is this latter point true? Will the rich middle class professionals continue to benefit from globalization and other changes that are as likely as anything the politicians do to determine our futures? Outsourcing, robotics and artificial intelligence are happening and are going to affect middle class professionals at least as much as the working classes have been hit by the transfer of industrial jobs to lower wage economies.
Take two sectors I know something about: law and banking. Both will be profoundly affected by these developments. We have seen the start of this in banking. We are seeing the start in law. Many of the jobs done by junior lawyers – the review and analysis of vast amounts of material to extract the relevant documents, the preparation of and changes to contracts and other standard documents, the changes needed as a result of legal/regulatory changes, for instance, are ripe for replacement by clever programmes which can do these jobs far more quickly, probably more accurately and certainly much cheaper than even the cheapest lawyer.
The pressure on lawyers (whether external or in-house) to make the necessary cost savings will force lawyers to adapt. And not just them: all professionals will be asked what value do they add to what can be provided by non-human providers. This is likely to be as seismic a change for these groups as the abandonment of industrial production has been for the rust belts of the West.
What are the likely social, economic and political consequences of these changes? Well, for one, people will need to revisit the cosy middle class assumption that if you only get the right degree from the right university, the right internship, the right job, you will be able to earn well and, in some cases, very well indeed and, to a significant extent, be shielded from the forces which have affected others.
These changes bring opportunities, certainly. But they will require a change in mindset in those who are doing this work already (and some of the proposed changes will make work easier or more interesting, removing much of the drudgery). They will also likely mean that fewer lawyers or bankers or auditors or consultants or whatever are needed. And for those starting out in such careers: how will they learn the skills and get the experience to gain the judgment needed to provide the added value?
The opportunities for the middle classes may be fewer and they are likely to face far more competition than previously. They too may start feeling left behind, facing unfair competition, jobs outsourced or vanished, salaries undercut. They too may start thinking of the forces of globalization and automation in a different light.
What the economic and political consequences of these changes are likely to be is uncertain. What will they do to tax revenues? And without the necessary tax revenues – think how much harder it is to tax companies based abroad providing automated services to companies and people here – how will May help those struggling and barely making do.
Can one tax robots? An EU functionary recently made just this suggestion. What will this do to our attitudes to the welfare state? Will it make more people more protectionist or more willing to take the opportunities which change brings? Will it make the country feel the need to be part of something bigger – even if this seems unlikely now?
May’s speech may have been good at diagnosing the cry of pain of those who were behind the Brexit vote. But we may all (or rather more of us than we’d like to think) find ourselves uttering cries of pain in the future. It is not at all clear that May has any sort of cure for the pain or any real idea how best to position Britain to take advantages of the opportunities that undoubtedly exist.
But working out a way of making the changes that are happening work for Britain is at least as important a task and, arguably, a more important task in the long run than negotiating Brexit. The last time Britain’s economy and society went through significant structural changes was in the 1980’s shortly after Callaghan said the quote above. We had three advantages then: oil revenues, a feeling that change needed to happen and a leader with a clear idea of where she wanted to go and the determination to stick at it.
What advantages do we have now? Over to you.