Kieran Madden
Auckland, March 27, 2017
Many pinned Trump’s election and the Brexit vote as being fueled by people’s fear of losing their way of life.
When it comes to economic insecurity, I think they are bang on.
It is likely that those with less formal education and skills voted for change in both situations not because they were ignorant or did not know any better, but, because they see their working life hanging by a thread.
Uncertainty breeds fear, and a society driven by fear tends towards dysfunction.
Is this fear rational? Many factors are making it clear that the generally stable post-war economic order is giving way to a new, modern, flexible economy; one facing the triple threat of automation, ‘uberfication,’ and a decoupling of wealth, output, and employment.
This economy is likely to benefit those already flourishing in this changing world (those surprised that Trump and Brexit were a thing) but also, sadly, leave many behind.
Three big shifts
We have seen a lot written recently about the first two big shifts.
For jobs that involve routine tasks, the robots are coming.
Some estimate up to half of our current jobs will be at-risk of being automated over the next few decades. An increasing proportion of jobs are also likely to be consumed by the ‘uberfication of everything.’
In this gig economy, more and more employers will contract out individuals to work on a temporary basis.
So not only are many jobs at risk, the jobs that remain are likely to be less secure.
The third big shift likely upon us is less well-known.
Nicholas Eberstadt, political economist and author of ‘Men Without Work: America’s Invisible Crisis,’ believes the problem is characterised by “an ominous and growing divergence between three trends that should ordinarily move in tandem: wealth, output, and employment.”
He said that 21st century America has managed to produce markedly more wealth for its wealth holders even as it provided markedly less work for its workers.
“The Great American Escalator has broken down.”
There is good evidence that this is the case too.
Sobering study
According to a sobering 2016 study by a Stanford economist, a thirty-year old today only has 51% likelihood of earning more than their folks at the same age, down from 86 percent in the seventies.
Growing yet unevenly distributed wealth, stagnant economic growth, and serious underemployment combine with our earlier trends of automation and uberfication to form a perfect storm of economic insecurity.
If these trends continue, it is easy to see how votes for upturning the status quo were rational. More of the same will not work.
We cannot stand like King Canute and tell these tides to stop, but we must understand the signs of the times we are in and respond well. New Zealand is somewhat insulated from the more extreme trends facing the States, but we are not immune.
These big shifts in economic life will bring great benefits to many, but it is important that we prepare, not merely take care of, those left behind.
Kieran Madden is a Researcher at Maxim Institute based in Auckland.
