Summary to The Globotics Upheaval (Globotics Transformation) by Richard Baldwin

Just as “New Deal capitalism” protected workers during the previous century, similar measures might be needed to ensure the well-being of workers as AI reshapes industries.

Review

The Globotics Upheaval analyzes how globalization and automation are transforming the world economy. Baldwin discusses the rise of global digital platforms that allow various types of work to be performed across borders through digitization and remote access. By breaking apart production chains, these “globotics” technologies disrupt labor markets and enable new organizational forms.

The book examines what jobs are susceptible to offshoring and automation. Baldwin argues that many services once considered sheltered from global pressures are now tradable via digital technologies. Industries from healthcare to education face radical restructuring as work becomes footloose across the globe. However, globotics also create new opportunities for developing countries to participate in global production networks.

Baldwin offers policy prescriptions for how nations can adapt to ongoing disruptions. He advocates for active labor market programs, education reforms, reasonable immigration policies and international cooperation. The Globotics Upheaval presents an encompassing framework for understanding technological forces profoundly reshaping work and economies worldwide. Baldwin’s analysis sheds light on debates around jobs, inequality and the fate of less-skilled workers.

The book provides valuable perspectives on ongoing economic transformations that can help policymakers and business leaders prepare for change. Baldwin paints a nuanced view of both challenges and opportunities brough about by globotics-driven disruption.

In summary, Richard Baldwin’s The Globotics Upheaval examines how technologies are allowing work to be done across borders, reshaping labor markets globally. Call to action: Continue reading to learn Baldwin’s policy prescriptions for navigating work disruptions in the digital age.

Genres

Economics, technology, business, policy, globalization, workforce, employment, innovation, automation, management, finance, development, trade, disruption, future

Recommendation

Economist Richard Baldwin believes past economic transformations indicate what the digitech future might hold. Historically, tech drives change. Its main challenge is to replace jobs lost to innovation with new jobs fast enough to ease social disruption. Currently, white-collar workers face major infiltration by “globotics” – globalization and robotics. Long-term globotics will create new jobs for those with strong social skills and spawn a more just society. The unprecedented speed of this transformation puts society at risk for uprisings and revolt, as economists, innovators and students of the future of work will understand.

Take-Aways

• Technology causes economic transformation, which unleashes upheaval and backlash. Resolution follows.
• The Service Transformation followed the Industrial Revolution, displacing blue-collar workers.
• Globalization and robotics progress together rapidly, transforming the white-collar sector.
• “Telemigration” and “telepresence” radically change the future of work.
• Robotics will displace or eliminate many white-collar jobs faster than replacement jobs can be created.
• Globotics could worsen rising inequality in the West.
• Some workers will require “sheltering” from the globotics movement to ease disruption.
• Jobs that require “social intelligence” will be in higher demand as AI replaces automated data processing.
• Ultimately, the Globotics Transformation will ensure a more humane and more local society.

Summary

Technology causes economic transformation, which unleashes upheaval and backlash. Resolution follows.

For more than 1,000 years, economies relied on land production for human sustenance. The first steam engines appeared in the 1700s, and initiated three centuries of innovation and economic expansion. Mechanization eliminated many farming jobs while creating new occupations. Rapid innovation and growth created the conditions for the “special century” (1870–1970), which saw chain reactions of innovations. These spurred more growth and innovation and created more jobs.

“Globotics is injecting pressure into our socio-politico-economic system (via job displacement) faster than our system can absorb it (via job replacement).”

Rapid transformation caused social unrest. Early urbanization created food insecurity among the working classes and intensified income inequality. The backlash didn’t find expression in political extremism (for example, fascism and communism) and economic instability (as in the Great Depression) until the first half of the 20th century. New Deal capitalism ended the backlash by protecting workers in the West, and initiated “three glorious decades” of prosperity. This dramatic cycle serves as a model for the Second Great Transformation – which began in 1970 – and for today’s conversations about the “future of work.”

The Service Transformation followed the Industrial Revolution, displacing blue-collar workers.

The computer chip heralded the Service Transformation in 1973 and “emptied factories faster than the Great Transformation emptied farms,” but also expanded the service sector. Computer automation caused the share of jobs in the US manufacturing sector to plummet from 30% in the 1970s to 10% by the 2010s. Emerging economies such as China took over manufacturing output. The US also exported technological and corporate know-how. A worldwide slowdown in growth intensified the destabilization that globalization caused.

“Digitech is replacing people who work with their heads and rewarding those who work with their hearts.”

Communications technology favored college-educated professionals, but not the uneducated or unskilled. The switch from value created by capital to value created by knowledge proved even more transformative. Knowledge owners such as Apple, Microsoft and Google benefited. US and UK blue-collar workers were particularly hard hit because their governments did not protect them. These workers acted on their discontent by voting for Donald Trump and for Brexit in 2016.

Globalization and robotics progress together rapidly, transforming the white-collar sector.

The human brain finds it difficult to process exponential growth. Processing speed in Apple iPhones doubled between 2015 and 2017. Networks gain in value faster than the cost of joining them (Metcalf’s Law). Combinations of components of digital technology – for example, the iPhone combines wireless communication, emailing, maps and online shopping – trigger a new innovation boom (Varian’s Law). Once new products appear, manufacturers reproduce them swiftly and without cost. With faster processing speed comes greater capacity for machines to learn, so artificial intelligence (AI) creeps into all sectors. Globalization and robotics now progress together, portending massive labor market disruption. This is the Globotics Transformation, and the world is not ready for its speed or its lack of fairness.

“Telemigration” and “telepresence” radically change the future of work.

“Telemigrants” are international online freelance workers, mostly from India, China and Thailand. They perform white-collar work, such as accounting or programming, and cost a fraction of a European or US worker. Freelance work is exploding; Upwork.com matches workers to employers and has 14 million users in 100 nations. English is the lingua franca, but machine learning fuels translation software that will open the market to non-English speakers. A “tsunami” of global talent will compete with English speakers, disrupting the marketplace even more.

“Globalization and robotics are now Siamese twins – driven by the same technology and at the same pace.”

Wired magazine employee Emily Dreyfus lives in Boston, but telecommutes via a “telepresence robot” at the Wired headquarters in San Francisco. “Embot” is an iPad on a stick attached to a Segway that moves around the office. When Embot is “on,” Emily is “present” in the iPad, and can maneuver Embot to face people in meetings.

“The sheltered sectors of the future will be where people actually have to be together doing things for which humanity is an edge, not a handicap.”

In Denmark, “Augmented Reality” (“AR”) assists paramedics and firefighters at crime scenes. Using a smartphone or iPad, a first responder communicates with a remote crime scene investigator, who “draws” circles around objects onsite that no one should touch. Surgeons use AR in combat zones.

Robotics will displace or eliminate many white-collar jobs faster than replacement jobs can be created.

By 2020 infiltration by robots will affect every white-collar job. The “high-end” robot Amelia – an AI “employee” at the Swedish bank SEB – has an empathy feature to help her assist customers online. “Low-end” robotic process automation (RPA) performs back-office processing in finance, supply chain, HR and customer service.

“Over the next few years, the number of jobs displaced by white-collar robots will be somewhere between big and enormous.”

Telemigrants and robotics will have less impact on jobs requiring a physical presence, including farming, child care work and surveying, among others. Jobs that can be “sent down a wire” – approximately half of all management, business and financial work – can be done from abroad. This is 30% of administrative jobs and 60% of jobs in professional, scientific and technical fields. Telemigration may affect one in three US jobs.

“Humanity will be important in most of the jobs of the future.”

The “future of work” is here. Some 35% of the US workforce works freelance, and among those age 18 to 24, the figure reaches almost 50%. Hierarchies dissolve, corporate structures grow more fluid, and “on-demand” services will become the norm. The more people work remotely, the more companies will adapt workplaces and team structures. Work is returning to the “cottage industry” of the pre-Industrial Revolution era.

“The sad reality is that it is a lot easier and faster to make money by eliminating jobs than it is to make money by creating jobs.”

Office administration, the retail sector, construction, security, food preparation, transportation, medicine, pharmaceuticals, law, finance and even journalism will suffer the most displacement from RPA. Once the systems are in place, they essentially cost nothing. New jobs, particularly in digitech, will replace lost jobs. But will they appear quickly enough to prevent social upheaval?

Globotics could worsen rising inequality in the West.

Profiting by eliminating jobs proves far easier than creating them. Most R&D seeks to improve technology, not expand the technology sector. Potential exists for a new class of “semiprofessionals.” “Digital assistants” would augment less-educated people in medicine, law and finance. But this will not offset globotics’ disruption of the global workforce.

“Economic hardship and extremism are long-time, historical companions.”

For decades, hypercompetive industrialized countries followed a “sharing-and-caring” policy that protected less-competitive workers from being paid significantly lower wages than their competitive counterparts. These “sheltered” workers risk losing their protection to globotics. This emphasizes wage inequality. The “infiltration” of AI affects the US economy, where job security is in decline even if the number of jobs remains steady. Globots “don’t play fair.” They work 24 hours a day, never demand a lunch break and never need benefits. They don’t need salaries. This bodes poorly for US workers, who faced decades of cuts in the social safety net and wealth concentration among the top 1%. Populism is on the rise.

“Not to put too fine an edge on it, machine translation is unbuilding the Tower of Babel.”

What would a “backlash” look like? The protests against globalization in the late 1990s did not spark worldwide revolt. But with blue- and white-collar jobs at risk, the upheaval could be much greater. The backlash might target companies that grew rich by monetizing people’s data, such as Facebook and Google. Replacing the “data-as-capital” with “data-as-labor” business model would force these companies to compensate people for their data.

Some workers will require “sheltering” from the globotics movement to ease disruption.

In 2017, almost 60% of surveyed Americans favored regulations limiting automation in the workplace. In the UK, taxi drivers protested the incursion of Uber, claiming it had an unfair advantage and that its inability to regulate its workers made it “not fit and proper” to operate. In the EU, the fear of “social dumping” – allowing cheaper workers from poorer countries to compete with local, higher-paid labor – rose after the 2008 global recession. Regulations could make it more expensive and difficult to fire workers, even obsolete ones, to minimize the burdens of sudden change. Such “shelterism” could slow the globotics movement.

“Globots will do what they can do. We will do the work that globots can’t do.”

Allowing discontent to grow and extremist political views to ascend might not be worth the cost of slowing progress, at least long enough for society to adapt to the globotics transformation. With that transformation, the world will become more local and more humane.

Jobs that require “social intelligence” will be in higher demand as AI replaces automated data processing.

Current AI demonstrates that jobs requiring “social cognition” skills will remain in high demand. These jobs prioritize negotiation and persuasion, skills AI can’t master now or any time soon. Artificial intelligence excels at processing data, but can’t reliably explain “why” it produces certain results. Currently, AI makes educated guesses deriving from pattern-recognition in data processing. AI can read millions of scans and provide a sound guess in a cancer diagnosis, but it can’t replace a doctor. AI can’t take personal responsibility if it makes a fatal mistake.

“Human ingenuity and entrepreneurship will do their job and find jobs for all of us eventually, but if history is a guide, that could take a long time.”

An analysis of which aspects of the job market are least automatable reveals certain occupations – in management, education, scientific, technical, media, arts, entertainment, recreation, government and utilities – as likely to be sheltered.

Ultimately, the Globotics Transformation will ensure a more humane and more local society.

Workers can’t compete with globots, who work for free, or with telemigrants, who work for much less than a Western white-collar worker. Jobs that don’t yet exist will emerge because humans are endlessly innovative. The last two great transformations brought prosperity. Society ultimately will benefit from the globotics transformation.

“Upheavals, however, are never driven by what will happen in the future. They are driven by what is happening today.”

In occupations where data are exploding, AI would alleviate the human drudgery of data processing at a fraction of the cost of hiring even a telemigrant. Workers can focus on what AI can’t do, like deal with idiosyncratic problems and creative problem solving.

Jobs that require face-to-face interactions will be in high demand, while automation will dominate process-driven professions. Globots will facilitate cheaper products and services that will make some people richer. Society must adopt regulations and policies to protect workers. Society must shelter jobs that require social cognition.

Upheaval is inevitable in times of rapid, radical technological change. Backlash is also inevitable. But the result needn’t be extremism. Society must cope with the unprecedented speed of the globotics transformation.

About the Author

Richard Baldwin is professor of international economics at the Graduate Institute, Geneva and president of the Centre for Economic Policy Research (CEPR). He founded VoxEU.org, an economic policy portal, and serves as its editor-in-chief.