Tuesday, 20 December 2016

Globalization backlash misses real danger: robots

The backlash against globalization misses the real danger to jobs in 2017: robots. Voters are rewarding nativist politicians. But campaign promises to bring back manufacturing jobs will soon prove hollow. That's because the bogeyman is automation, not open borders.

Citizens cheered candidates or policies that rejected immigration, outsourcing and trade in 2016. U.S. President-elect Donald Trump drew applause when he vowed to build a wall along the Mexican border while across the Atlantic Ocean, former UK Independence Party leader Nigel Farage played on anti-immigrant sentiment as part of the successful campaign for Britain to leave the European Union. Candidates with similarly skeptical views of immigration and free trade are running in elections in 2017, including in France and Germany.

Trump and his acolytes pitch a vision of a return to a bygone era, when jobs in heavy manufacturing and coal mining will reappear. Reality is different. In the United States, about 5 million manufacturing jobs have been lost since 2000. Yet factories have churned out more, with gross output in that sector increasing to more than $6 trillion from $4.2 trillion over the same period, according to the U.S. Bureau of Economic Analysis.

That's largely the result of increased automation. In 2016 globally, the number of newly installed robots grew by 14 percent, and similar growth is forecast for 2017, according to the International Federation of Robotics. Germany has 301 robots per 10,000 workers, while the United States has 176.

Predictable physical activities are the easiest to automate, which is why factories making automobiles and electronics have seen the biggest increase in robot usage. But sectors like food services, retail and healthcare are also ripe for automation, according to a July 2016 McKinsey report. Momentum Machines is planning to open a restaurant in San Francisco staffed by robots that can make 400 burgers an hour. Amazon is experimenting with grocery stores that dispense with cashiers.

It's easier to campaign against foreign governments or immigrants than automatons. That is why politicians are likely to carry on making promises that they cannot keep. Fighting those past wars will render governments flat-footed in tackling more pressing challenges.

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