Anyone who has read “The Second Machine Age” will understand why Trump was always going to win the US Presidency! The world has passed through a tipping point in the past decade and most people missed it. They think that the economic issues around us are still related to the Credit Crunch, when they are not.
Mervyn King, like Hillary Clinton, cannot understand what has happened to the world around them. In his book “The End of Alchemy”, Mervyn states that
‘Central banks have thrown everything at their economies, yet the results have been disappointing. Most sharp downturns are followed by sharp recoveries – and the sharper the downturn, the more rapid the recovery. Not this time!’
The truth is that very few people do understand what is going on. Erik Brynjolfsson and Andrew Mcafee at Massachusetts Institute of Technology (MIT) described how only a couple of years ago they laughed at the idea that artificial intelligence could ever drive cars or do half the things that they we are now seeing. They then set about researching the impact that machine intelligence is having in the real world and they realised that we have already passed the exponential tipping point.
Machines are now doing for the human brain, what they did for Muscle power during the first Industrial Revolution. Their findings are now summarised in the book The Second Machine Age. They describe how millions of jobs are being destroyed by machine intelligence. Not just working class jobs, because ironically it is the more complex tasks that machines are better at, but now the impact is almost universal.
This is a global issue; and don’t get mislead by the globalisation argument. While economist s David Aut or, David Dorn, and Gordon Hanson point out that competition from China has hit a quarter of manufacturing jobs in the US. Since 1996, manufacturing employment in China itself has actually fallen as well, coincidentally by an estimated 25 percent. That’s over thirty million fewer Chinese workers in that sector, even while output soared by 70 percent. It’s not that American workers are being replaced by Chinese workers. It’s that bot h American and Chinese workers are being made more efficient by automation. As a result, both countries are producing more output with fewer workers.
Even more disturbing should be their deduction that it is not the developed world which will be worse hit by this, but the developing world where they rely upon their cheap labour for economic growth.
This is the real root cause of the anger that is behind Brexit and the support for Trump. In the run up to the election I asked people who they thought was angrier out of Trump and Clinton, they obviously said Trump. People felt that he spoke for them and expressed their anger.
In The Second Machine Age they explain how we are now in a world where the winner takes all, basically an online shop or App can make a handful of people billionaires while wiping out thousands and thousands of jobs.
They do however say that this technical revolution is going to benefit humanity and we shouldn’t set about smashing up the spinning or weaving machines.
They suggest that political and economic reforms will be required; but as long as Central Bankers, First Ladies, Presidents and the general population remain ignorant of the fundamental issue of our time, then reforms will remain impossible.