The demand for workers, even in China, is moving from low-skilled to highly-trained workers and transforming labor markets around the world. Some countries, including the US and Japan, have rapidly aging populations and businesses have begun to rely on automation instead of the traditional physical labor. This brings to mind the change from travel by horseback and stagecoach to cars powered by steam power and the fossil fuel combustion engine.
From a macroeconomic perspective, in light of the emergence of industrial robots, the future for human workers couldn’t be more uncertain. Examples of robots replacing humans are rife, such as the use of robots for more efficient aircraft production. It turns out that aircraft order backlogs are cleared much more quickly when robots are involved than otherwise.
China, the world’s main manufacturing base, has unleashed the desire among its people for the products they have been building for decades but have not been able to afford. One reason for the high rate of “knockoffs” of Western products is the desire for the average Chinese citizen to be able to afford high-tech devices that look like the real thing.
Just as many countries skipped the buildout of telecommunication systems with wires and went directly to wireless mobile technology, many emerging economies including Indonesia, South Korea, Taiwan, and Thailand are skipping the Chinese style low-wage model of growth and moving directly to high-tech automated manufacturing. This is being referred to as the Auto-Industrial Society, as in the Automated Industrial Society, the new model for economic prosperity in the 21st century.
The following video by Robert Reich, former US Labor Secretary, “Preparing Our Economy for the Impact of Automation & AI,” explains the challenges and opportunities ahead.
