Donald Trump secured his election success in the federal states that once made up the industrial heartland of the USA. The radical disruption that has shaped those areas offers a vivid indication of how technology is redefining the value creation process entirely. What can be done to reconcile technological progress and civic democracy?
The future is upon us quicker than we expect.
Ordinary factories don’t consist of speedy assembly lines surrounded by diligent workers anymore. Instead there is hardly any difference between the workspace in a plant and a law office. Desk jobs are the main activities in both settings.
The same would be true for financial services. Banks are still physically entered into to arrange remittances but basically any money transfer is nowadays virtually nothing more than the exchange of datasets within an electronic network.
This is what a new age looks like, leaving behind the operating principles of the industrial era. The resources that keep our societies running are numeric codes encrypted in bits and bytes.
If our societies are getting collectively smarter, how can the regressive political backslash in the West be explained? The difficulty lies in the fact that both developments are partly driven by the same causes.
Various reasons need to be taken into account in order to understand the current rise of populism. Ideological roots and references must be examined. Widening inequality undermines social cohesion. Deregulated financial markets remain a potentially explosive threat to society. Toxic financial products are still traded and bankers act under the condition of a moral hazard, enabled by an awareness that in the end they will be bailed out by public funding no matter how catastrophic the outcome of their conduct.
There is a clear lack of a coherent political programme offered by the Left to seriously tackle these unsustainable trends. On the contrary, part of the traditional Left has succumbed to the idea that market forces alone will lead to greater general prosperity and will ultimately make the poorest better off as well. It remains a hard task to replace wishful thinking with political proposals that guide into a progressive future.
Now there is one key factor missing in the outline above. One particular aspect is all too easily overlooked: The role of technology.
When correlating technology and the rise of populism, the importance of social platforms in the political discourse is usually – and for good reason – considered. Populist anger and the mutation of social networks into chambers of obscurantism and realms of conspiracy go hand in hand and even accelerate each other. Trolls financed by state agents act as a key agents in this regard.
But for now let’s choose another approach: What is it that technology actually does? In principle, it facilitates the work that needs to be done, it turns repetitive activities into an automated workflow, and it changes manual occupations into mechanical activities. Given the current limits of technology the direct implementation is mainly restricted to labour activities in manufacturing processes in which the repetitive pattern of individual tasks can be easily replicated.
The American presidential election and the consequences of automation
Bearing that in mind, an essential explanation can be given on what happened in the United States of America last November when Donald Trump was elected president.
The republican candidate ran an unsettling, narcissistic, xenophobic, misogynistic, incoherent, aggressive, and contradictory campaign. But he constantly delivered one reverberating message: His administration would undo the massive consequences caused by deindustrialisation in the American heartlands by curbing immigration and free trade.
This is where the misconception already starts. The job loss in the manufacturing sector was neither caused by free trade nor by migration scenarios. It was initiated by technology.
In the US about 5.6 million manufacturing jobs were lost between 2000 and 2010. A study conducted by the Ball State University estimated that 85 % of these cuts are actually attributable to technological change, particularly automation.
The output of U.S. manufacturing more than doubled over the course of the last 25 years, whereas the number of people employed in the sector has almost halved.
The Boston Consulting group meanwhile estimates that on average an hour of manual labour costs 28 $ in the USA whereas an hour of automated labour costs $ 8.
Automation substituted simple tasks in the production process that were executed by people who often had little or no skills. It must be acknowledged that a lack of education presently results in lacking the skills demanded by the labour market. If a task doesn’t demand special qualifications, it can be automated much more easily than more complex ones. This interdependence must not be ignored.
Donald Trump lost the popular vote but outperformed his competitors in 30 U.S.-states, which secured him the Electoral College win. If the 30 : 20 ratio that shaped the division among the states in the election is used to depict further patterns than interesting correlations can be discovered.
One factor that explains the likelihood for a certain candidate to win the majority in a particular state is the share of inhabitants who obtained a higher education degree. Donald Trump won 28 out of the 30 states where people are less likely to have entered higher education. Hillary Clinton won 18 of the 20 other states. The share of people in a state having a higher education degree determined the outcome of that state’s results more than even wealth or faith.
The orange states were won by Donald Trump, and the green states by Hillary Clinton. Donald Trump obtained the majority of votes in 30 states, Hillary Clinton 20 states plus Washington DC.
The 30 states in orange have a lower share of inhabitants with any kind of higher education degree compared to the other 20 states in green. Trump won 28 of the 30 orange ones and Clinton 18 of the 20 green ones.
The orange states indicate the 30 states with a lower GDP / capita compared to the other 20 states. Donald Trump won 24 of the orange ones, the poorer states.
The 30 states coloured in orange show the areas where a relatively higher importance of religiosity shapes everyday life compared to the other 20 US-states. Relying on a Gallup survey that examined the importance of faith it can be seen that Donald Trump in fact won 25 out of 30 states with a stronger inclination to religiosity. The share of people with a higher education degree living in a state therefore represents a fact more relevant than prosperity in form of GDP / capita or faith to assess the probability of each candidate winning a majority.
Refocusing our attention on the other side of the Atlantic, a similar tendency can be observed.
Looking at the electoral map of France it can generally be stated that the higher the unemployment rate in a particular region the bigger the share of votes for Marine Le Pen in the final runoff of the presidential elections against Emmanuel Macron in spring 2017. There is an especially strong correlation in areas hard-hit by the consequences of deindustrialisation and automation. Marine Le Pen performed above average in areas that used to be the backbone of French industry: regions in the north and southeast that dealt with massive reductions in the number of jobs in the manufacturing sector over the past decades.
The same would be true for the Dutch election in 2017 when polls ahead of the national ballot predicted the possibility that the far-right politician Geert Wilders could be the next prime minister of the Netherlands. This is not only astonishing because the Netherlands are a parliamentary monarchy and Geert Wilders presides over a party that only consists of a single member – himself. It is also remarkable because the consequences of technological disruption influenced the outcome significantly, according to scientific analysis. The Dutch political scientist Cas Mude attributed the rise of Geert Wilders partly to the phenomena of deindustrialisation in the country whereas the OECD states that the output of the national industrial sector has grown constantly over the past. What appears to be a paradox becomes easily explicable if the results of automation are included into the equation. Redundancies in the manufacturing sector don’t entail the lowering of the overall output. It just demonstrates that jobs that have been done manually before are now automated.
Don’t draw false conclusions
What to do with the insights now?
First of all don’t draw the wrong conclusion. The frivolous claim that the better educated someone is, the more likely he or she is to resist the appeal of modern populists must not be accepted as an adequate rationalisation to explain the rise of populism. Modern society and politics thankfully do not operate that simplistically. The rise of populism must be understood before the background that education serves as the key gate to the labour market and the labour market still represents one major pathway to participate in societies. Equally, a lack of education doesn’t mean one is apathetic, resentful, or dull. Instead it leads to a lack of the skills that are more and more in demand in factories or offices, clinics, or public authorities, supermarkets or shops. This is even more true going into the future.
Populism can be understood as the expression of political disapproval by a certain class that has been callously left behind by the economic structure. If Western societies go on like this they will turn into duopolistic entities where fewer and fewer find auspicious opportunities and a growing mass of people are deprived from any chances to contribute meaningfully to modern economy. Populists understand how to channel the rage.
Manufacturing is just the beginning of automation. Artificial intelligence will probably have similar consequences for our offices and parts of the service industry as automation has for manufacturing. Robotics will reshape our health care system and warehouses. Drones will change delivery systems and supply chains. Self-driving cars and lorries are going to disrupt the transport sector. 3D printing will overhaul traditional industries. Blockchain technology will probably recreate the financial industry and law business in a similar way as social media has changed publishing.
The luddite claim that technological progress shall simply slow down is therefore futile and counterproductive. We are just standing at the beginning of a transformation. Technology, result of our scientific endeavour, is a wonderful gift, if it is properly used as a vehicle for more prosperity, as a tool for development and efficiency, and as a key means towards making the green revolution a reality.
However it reshapes our labour market entirely. There is no sense in sticking to old conceptions about labour. A simple reduction of the weekly working time isn’t a sufficient proposal since it ignores the underlying structures of the ongoing developments. Solutions that worked well in the past won’t work in a radically different future. Our societies are not running out of work but substituting particular manual tasks with machines. The political challenge isn’t solved with the consideration on how to redistribute work that is still available. The question should instead be how to introduce mechanisms to redistribute the wealth created by machines.
Societies have lived through fundamental changes and transformative progress. Basically new ideas are needed, somehow as radical as the idea of universal health care when our societies managed to mitigate the impact of the industrial age. Ideas are needed that are as staggering as the break-up of the aristocratic authority by the rule of law through parliaments. The universal basic income represents such an approach.
The universal basic income institutionalises a mechanism that allows us to redistribute wealth created by robots and IT-operations. It would mark an expansion of our civic rights. The profitability realised by machines is currently almost entirely privatised, apart from the amount that every state collects by the corporate income taxes. Compared to human labour, more machines don’t result in more income tax or social security contribution. That needs to change. We can’t afford to stick to the idea that labour is the main mechanism to fabricate wealth. If this is no longer the case, then we need to get rid of the common conceptions around work as well. We have to start to think differently. The ordinary understanding of wealth and labour is deeply rooted in past experiences but don’t capture the new paradigms that are evolving. There needs to be some kind of disentanglement between income and work.
Furthermore we need to demand public investment in higher education. Higher education must be made accessible for as many as possible and tuition free. It can be even regarded as an investment that will pay off in the future many times over. Our higher education system must become more integrative, more representative, more adaptive – just more open.
The project of life-long learning must be promoted and institutionalised. Skills get outdated more quickly than ever before. Constant acquisition of more qualifications shall turn into an integrative part of a professional career. This task aims at public institutions, universities, schools, trade unions, employers’ federations, employers, and employees likewise.
The debate about fair and democratic education represents not merely an economical imperative: it is a struggle to let the open society endure and prevail. It is an idea aiming on defending democracy itself by equipping citizens with the possibility to live a dignified and self-determined life. Only a steadfast link between new ideas in regards to education and the acceptance that machines need to work for humans – and not that men have to compete with machines – will turn the knowledge society into a civic project and democratic movement. We need to discuss the basic questions about how it should be managed that as many as possible will benefit from the great promises that lie ahead. That would finally build a narrative that could give guidance to build up a new civic age under advanced conditions. Don’t blame technology for the deficiencies that we are currently experiencing. Instead it is up to us democratic citizens to shape the promising age that lies ahead and to make use of the great opportunities offered by the mechanics of progress.
This is the abridged version of a talk held at the annual conference of the Green Economic Institute, hosted at St. Hugh’s College, University of Oxford.