Making the Future Work for Us

CAMBRIDGE – What does the future of work hold in store, and how should we prepare for it? The debate so far has focused on developed countries, but it is a question that will affect the entire world.

To pessimists, the introduction of these so-called general-purpose technologies – including 3-D printing, artificial intelligence, and the Internet of Things – threatens the demand for labor; without new forms of social solidarity, such as a universal basic income, the future will be one of widespread destitution. To optimists, the latest technological developments, like others that have propelled humanity forward, promise to deliver unprecedented levels of prosperity.

It is probably impossible at this stage to say which side is right. As the physicist Niels Bohr said: “It is very hard to predict, especially the future.” For a complex system such as the world economy, understanding the past – for example, the massive decline in manufacturing employment in almost all countries over the past two decades – is already hard enough. What is more easily ascertained are the causal links that might determine the outcome.

Rapid displacement of massive amounts of human labor is not a new occurrence. The early-nineteenth-century Luddites revolted against the mechanical looms that were supplanting artisanal textile production. Almost 60 years later, agricultural employment in the US peaked at 53% of total employment. Today, it is less than 3%.

In fact, since as recently as 1980, most countries have experienced large declines in agricultural employment. In some, like Portugal, Malaysia, Turkey, and Indonesia, the share of agricultural employment declined by more than 20%. In others, like Greece, Italy, Bulgaria, Hungary, Estonia, Poland, Malaysia, Philippines, and Sri Lanka, the decline exceeded 10%.

And it’s not just agriculture. According to the World Bank’s World Development Indicators, the share of manufacturing in GDP fell in 100 of the 124 countries reporting data since 1990.

But if large shifts in the composition of employment have been the norm, what makes today’s technology-driven shifts so scary?

Fundamentally, technology is a way to transform “the world as I found it” into “the world as I want it to be” – from pastures to milk, from soybeans to chicken tenders, from silicon to smartphones. And it depends on three forms of knowledge: embedded knowledge in tools; codified knowledge in recipes, manuals, and protocols; and tacit knowledge, or knowhow, in brains.

Most of the time, these three forms of knowledge complement one another: like coffee and sugar, the more of one you have, the more of the others you want. But technological progress occasionally substitutes one for another, as with coffee and tea. Once upon a time, people stuck their hands in the ground to plant the next crop. Now seed drills and planters do that much more quickly and effortlessly. Not long ago, airline check-in clerks wrote out boarding passes. Now they are delivered to our smartphones. It is these substitutions – the embodied knowledge of the machine for the knowhow of traditional handiwork – that make us fearful.

But while each new technology displaces one form of knowhow, it creates others. The first industrial revolution so reduced the cost of textiles that it led to a boom in demand, production, and employment. Likewise, as David Autor of MIT has pointed out, the automatic teller machine (ATM) displaced human bank tellers, but so reduced the cost of branches that their number rose, fueling an increase in employees focused on customer relationship management (for which ATMs are less than ideal). Today, websites have displaced printed materials, giving rise to an industry of web designers.

But while it is clear which jobs new technologies displace, it is harder to anticipate how the new possibilities will be exploited. Back in 2001, many thought the Internet’s fiber-optic backbone had been overbuilt, given low demand for bandwidth. But then along came iTunes, YouTube, Facebook, Twitter, Skype, and Netflix. Similarly, today we are trying to predict the nature of future work before the jobs of the future have been invented.

The most important uncertain aspect of the new technologies is their diffusion capacity. If they do not diffuse worldwide, they will widen the income divide between countries and regions. Landline telephone service and electricity have diffused far less than guns and cellphones.

One determinant of a technology’s “diffusability” is its knowhow intensity. Tools and codes are easy to ship; moving the knowhow needed to use them is a different matter. Guns require just a little training to operate, whereas an electrical utility requires a large team of people with varied expertise to run the generators, install and service the transmission lines and sub-stations, limit theft, and compel customers to pay their bills on time. Technologies that require more diverse knowhow, reflected in the size and heterogeneity of the team needed to implement them, diffuse much more slowly or not at all.

A new technology’s diffusion is also affected by its dependence on the previous diffusion of other technologies. Uber depends on the previous diffusion of cell phones, cars, and credit cards. If implementing a technology requires less knowhow and fewer other technologies, it is likely to diffuse even faster than the technologies it replaces.

This is what people call technological leapfrogging. As was the case with computer-aided design and manufacturing, it is easier to run a 3-D printer than to master all the steps needed to make the same part the traditional way.

Artificial intelligence may make technology less reliant on knowhow and consequently easier to diffuse. By contrast, the Internet of Things will probably require prior diffusion of many other technologies. In 66 countries, electricity penetration is less than 60%; in 26 countries, it is less than 30%.

Finally, diffusion depends on whether countries can afford to purchase the new technology. And that, in turn, depends on whether it facilitates or complicates their search for goods and services that they can sell internationally. The globalization of value chains has made it easier for more countries and regions to participate in international trade, because each country needs to assemble less complex teams; but it has been bad for places like Detroit, where fully integrated industries used to cluster.

In the end, predicting the future is beside the point. Most countries’ future is more likely to be bright if they focus on ensuring that they can master every new technology and exploit every new opportunity that comes their way.

Ricardo Hausmann, a former minister of planning of Venezuela and former Chief Economist of the Inter-American Development Bank, is Director of the Center for International Development at Harvard University and a professor of economics at the Harvard Kennedy School.

By Ricardo Hausmann

Europe’s Three Fault Lines

PARIS – Ten or 20 years ago, the existential question facing the European Union was whether it still had a purpose in a globalized world. The question today is whether the EU can respond effectively to major external shocks.

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How Poor Countries Foot the Refugee Bill

PARIS – The Syrian refugee crisis has focused attention on the need to improve management of refugee flows during times of crisis. One issue is particularly worrying: poor countries may be paying a large indirect price for rich countries’ efforts.

Data show that a substantial portion of the costs associated with the influx of refugees and asylum-seekers in some European countries is being reported as official development assistance (ODA) – the measure the OECD Development Assistance Committee (DAC) uses to track international aid spending. This leaves less ODA available to launch, sustain, or expand economic development projects in poor countries.

In 2015, the European Union’s DAC member states spent $9.7 billion of their ODA budgets on approximately 1.2 million asylum-seekers in their own countries. By comparison, they spent $3.2 billion of ODA in Syria, Afghanistan, Somalia, South Sudan, and Sudan– the top five countries from which those asylum-seekers had fled.

The rule enabling donors to report so-called “in-donor” refugee costs as ODA was introduced in the OECD-DAC Statistical Reporting Directives back in 1988. At first, few DAC donors took advantage of it. From 2010 to 2015, however, the share of total ODA reported as in-donor spending more than tripled, from 2.7% to 9.1%.

The DAC is working to establish clearer rules for using ODA to cover in-donor refugee costs.It has established a Temporary Working Group on Refugees and Migration to help determine whether donors are targeting their assistance in the right way, in the right place, and at the right time. We expect to be able to communicate the results of this work around July.

The global attention that the Syrian crisis has focused on refugee flows and associated humanitarian needs is a positive development. Yet Syrians constitute only a small portion of the more than 21 million people worldwide listed as “refugees” by the United Nations Refugee Agency (the UNHCR categorizes more than 65 million people as “forcibly displaced”). And while the spotlight today is on asylum-seekers in Europe, most refugees – over 86% – remain in developing countries, close to the countries they have fled. Uganda, for example, took in more refugees from South Sudan in 2016 than the total number of migrants crossing the Mediterranean into Europe over the same period.

Every day, 40,000 people are forced to flee from conflict and persecution. Many more leave their homes in search of a safe and dignified future. An increasing number of these people are displaced for 20 years or more. And many are left behind, displaced within their own countries, living in extreme insecurity and poverty.

Standing by idly while others live in fear is not humane. Yet countries like Uganda, which for decades have generously hosted hundreds of thousands of refugees, increasingly see the principles of tolerance and protection they uphold undermined in the global north. Wealthy countries understandably seek to manage their own refugee populations and reassure their own citizens. Yet the right to asylum is universal and development cooperation must not, under any circumstances, be used for the purpose of containment.

Refugee situations are not new. Together, the top five countries of origin have generated approximately 10.2 million refugees over the past 25 years. The numbers are staggering, but the challenge they represent is by no means insurmountable. Development aid can help to address the longer-term, socioeconomic dimensions of displacement, lending support to ensure that refugees are included in national and local development plans. It can help address the root causes of forced displacement by focusing efforts on reducing poverty and inequality, strengthening peace building, and improving access to justice. The OECD’s temporary working group will seek to identify and deliver better solutions for refugees.

The conditions facing forced migrants today stand in stark contrast to international commitments such as the Sustainable Development Goals, which strive to “leave no one behind.” Failure to address these issues also threatens the international solidarity that underpins the global development agenda.

Developed and developing countries need to work together. They must leave no ambiguity about the right to seek asylum and the responsibility to protect those who exercise it. We need to ensure that “new” funding means extra money, rather than the redirection of funds. And above all, programs for refugees – including responses within our own borders – must have human rights at their core. Jorge Moreira da Silva, formerly Portugal’s Minister of Environment and Energy, is Director of the OECD Development Cooperation Directorate.

By Jorge Moreira da Silva

How to Fight Antimicrobial Resistance

ZURICH – Two weeks ago, G20 leaders committed to working together to address one of the world’s most pressing and perplexing security threats: antimicrobial resistance (AMR) – a fierce and evolving adversary against which conventional therapeutic weapons are of no use.

The threat is straightforward: bacteria and other microbes are becoming resistant to available medicines faster than new medicines are being developed. Every year, drug-resistant microbes kill about 700,000 people worldwide – more than three times the annual death toll from armed conflicts.

In 2016, a special panel commissioned by the British government predicted that, by 2050, as many as ten million more people will die from drug-resistant microbes every year. AMR now poses a clear and present danger to every person on the planet. Unless we confront it head-on, we could return to a world in which it is common for people to die from basic infections.

Beyond the cost in human lives, AMR could devastate the world’s economies. In Europe alone, the annual health-care costs and productivity losses associated with AMR already total an estimated €1.5 billion ($1.7 billion).

The G20, for its part, has taken an important step forward. Each G20 country has promised to start implementing national plans to fight AMR in earnest, and to do more to promote new treatments against resistant microbes. To that end, G20 leaders are calling for an international “R&D Collaboration Hub” to “maximize the impact of existing and new anti-microbial basic and clinical research initiatives.” And they have promised to explore how market incentives can be used to encourage new research.

Beyond the G20, innovative public-private partnerships are emerging to deliver new treatments against drug-resistant killers such as tuberculosis. And some governments have already started filling critical roles in the global response to AMR, by collecting data on the spread of resistant strains of E. coli, salmonella, and other common pathogens.

Now it is up to political leaders to follow through on their commitments. Because new treatments for multidrug-resistant microbes aren’t expected to generate much return on investment, it is incumbent upon governments to make research and development in this field more attractive to private companies, and, in order to stem the development of resistance, to ensure that new drugs are not overused.

When traditional market mechanisms fail, instruments such as “transferable market exclusivities” can help, by allowing drug makers to transfer an antimicrobial medicine’s intellectual-property benefits to another drug.

In addition to policy innovations, more well-funded collaborations between governments and private institutions are needed. When private institutions enter into such collaborative efforts, they must be prepared to work outside of traditional boundaries, accept the challenges associated with complex public projects, and be willing to bring their skills, ideas, and experience to the table.

In responding to AMR, we can learn some valuable lessons from other global public-health efforts. Malaria, which is caused by a parasite transmitted by more than 100 species of Anopheles mosquito, is a leading cause of death in many parts of the world. But now that many governments and private institutions have made fighting the disease a high priority, its death toll has been halved over the last 15 years.

Still, the parasite that causes malaria is developing resistance to artemisinin, which forms the basis for the most effective treatment: artemisinin-based combination therapies. Artemisinin resistance first emerged in Cambodia just over a decade ago, and has since spread through Thailand, Laos, Vietnam, Myanmar, and China. It is now approaching India, and experts are sure that it will eventually reach Africa. According to one recent study, if artemisinin resistance is allowed to spread, malaria will kill at least 116,000 more people every year.

Unless new treatments become available, the tremendous progress that the world has made against malaria will have been tragically short-lived. Fortunately, those engaged in the global response to malaria recognize that just as parasites are adapting, so must we. New efforts are underway to identify and minimize the spread of resistant malaria, while simultaneously developing new artemisinin-free treatments.

For example, the Regional Artemisinin-Resistance Initiative is working to halt the spread of resistant malaria in the Mekong Delta region, by monitoring and sharing drug-resistance data and promoting proper use of antimalarial treatments. So far, the initiative has secured €110 million through the Global Fund to Fight AIDS, Tuberculosis, and Malaria, which is financed primarily by governments.

Moreover, Novartis and the Medicines for Malaria Venture (with support from the Bill & Melinda Gates Foundation) are starting a new clinical trial next month to test KAF156, a molecule that could form the basis of a new treatment against artemisinin-resistant malaria strains.

At the 2016 World Economic Forum in Davos, Switzerland, 100 companies (including Novartis) and industry associations signed the Davos Declaration on AMR. Under that commitment, we promised to work together with governments to slow the development of resistance, by increasing our investments in R&D and making high-quality antibiotics available to patients who need them.

The G20’s national action plans will, we hope, help us to meet these commitments. But political leaders, too, must marshal the will to turn words into action. We urgently need more resources to monitor resistance, stronger incentives for R&D, and innovative financing mechanisms to ensure widespread access to accurate diagnoses and quality medicines.

The world cannot afford to lose the fight against AMR. Winning it will require large-scale public-private cooperation, underpinned by political leadership that makes global public health a top priority. Jörg Reinhardt is Chairman of the Novartis Board of Directors.

By Jörg Reinhardt

Data for Development

NEW YORK – The data revolution is rapidly transforming every part of society. Elections are managed with biometrics, forests are monitored by satellite imagery, banking has migrated from branch offices to smartphones, and medical x-rays are examined halfway around the world.

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Why deflation is good news for Europe

BRUSSELS – In today's global economy, there is no price as important as that of crude oil. More than 80 million barrels are produced (and consumed) daily, and a large part of that output is traded internationally. Thus, the sharp fall in the crude-oil price – from about $110 last year to around $60 today – is yielding hundreds of billions of dollars in savings for oil importers. For the European Union and the United States, the gain from that decline is worth about 2-3% of GDP.

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Constitution Review Committee Marches on

The Constitution Review Committee has ended a three days working retreat in the historic City of Robertsport, Grand Cape Mount County which began Wednesday February 13, 2013 and ended February 15, 2013.

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“The Legislature Is Independent”

The Constitution Review Commission’s two days symposium was money spent in the right direction. Since the Liberian civil war, it seems that the review process is the first substantive move to deal with causative factors which led to the Liberian conflagration. The Chairman of the National Council of Chiefs, Chief Zanzar Kawor, with vehemence, spoke the minds of traditional leaders.

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Liberians Expressed Views on Constitution:

Participants at the just concluded constitution review symposium demonstrated interest in the review of the Liberian constitution. The issues raised seem to speak beyond the mandate of the President to the Gloria Scott’s Review Committee. There is no doubt that the timeline of the commission cannot do justice to the numerical preponderance of constitutional contradictions.

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Public Works Rural Agenda: A New Dawn for Rural Cities?

The Republic of Liberia is evidently far behind its neighbors and other African nations in terms of infrastructural development. The Republics of Ghana, Nigeria, and Guinea have outdone Liberia infra-structurally. City roads networks and high ways are in better and modern conditions than Africa’s oldest independent state. It seems difficult to understand why a nation that is 165 years old with lots of natural riches has not paved all of its city streets and highways. Can it be that Liberia is jinxed; or simply the fact that we have lost hold of development priorities?

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