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Friday, 30 December 2016

Globalization: Trade & Technology

Auditing taught me there are 4 things worth safeguarding: money, goods, hours, and information. A new book by Richard Baldwin called The Great Convergence: Information Technology and the New Globalization brings a new perspective to these 4 elements.

Richard Baldwin "argues that globalization takes shape in three distinct stages: the ability to move goods, then ideas, and finally people. Since the early 19th century, the cost of the first two has fallen dramatically, spurring the surge in international trade that is now a feature of the modern global economy." (Quartz)

For thousands of years, transport of money, goods, hours and information was difficult. That was the main reason why wealth only increased slowly. Technology has created these means of transport: eg, wheel, truck, ship, train. The Technological Revolution of 1800-2100 has brought immense wealth although its distribution - not its existence - created global and national imbalances. See the 5 December 2016 speech on globalization by Mark Carney, the BoE governor.

Richard Baldwin states that only human labour (ie, hours) was not yet globalized. Technology is now about to change that too. Baldwin argues that outsourcing of jobs is essentially an outsourcing of technology (ie, information) as the people do not follow their jobs. The newest technology does allow a globalization of people by means of telepresence and telerobotics.

Telepresence has a lot to do with "holography, the science and practice of making holograms" (Wiki). Quartz: "Telepresence is half of a table with life-size screens, good light, lots of cameras, and microphones. Then the other half of the table is somewhere else. When people sit at the table you have a very strong impression that they are in the same room."

Telerobotics "is the area of robotics concerned with the control of semi-autonomous robots from a distance, using Wireless networks or tethered connections. It is a combination of two major subfields, teleoperation and telepresence." (Wiki). Quartz: A well-known telerobotics example "is the surgeon operating at a 100-kilometer distance from the patient".

The earliest example of a differentiation between work and work place is our day of "working at home". Actually many of us could work from any location and still do our job. An auditor could use telerobotics to attend a physical stock count while being thousands of kilometers away and monitor the process through the robot's "eyes" and "ears".

I have little doubt that using robots will be cheaper than outsourcing manufacturing jobs to low-income countries. The real challenge is with jobs in the services industry, which represents about 85 to 90% of our Western economies. Quartz: "It will create great opportunities in many of the countries that have been left behind by earlier globalization, for instance almost all of sub-Saharan Africa and South America."

The gradual introduction of a Universal Basic Income is strongly connected to the above. Quartz: "the most disruptive phase of globalization is just beginning".

We've Only Just Begun (1970) - The Carpenters - artists, lyrics, video, wiki-1, wiki-2