For all the talk of growth, though, the global economy is also in an employment morass that has the smartest people in the room humbled and anxious. The rebound is not producing jobs and pay increases to the degree that many of them expected. Most governments are tapped out, fiscally, and can only call on the private sector – “the innovators” – to do more.
That in itself seems humbling. Davos was the place where governments often found succor, in a cacophony of panels, speeches and forums that seemed to usually conclude with the view that a government – democratic or theocratic, clean or corrupt – had good reason to go home and get on with it.
Of course, after 9/11, governments coming here expressed dismay at their seeming inability to fight the new enemy. State warfare was gone. Then came the financial crash of 2008, and the state was back. Bailouts, crackdowns, virtual printing presses for money – the interventionists had their day in the Swiss sun.
But rather than a celebration, these countries are all owning up to a new challenge, as amorphous and yet more insidious than anything else on the agenda. You wander into the Google Club and sense that much of what Davos has known is coming unglued.
Here’s what the world may look like, sometime in the 2020s, which for this crowd is tomorrow:
• The Internet changing the functioning of everything. Your hearing aid. Your snow shovel. Your shoes. Everything will be programmed, monitored and designed for what’s called “process optimization,” meaning a machine will run your life.
• Advanced materials changing the shape of everything, from airplanes (they have to be cylindrical because of aluminum) to rooftops (they have to be angled because of lumber). More mind-bending (literally): bioprinted organs based on stem-cell materials.
• Artificial intelligence changing the job of everyone. Emerging intelligent software can handle unstructured commands and rely on what we humans call judgment. Siri is about to get a PhD.
The consulting firm McKinsey & Company has tried to calculate how much the coming wave of disruptive technologies will change the global economy, and figures a dozen innovations like these could, by 2025, create up to $33-trillion a year in new economic activity. That’s $3,300 for every expected person on the planet.
It’s heady stuff for consumers and entrepreneurs. Goods and services will be cheaper, and easier to use. And anyone with a sound, scalable idea – plus venture capital – will be able to eat the lunch of vast industries. Banks, universities and drug stores may yet get to taste the bitter pill of disruption that media, retail and phone companies have swallowed.
Which is where the worry of government becomes evident.
If a 3-D printer can kneecap your construction industry, or an AI-powered sensor put to pasture half your nurses, what hope is there for old-fashioned job creation?
The new digital divide – it used to be about access, now it’s about employment – stands to further isolate the millions of long-term jobless people in Europe and North America, many of whom have left the workforce and won’t be getting calls when jobs come back.
Some governments see this as a call for an overhaul of their education systems, to be replaced by lifelong learning programs that assume much of the population will be back in class at age 40, 50 and 60, and probably for a good many hours in between. Globally, there are an estimated 200-million unemployed. A Davos forum on the issue was told that number could hit 250 million by 2018.
In an age of economic upheaval, history indicates most employment will come from new enterprises, ones that don’t exist today, as the old ones – including government – batten down their hatches. In Canada, spurring such enterprise has left government planners flummoxed, just as they were a generation ago. With notable exceptions, venture capital remains as foreign as four-down football, something Canadian entrepreneurs go to Boston or San Francisco to find.