The small Midlands town of Stoke-on-Trent is the latest theatre in the ongoing battle of incumbent political parties vs their upstart, hot-headed, populist newbs. But what does this sleepy backwater of middle England have to do with events in California and Italy?
The United Kingdom of Great Britain and Northern Ireland gave birth to the modern world. If it hadn’t been for the liberalism eschewed across the country, things might be very different today. Technological innovation is one of the outstanding legacies that the bullish Brits gave to the world. From the centres of heavy industry, Newcastle-upon-Tyne, to the workshop of the world: Birmingham, and Mancunian-Leeds’ garment factories, to the engineers that increased industrial throughput, technology has been first and foremost the single most important constant since that Geordie lad, George Stephenson, designed and built the Rocket that ran between Darlington and Stockton-on-Tees.
Fast forward 300 odd years later, that Rocket has had several iterations. The Japanese have bullet trains and the Australians have them nearly 1km long. Yet, was Adam Smith right when he penned The Wealth of Nations?
300 years is a long time, even for people, and since 1750 (the date that Britain’s Industrial Revolution began) that rate of innovation has not stopped. Today, however, this innovation in technology might signal the painful birth pangs of the most dreaded word that the EU Parliament and Westminster fear: Populism. As this short video from The Economist details, populism is a tsunami striking western democracies. What, if anything, can we do?
Unfortunately not a lot. That might come as a surprise but the reality is, ever since our Neolithic forefathers (and mothers) decided to give up on hunter-gathering and start farming, the so-called Agricultural (Neolithic) Revolution, the rate of technological change increased, just insignificantly. The problem citizens face in OECD and non-OECD countries, today, is that of computing power (the laws of which are encapsulated in Moore’s famous law). As we near the rubicon for quantum computing, expect a lot more disturbance in the global workforce.
In terms of risk, for both investors and governments, should we be worried? Yes. Speaking from my own city, London, incumbent governments need to get their acts together regarding the rate of change. Technology is a constant. It’s a “known known” that it will and always will change. The problem is the catalyst: computing. Computing burst onto the scene in 1946, with the University of Pennslyvania’s first computer ENIAC. And since then, just like the world’s human stock, it has seen continued and incredible growth.
Governments, like most social institutions, at least in the UK, are stuck in a Victorian mindset. There are outliers here and there that are revolutionising education, training, and engagement. Think MOOCs and the use of mobile ICTs as a leapfrog technology in developing countries. But as far as risk goes, without credible policies in place and ex-ante government policy and programmes, the world’s current and future stock of human capital is in for one hell of a ride. In fact, the only guaranteed winners in this fast changing landscape are those whom the system already favours: Exceptionally intelligent men and women. Think of those occupying the very best jobs and positions in organisations across the world. Standardised testing (GCSEs, A-Levels, degrees, and post-graduate education), in addition to obtaining 70th percentile+ marks in PLI and graduate aptitude tests. With the current set up, it is only these who benefit from retraining and retooling. The rest of us, like in any dystopia, are fending for ourselves. It comes as little surprise then, that The Economist has published on this recently, see here, here, and here, and seems to be using a trumpet of words to destroy the new Jericho: Outdated and unsuited institutions.
It is scenes like the ramshackle, bodge job, of Port Talbot’s steel works that scare investors and incumbent governments. This is the greatest source of political risk threatening OECD nations. Populism, as the short video describes, is a real and present danger. Incumbent governments have forgotten the anger and angst from the 2007 – ongoing recession (outside of London, in the UK), and are surfing the good times once again but populism is something pundits and betting agencies (posh pollsters) haven’t factored into their fancy algorithms. The likes of Italy’s god-like, charismatic, Beppe Grillo, Farage, and Trump, have all provided simple yet effective messages to the masses that have, and are, quite frankly being left behind.
The real test of politicians convictions will come in the following decade when the likes of OTTO’s self-driving lorries will displace over 3.5 million Americans from the trucking industry. This is the litmus test. If government’s fail here. Rather, if Trumponomics fails here, this could be the single gravest threat to peacetime security since the end of WW2 and the collapse of Russian Communism.