We Live in a Time of Unprecedented Prosperity
We have had a great run. The world has never been more prosperous than it is today. People around the world live longer, healthier lives than ever before. In emerging markets, billions of people have moved out of extreme poverty. In the developed world, we enjoy better medicines, education, information, connectivity, and mobility than most of us could have imagined a quarter century ago.
These achievements have many fathers and mothers. Human inventiveness, political leadership, social activism, and entrepreneurship have all contributed to what Nobel Prize winner Amartya Sen described as human freedom.
Carefully crafted policies for the free exchange of goods, services, capital, and labor—commonly known as globalization—and the march of technology have played essential roles. These two forces have increased productivity, opened up markets, and created opportunities for billions of people to improve their lives.
We Also Live in a Time of Growing Economic Inequality and Uncertainty
Societies in the United States and Europe are being fundamentally challenged in ways we have not seen for decades—with nationalistic rhetoric and agendas from the far right and a deep distrust of business, globalization, and technology from the far left. Many worry that such a polarization of public opinion and policy making could introduce new risks and uncertainties that would deter investment (which is already far too low, judging by current interest rates) and undermine the basis for future prosperity.
Why this polarization? While there are many causes, and they vary from country to country, it reflects in large part widespread and growing dissatisfaction with entrenched economic and social inequality and greater personal uncertainty in a fast-changing global economy. It also reflects people’s mistrust of political and corporate elites, who are seen as the architects of this state of affairs. Economic inequality within our societies is a byproduct of the way we have managed the past three and a half decades of global economic integration. At the same time, technology—in particular, recent advances in robotics, machine intelligence, and distributed ledgers (blockchain)—could replace human labor in many areas, further compounding dislocation, inequality, and discontent.
Brexit was a watershed. The British vote to leave the European Union was motivated in large part by frustration with economic stagnation and inequality, and it has created fertile ground for nationalistic, anti-immigrant sentiment. The English West Midlands, the region with highest “leave” vote, has experienced stagnating median household incomes for nearly two decades.
The division between those who have captured the vast majority of the benefits from global integration and technological progress and those who haven’t runs between major cities and smaller communities, between young and old, and between people with different levels of education. And it’s not just Great Britain—70% of the US workforce has experienced no real wage increase in the past four decades. Similar patterns can be observed in Canada, Germany, and other European countries. Wealth concentration has also increased globally, with around 1% of people controlling 50% of the world’s assets.
Chosen excerpts by Job Market Monitor. Read the whole story at bcg.perspectives – Saving Globalization and Technology from Themselves