Colin James to Golden Bay University of the Third Age and public meeting in Takaka, 20 March 2015
It’s 2015 and you have a health issue: the doctor will see you now.
Imagine it’s 2020: the robot will see you now.
Now stretch your mind to 2025: the customer (patient) will see you now.
This time travel is not as wildly fictional as it sounds at first hearing. The 2010s are a remarkable decade. The science and derivative digital technologies that gave us the transistor in 1947, the integrated circuit (which we now call the chip) in 1958, the ready-to-use personal computer in 1977, the public internet a decade later and the smartphone in 2007 has come of age. It is a new industrial revolution – but very much faster than the first in the eighteenth-nineteenth centuries. There is a loose parallel with the coming of age in the 1920s of the technologies developed from the science of electricity a century earlier which transformed many aspects of daily life. But this industrial revolution is much faster than that one, too.
Digital technology is changing how goods and services are produced and blurring the definitions of goods and services to the point where we may not be able to distinguish them. Is an iPhone a good or service? Is Weta Digital a manufacturer?
The internet has enabled crowd design and funding — drawing on the ideas and investment from wherever they come — and targeted marketing to global niches. This is great for small firms in small countries.
Computers have changed the operation and organisation of factories. A new generation of robots, with growing capacity to respond to changing circumstances, is replacing workers on assembly lines and in many other aspects of production. A product is adjusted as it is being made to suit specific customer requirements. Instead of mass production — the maker decides what is made — there is mass customisation — the customer decides.
Increasing numbers of micro-computers are integrated into appliances, machines and other items to manage the way they operate and, increasingly, communicate with other micro-computers in appliances and machines and to interact with the people who own or operate them.
Additive manufacturing — formerly known as 3D printing — is developing fast. It is not outlandish to think that many things you buy in 2030 will be “made” either in your home or nearby and that “imports” will be the software and raw materials. Next: body parts.
These developments will have profound effects on what we now call “trade”. Some higher-technology products are now made in high-income countries because it is more cost-efficient and eliminates or shortens the complicated value chains along which the ingredients of products and then the products themselves now flow, often across a number of borders. “Reshoring” and “insourcing” are reversing three decades or more of “offshoring” and “outsourcing” that fuelled the rise of east Asia and particularly China.
Communication is far easier, far cheaper and far faster. On the planet of the apps ways of doing things are changing quickly. We are now hyperconnected.
A few years back David Jones in Australia complained it had become a fitting room: people came in, tried on an item, then bought it more cheaply over the internet. This is now widespread across retailing and some internet suppliers are setting up simple showrooms.
Uber has undermined the established taxi trade in many countries. Car-sharing smartphone apps locate the nearest pool car for you to drive from A to B, where someone else will pick it up to go from B to C and so on. Why own a car? Such inventions might customise “public” transport. In 2030 what will be “public” and what “private”?
Uber and Amazon are examples in the service and product fields. This will spread. Consumer and customer choice will widen.
These changes mark a generational shift at least as deep as the baby-boomers’ breach with their fuddy-duddy parents and maybe deeper. ACT MP David Seymour is 31. He said in a speech a couple of years back his decade-younger cousin had incomprehensibly (to him) different expectations of her digital devices from the expectations he had. And Facebook? “That’s for old people,” a 12-year-old told his father, an acquaintance of mine, four years ago.
This ability to be in close connection with someone without being actually in the other person’s physical presence may be part of the reason why in rich countries, including this one, young people are far less likely to want or get driving licences or own a car. Overall, per-person car-kilometres are falling. That is the “peak car” phenomenon which is driving a bus through once cast-iron predictions and planning for roads. No longer can you confidently say that if you build a road people will drive on it.
This new version of choice is seeping into education. Why put up with a boring, stumbling lecturer when you can access the best and flesh that out in tutorials? Why go to a polytechnic when a MOOC can give you exactly the new practical skill you need – likewise for an employer needing an employee to get a specific skill? Kids can be hooked into school with tablets and smart teaching. At Point England school kids from one of the poorest parts of Auckland are matching the national average in results.
For that matter, why get yourself stuck with an employer fixed in its ways when there are far more opportunities to do your own thing and make money at it? Chief executives tell me of graduates who don’t want a ladder-climbing career. They want to do something for a bit and move on. Some want to set up little businesses or operate as contractors. They want something like the sort of choice they have in sound and sight on the planet of the apps.
And, going back to where I started, why accept the doctor as gospel? You can scan the net for information on symptoms, some of them uncovered by devices you are wearing, some of them tested by yourself at home with new devices. Then you talk through the symptoms, measurements and other information with the medic who becomes an expert interpreter instead of all-knowing (or not-knowing) god. Even better, before taking up the doctor’s time, the doctor’s robot could work through your findings and symptoms and test them online to get better information and enable the doctor to target the intervention. If you have some rare disease shared with only a few people in the world, it is far more likely to be diagnosed if the symptoms can be fed into high-quality databases and all possibilities assessed: no doctor can know everything. Down the track, like retailers trying to reach customers who once used to come to them but now roam the net, doctors may be trying to work out how to get to customers who will no longer be “patients”.
And what about the interventions. Why be hacked about or subjected to medicines with side-effects when you could have a nerve implant which would negate the pain? Why not head off inheritable conditions with gene splicing. And for your next child, get the right DNA mix. It might cost a bit but you can ensure your kid won’t flunk maths.
Why put up with single-sourced assistance from the state when you could get it tailor-made by a not-for-profit or a private company which does some of the provision of services?
Does this sound like science fiction to you? It does to me. But I have only scratched the surface of what I read about in the New Scientist and elsewhere. A lot of that science-fiction-sounding stuff may be science fact.
This is an extraordinary decade, not just an extension of the 2000s. As a wit wrote three years back: “To say something is twenty-first century is so twenty-first century. These are the 2010s.”
And year by year digital technology makes many of our transactions easier. Do you want to go back to when the only things you could buy were what the shopkeeper had decided you could buy? Do you want to leaf through a stack of encyclopaedias to find out about something or is Google easier and quicker? Do you want to go back to 1980s banking? For that matter, why not extend the fiction that is money – and it is a fiction – to encompass the likes of bitcoin?
None of this says we are going to heaven on earth.
By the month privacy is being eroded, invaded and degraded. The lights are on, the blinds are up and you are naked.
Data can be collected, mined and used/misused with increasing, mind-boggling sophistication. We have always left trails as we have shopped, written to or rung each other, travelled and done deals. Now what we shop for is recorded (unless we use cash), what we write is archived forever (unless we write in pencil on paper), whom we ring is on file, where we travel or even walk is GPS-recorded and whom we deal with and for what is known. It takes a long time to peruse paper files, even if the material is available. New techniques – by which I mean techniques which weren’t around last year – enable sophsticated sifting of data. The high-profile sifting is by governments – of course, for our own good they say, claiming to protect liberty by eroding liberty. Lower-profile but far more pervasive and invasive and in my view immoral is what firms do, from Google down to the local supermarket. The Economist a couple of years back wrote that statisticians – once universities’ most boring outputs after accountants – were in hot demand by firms’ marketing teams.
How do you write laws to protect privacy in this dark underworld of data thieves? And if some 22-year-old legal genius did work out how and uncomprehending officials and politicians turned it into law and fusty old judges worked out how to apply court principles to that law, would those laws work in 2017 or 2020? Or do we just have to admit we have no privacy now? Is it back to the village, with the chintz curtains?
A second big change is in the nature and security of work. For those who want a steady, life-supporting income – and that is still by far most people – the prospect is not good. There has been a serious and serial loss of security as routine manufacturing and clerical jobs have been eliminated and largely replaced by in-person service work and menial work that doesn’t pay a living wage.
Optimists say that in the first industrial revolution two centuries back new technologies created more and better-paying jobs than the jobs they destroyed and this will happen with this revolution. Indeed there is burgeoning employment in digital-technology-related jobs. Pessimists say well-paying new jobs are limited in number and limited to the brainy or entrepreneurial and not everyone can be one of those so for the rest prospects are narrowing. Pessimists cite “man and a dog” automated factories: a dog to keep people out and a man to feed the dog (of course, a woman would manage the do better but that is another story). It is too early to say whether the optimists or pessimists will be right but if the pessimists are right the transition might be rough and a generation might be lost to serious inequality.
Add in globalisation, which has intensified over the past two decades to the point where it has become what Harvard economist Dani Rodrik has called hyperglobalisation. This is not just an extension of the globalisation we knew in the 1980s or even the 1990s. Economies are more deeply interconnected and interdependent. Supply chains have become complex value chains and are now becoming dispersed value networks. So-called trade agreements are far less about border protection against traded goods and far more about behind-the-border regulations, especially on intellectual property and recognition of professional qualifications, and access to legal sanctions.
There are many implications. One is that for routine work wage rates have been converging: a call-centre worker is paid the same in the United States as India. Another is that if the United States stuck tariffs on imports from China, Apple’s profits would fall far more than those of its Chinese assembly firms. A third is that for those in the “creative class”, the innovators of design, technology and marketing, the pickings have got much better. A fourth is that those who command or control capital are getting a far bigger slice of the global pie than those who work for salaries and wages.
That is destabilising societies. So is mass migration. Some 300 million live outside the borders of the countries they were born in. The result is tension and the rise of populism, notably in Europe. Populism can take many forms and project many ideologies, from far left to far right: Greece or Spain on the left and France, Britain, Holland and Germany on the right. But voters who desert established parties to give these movements political weight are not doing it for left or right reasons. They are frustrated with their economic and/or social conditions and they are angry with the establishment. The tragedy for their search for a relief from their frustration is that populist politics is usually counterproductive for them. It can also turn septic, as in Nazi Germany.
So it is no surprise that after a period of global order — the cold war standoff and then the unipolar American hegemony — we are now in a period of disorder. China’s assertive claims to territory in the North and South China Seas, Russia’s re-creation of an empire in opposition to western Europe’s encroachments into the Slavic region, and the chaos of Islamic fundamentalism are examples. Modern weapons are powerful deterrents to open state-versus-state warfare (though Iran is taking on the so-called Islamic State) but 101 years ago there also were thought to be powerful deterrents to war between the major powers of Europe.
And technology and globalisation have enabled terrorists to reach across borders and their marketing skills coupled with the internet’s instantaneity and reach have brought terror right into living rooms in a way that Irish bombers in London in the 1970s did not. The Beehive has responded by restricting liberties.
This hyperconnected and hyperglobalised humanity is creating for itself the need for major adaptation. The explosion of the global population – with another 30% projected by 2060 – coupled with the frenetic pursuit of material welfare has degraded ecosystems, poisoned and over-exploited water sources, polluted air to toxic levels and contributed to climate change. We have the means to mitigate these effects but, given that there is no global government and national governments do not want to risk lowering the material prosperity of their citizens, we humans are likely to be adapting to a less human-friendly global ecosystem more than we mitigate.
The good news is that humans’ standout distinguishing element is the capacity to adapt. The bad news is that it might be very disruptive.
The big picture is that technology, coupled with economic and social change, are driving a real globalisation – of societies and economies. The parallel is the transition from small local economies to national economies under the impact of the first industrial revolution. But then there were national governments which could intervene to manage that process. There are a few international governing bodies. The International Civil Aviation Organisation sets global rules for air transport which countries and airlines must comply with or lose trade. The World Trade Organisation sets rules for its members. And there is far less enthusiasm for state-versus-state war to resolve disputes than 75 years ago. But the United Nations is predicated on the inviolable sovereign Westphalian state and, except in Europe, no enthusiasm to hand over much if any national sovereignty.
Can there be a bit more of what idealists call “global governance”? Yes, on a bottom-up basis. That, for example, is the way the talks leading up to the Paris summit on climate change in November-December have been shaped, a combination of bottom-up national action within top-down agreed global rules. Countries are to table intended nationally determined contributions to curb greenhouse gas emissions post-2020, accompanied by narratives explaining the thinking and policy. They will be “peer-reviewed” by all other countries and maybe adjusted before Paris. Presidents Barack Obama and Xi Jinping gave a big boost to the bottom-up process late last year when Obama stated his intention to cut United States emissions by 26% from 2005 levels by 2025 and Xi committed to peak emissions by 2030 (which China now looks like doing earlier. Bottom-up INDCs, even if fully achieved, will not arrest global warming at the target of 2 degrees above pre-industrial-revolution levels according to International Panel on Climate Change scientists and there is a range of other unresolved issues such as financing developing country adaptation and mitigation and treatment of land use change. But if the process generates some momentum, as even our Climate Change Minister believes it will, that improves prospects of firmer action sometime in the 2020s.
So don’t rule out a slow, fitful, organic evolution of global governance. And especially don’t rule it out if global disorder worsens into serious conflict, perhaps involving nuclear weapons, and/or there are other catastrophic disruptions, such as in international finance (as in 2008) or famines or pandemics. That could conceivably be part of humans’ adaptation to technological, social and physical upheaval.
Where does the last, loneliest, loveliest nation on the planet fit?
A very small country has two realistic options. Sealing itself off is not realistic in a hyperglobalised world, as Myanmar has recognised and North Korea is showing signs of beginning to recognise. One realistic option is to cuddle up to someone big, as we did until 1984 – first Britain, then the United States. That means taking the big protector’s side in any big standoff, for example, United States versus China. The alternative realistic option is to argue for, and be an exemplary upholder of, a rules-based international order. The second option has been the only one for New Zealand since 1984 when we got ourselves kicked out of the Australia New Zealand United States alliance because of the anti-nuclear legislation and acquired a so-called independent foreign policy.
By and large New Zealand does play by the rules and by and large it is a good global citizen, contributing to peacemaking, peacekeeping and humanitarian assistance and taking a principled approach to disputes. That was a big factor in the stunningly strong support last October for a seat on the Security Council. But note that “by and large”. The present government has edged back as far as it dares towards a cuddle-up with the United States, as evidenced in the five-eyes spy-on-everyone arrangement which has led the foreign media routinely to call us a United States ally. A Labour-Green government would lean back towards the independent stance. The present government is tepid on climate change. A Labour-Green government would be more active.
The good news is that after the ill-executed restructuring of the Ministry of Foreign Affairs and Trade in 2009-10, which got rid of some time servers but also stripped out some top performers, there is now a return to professionalism in the appointments of Brook Barrington as Secretary of Foreign Affairs (after spells in defence and justice) and Gerard van Bohemen as Ambassador to the United Nations and Security Council representative. The word is that there will now be more effort to develop strategic foreign policy thinking. For the past six years the old Muldoon catchphrase of “foreign policy is trade” has broadly applied. But actually “trade is foreign policy”, requiring a much broader engagement with peoples and cultures. That goes especially for China and India.
An independent foreign policy requires openness, flexibility and resilience. So does successful economic engagement. New Zealand has one of the most open, flexible and resilient economies. It is still over-dependent on soft commodities – still a “quarry economy”, extracting value from rain, the sea and minerals and vulnerable to sudden or prolonged changes in taste, markets and global conditions. But it is diversifying. There is a high rate of high-tech startups. It is over-dependent on China and Australia but has the capacity to expand into other markets. Fiscal settings are sound. It has a relatively good education system, good institutions and the rule of law and low corruption.
New Zealand also has space and a benign climate. It has a relatively open, flexible and resilient society to go with its open economy. It is a highly desirable place. People want to come here to look and to live. Just 3% told census takers in 1991 they had Asian ethnicity; in 2013 the figure was 12%. New Zealand is Asianising. Well-off Chinese and other Asians – of whom there are rapidly growing numbers – have money and we have something they want to buy. The median projection for the population in 2030 is 5 million. What if Chinese – and Indians and Koreans and Filipinos – want to make it 10 million? That is a question we dare not discuss because we fear accusations of xenophobia, racism and eugenics.
But our own past behaviour could help us through that discussion. We have been Polynesianising. We have largely made the transition to being bicultural: an animist Maori culture and a liberal-enlightenment ex-British culture coexist in mutual respect. That is world-unique. And we got there without anyone blowing anyone up. It is still work in progress but we are all now not just in the Pacific but of the Pacific.
And now in a small way biculturalism is an export: a mainly Maori law firm is advising Papuans on dealing with multinational companies; those on trade missions to China say they get a better reception and do more deals when there are Maori in the team; watch where Te Papa goes over the next few years. At home Maori commercial weight – in iwi investment entities, independent trusts, firms and farms – is growing. That is the obverse of the so-called long tail of Maori educational, health and employment underperformance and over-representation in prisons. A rising middle class will underpin that and modernise Maori protocol and social structure.
But go back to that “long tail”. It is part of a long tail in the general population which reflects our now embedded socioeconomic inequality. Short of an invasion or climate or economic catastrophe, that inequality is our biggest social and political challenge.
A privileged few command a high percentage of resources and wealth and with that the ability to pass on their advantage to heirs and successors. This is not just a few capitalists at the very top. There is also what the British call an “educational meritocracy”. At least, it used to be called a “meritocracy”. There is now an argument for calling it a new “aristocracy”, which is the term the Economist magazine used in the case of the United States.
This new privileged class is descended from those who took advantage of the opening up of the universities in the 1960s to a much wider range of teenagers – I was one. They have been far more likely to get their kids well educated and so on down to grandkids. If you are born in the right family you are miles more likely to get the sort of education which will set you up than if you are born to a less-educated family. It is the opposite if you are born to the wrong family. This is a powerful force embedding the new inequality. And Labour embedded it in 2006 with interest-free student loans – a curious example of Labour backing an upward transfer from the less-well-off to the better-off.
In the twentieth century liberals, then social democrats introduced tax and other policies which reduced inequalities to the point where we thought of ourselves as an equal society. Moderate conservatives then embedded the equalising policies – some out of altruism but most because they wanted a stable, prosperous society which is what they got. This was so even in the United States: it created the so-called “middle class”, a home-owning democracy in the 75% or so in the middle did alright. This was called the mixed-economy. One of the finest New Zealand expositions of it was by Sir John Marshall, later a long-serving minister and Prime Minister in 1972, in his maiden speech in Parliament in 1947.
Inflation, then stagflation unpicked that mixed-economy and we got market liberalism, which I call Friedmanism (after Milton Friedman, its most prominent codifier): a belief that markets were efficient and would deliver materially prosperous outcomes for all. Governments should just set some rules and the fewer rules the better. That has helped embed the new inequality. That means many children will not have the start they might have, will not get educated as well as they might have and will not contribute to society, the economy and the tax system as they might have.
Friedmanism is now under challenge just as Friedmanism challenged the Keynesianism of the mixed economy in the 1970s. What will follows will not be clear for some time. What we can say is that it won’t be a nip and tuck of Friedmanism – not least because this time it will not be decided only by the “west”, which has dominated social, political and economic – and science – thinking for 500 years. The west will have input, of course, but Chinese and Indians – and others – will be increasingly influential. The resultant new thinking might be profoundly different.
Where does our politics fit in this.
The National party is in nip-and-tuck mode. That fits its dominant mix of moderate liberals and moderate conservatives, epitomised at the top by John Key and Bill English. So far, that has been very successful electorally, as its remarkable votes in the past three elections tell us. And the economy is going along nicely – for now – so people feel a bit more materially prosperous and bit more positive than they did two or five years ago.
But nip and tuck leaves inequality – and inequalities – embedded. The Bill English-driven investment approach to welfare reform and the widening public service focus on “results” instead of just doing what they are paid for are having some beneficial effects at the margin. But the real issue is not fixing up the worst cases or the most fixable cases. It is in devising a social and economic order and underpinning policies which enable the great majority of people to live tolerably well off what they can earn. That was so from the late 1930s to the 1980s. Now a wide swathe of the workforce needs Working for Families – in effect, a welfare handout – to get by.
The problem for moderate conservatives is that large embedded inequalities generate stress and create a risk of social instability and upheaval and that is the last thing moderate conservatives want. They want order and stability. Hence the nipping and tucking.
Social instability leading to upheaval can take two political forms. One is revolution. The other is populism which, as noted earlier, can take many forms and is usually eventually counterproductive.
For now in this country populist sentiment among voters is mostly mopped up by Winston Peters and parked in a safe place, with only sporadic influence on government policy. (Some also went to the Conservatives.) That may change next weekend if Winston Peters were to win the Northland by-election, which cannot be ruled out absolutely because Northland is the region under most economic and social strain. National recognised this by panicking a couple of weeks back and, stupidly, showing it was panicking by promising bridges, with more goodies added week by week.
But the party most at risk from populism is not National. It is Labour. That is because National can tap into the instincts and aspirations of middle New Zealand in the suburbs and provinces and Labour can’t. Labour grew out of the “working class” and its organisers, the unions. What Michael Cullen called “centrifugal forces” in a searching speech yesterday have cut the numbers in unions and dispersed much of Labour’s once committed support. While its 25% in the 2014 election was probably not a measure of its real support – it got 34% of the electorate vote – Labour knows it is in deep trouble. Michael Cullen warned it could slide to minor party status if it doesn’t pick its act up. That involves a deep rethink of policy to align principles with 2010s realities, far tighter organisation, an end to “identity politics” delivering on the wishes of small factions and being, to quote finance spokesperson Grant Robertson, “part of the communities we live in”.
No small ask. But Andrew Little is setting out to do all of that. And Grant Robertson is chairing a “future of work commission” – Labour, Grant Robertson says, is “the party of work and of workers” – to recast a wide swathe of policy. He will draw on an external reference group here and on international thinking – he is off to present at a conference in Mexico which follows on from one he went to in Amsterdam last April which explored some innovative thinking from “progressive” social democrats, including the now very famous Thomas Piketty. His commission will report at the end of this year and policy will follow by end-2016.
Will Grant Robertson and his team of MPs, researchers and academics really recast Labour thinking or just narrow their sights to the 2017 election? It is too early to tell. But, importantly, he is from the post-baby-boom generation and so are David Clark, Chris Hipkins, Jacinda Ardern, Carmel Sepuloni and Megan Woods in his team. If a generational shift in thinking is needed, this lot at least is of the right age.
The Greens are in a debate about where they stand, epitomised in the four contenders to succeed Russel Norman as co-leader. The Greens are unmistakably left of Labour on social and economic issues and Gareth Hughes wants them to stay there, arguing that good custody of the planet also involves good custody of humans in a fair society. Others want to go back to the environmental knitting and be more flexible on social and economic policy and so able to work with National as well as Labour. Candidate Vernon Tava takes that line. Kevin Hague and James Shaw are moderate versions of Gareth Hughes and Vernon Tava respectively.
The bulk of the membership goes down the Hughes-Hague line. But at some point Greens have to resolve a contradiction: they believe the environment is global but the economy is national. How and when they do that is unclear. But we can say that for now they are more likely to slip a bit in votes than climb. So for the purposes of the big inequalities question, we can park the Greens with Labour. There is no way for now that Labour can govern without the Greens and no way the Greens can have any serious influence but with Labour.
And if there is to be a major policy shift, history suggests it will be the Labour side that drives it: so it was in the 1890s (when Labour was a faction of the Liberals), 1930s and 1980s. National’s nipping and tucking doesn’t foreshadow a policy revolution and its leading players are over 50, in the long shadow of the baby-boom. It does have a couple of under-45s in the cabinet and brought in a swag in the 2014 election but their influence has yet to be felt – as was the case with a baby-boom bunch in 1978-84 who chafed under Sir Robert Muldoon and then watched helplessly as Labour ran the 1980s revolution. They are not likely to have real influence until the next National government sometime from 2020 on.
But history also tells us that when the Labour side has driven change it has been the moderate conservatives who have bedded it in. So in the 1950s and 1990s. They do that not out of ideology but in the interests of stability. After the turbulent 2010s – the technology, the hyperglobalisation and hyperconnectedness, the global rebalancing and global disorder and contest of ideas – and after the policy lurch likely to follow sometime in the next 20 years we, or rather our grandchildren, may be looking for just such stability.