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Technology and Globalisation – The Effects on Inequality

Technology and Globalisation – The Effects on Inequality.

It is a truism that the world is going through a period of rapid change which risks further deprivation for the most vulnerable in our society. Those with the least power over their lives are likely to be the most affected by these impacts. In particular two forces are driving this change, globalisation and technology.

In both cases there are both good and bad outcomes for the lower paid. Globalisation means New Zealanders now have access to much cheaper consumer products. Whether it is children’s clothing, flat screen TV sets or motor cars, they are all cheaper now because trade barriers, both in the form of tariffs and non-tariff barriers have been removed or greatly reduced. This has been particularly apparent when the first wave of globalisation in the 1980s displaced machine operators making socks, clothing or assembling cars in New Zealand. This means that the cost of living is cheaper than it would be otherwise for all New Zealanders, including the poor.

Likewise with technology, the costs of manufacturing with robots, or the use of electronic solutions to run car parking or airline check-ins or the customer doing their own banking electronically have all reduced the costs for businesses selling goods and services to New Zealanders. They involve replacing people with robots and computers and this will surely continue with autonomous taxis, buses and trucks or financial management and accounting practices operated by artificial intelligence. Many jobs will disappear. While some of these jobs will be presently held by well educated people with the ability to adapt to a new career, far more will be the jobs of those who lack the ability to transfer their skills to another career.

While there is a fear that the overall number of jobs will disappear this is not necessarily so. Throughout history there have been occasions of this nature. The industrial revolution greatly improved the productivity of agriculture by replacing hand labour with mechanised reapers, binders and threshing mills, with rural people then moving to the dark satanic mills.

And with this revolution new jobs will appear. Already people have jobs and achieve qualifications in careers that were unknown a generation ago. Professional sports including coaching and administration, gym instructors, tourist and leisure activities such as bungy jumping, adventure tourism or skiing, leisure pursuits and cultural activities that were unknown to our parents. We all have a better life because people and capital are now available to meet these needs.

But the change in skills required for these new occupations cannot be taken for granted. Certainly those who have successfully navigated an academic career or apprenticeship will be well placed to translate to these new jobs. But many of those in jobs that will disappear in the face of relentless globalisation and technological change will not have those strengths or they might live in a place where alternative jobs are available. For example the demise of the coal industry and the cessation of milling native forests have been a real challenge for the West Coast with not enough alternative jobs for redundant miners or forestry workers. In the 1980s many low skilled jobs throughout New Zealand were lost in manufacturing.

While we could adopt a policy of resisting change; perhaps closing our borders to cheaper imports or taxing computers that replace people or prohibiting robots or autonomous vehicles we would be depriving New Zealanders of the chance to live better, safer or more enjoyable lives.

Rather the best public policy response must be to embrace change but recognise that while we are all likely to be beneficiaries of these changes, too often the costs fall disproportionately on those who lose their jobs. It is now apparent that increasing levels of inequality in many western countries have arisen from the loss of traditional jobs in the new rust belts of what were once strong industrial communities. This rising inequality is now translating into political outcomes that are threatening the well-being of the whole community. At this point it behoves us all, policy makers and the well off as well as those who are suffering from the disappearance of these jobs to take a closer look at these victims of globalisation and technological progress.

A society that is based on fairness must recognise a duty to ease the transition for the displaced. This must take two forms; income support and re-training.

Many countries have what is effectively an insurance policy for those who are redundant. This will be at a level that maintains their income for a specific period which might be a year or much longer if they are prepared to be re-trained. It gives them a period of readjustment at a level where the state guarantees their income. The consumers who are now benefitting from the changes must foot the bill of caring for those who lost from them.

The displaced can retain their dignity. They will avoid the undoubted hassles of joining the welfare queue and having to prove they need help and having to use up their redundancy before they are eligible for the benefit. It acknowledges that the jobs of these people ended, not through any fault of their own, but because the greater good of their fellow citizens prevailed.

The New Zealand government must develop cohesive policies that provide a safety net and a leg up for the victims of globalisation and technological progress. Those who benefit from the cheaper options now available to all consumers must help those who lost through no fault of their own.

We have a choice. We can accept the benefits of technology and globalisation and ignore the social costs of rising inequality or we can embrace a fair society that recognises that these forces can have winners and losers and we must look after those unlucky enough to be the losers.
Grahma Roertson for Closing the Gap

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