Now playing on your handheld devices and in more robust growth is the Fourth Industrial Revolution – mobile computing, intelligent and remarkably dexterous robots, and the gradual fusion of human intelligence, artificial intelligence and machines. It will profoundly alter how the economy grows and American politics.
The first three waves of industrialization – water power and steam to mechanize production, electric power to facilitate mass production, and electronics and information technology to automate production – were terribly dependent on massive investments in plant and equipment. Robust economic expansions have been defined by consumers’ willingness to splurge on big-ticket items like cars and homes, and businesses’ appetite for grand projects – Fulton’s steamboat, railroads, auto factories and highways, and most recently, shale oil and pipelines.
All that is changing.
The economy is now on track to register 3 percent growth in 2018 for the first time in a dozen years but auto and home sales are flat and corporate investments in hard business assets – factories, machines and computers – are hardly rocketing.
Businesses have learned to use capital and human resources much more efficiently. Productive young professionals seem to be more interested in being near the hubs of intellectual activity–city cores– and buying new gadgets and streaming services than owning a home, big lawn and the latest hot car.
Businesses are dropping requirements for college degree or technical school certificates for many positions. Kids seem to be learning as much that is useful in this new economy playing on their smartphones and laptops as they do in the classroom.
At the cutting edge, Google was launched with $25 million in 1999 and grew into a $23 billion enterprise in five years. Now finding that two-year colleges do not impart the technology skills businesses require, Google is offering eight- and 12-month certificate programs through Coursera that connect graduates with employers like Bank of America, Walmart and GE Digital..
Productivity growth, after languishing during the Obama presidency, is taking off again. This permits businesses to offer low-skilled workers opportunities for bigger pay increases, often through in-house training programs. As businesses automate, they are training semi-skilled line workers to maintain machines and become software engineers.
All this is happening just as Generation Z – those born after 1996 and raised in the jaws of the financial crisis – is entering the labor force. They are more focused on career and financial success, more sober (they do not party nearly as much) and even more tech savvy than Millennials who preceded them.Little more than 50 percent are white. Raised by Baby-Boom moms in non-traditional careers, they are more comfortable with women and men working side-by-side and in racially mixed groups. All this spells change for universities, businesses and the political class.
Young folks are bargaining with colleges and often selecting value over prestige — or skipping college — forcing universities to trim costs. Some MBA programs and law schools are downsizing.
Businesses cannot discriminate — workers and good skills are too scarce and young employees will not tolerate it. That will be bad news for new age Democrats like Alexandria Ocasio-Cortez who are reskinning Hillary Clinton’ identity politics. Similarly, the anti-Trump wing of the GOP’s obsessions with the sanctity of the WTO and tariffs on automobiles and agricultural commodities are tragically misplaced. Just about anything of value can be made or grown on any continent these days.
What really matters is the artificial intelligence that goes into cars, the genetics of the seeds, and the apps in your palm. That is what is driving Trump’s trade policy — look at the extensive protections for American intellectual property in the deal just struck with Mexico and Canada.
President Trump grasps all this in ways his critics cannot comprehend, or is backing into it thanks to Federalist Society screening his judicial nominations and Ivanka promoting Labor Department apprenticeship programs.
The GOP may well get skewered in the midterms and Trump denied a second term but history tends to focus more on presidential accomplishments – deeds that changed the direction of the country or defined progress– than on character flaws.
It will speak of a man who saw a new age coming but was vilified by those invested in the past.
Peter Morici is an economist, business professor and national columnist. © The Washington Times, LLC.