Ironically, for the first several decades even of a game-changing technology, it's not hard automation labor substitution that plays a role, it's soft automation. Meaning that technology starts to incrementally make that job, make that function a little easier and a little easier and a little easier. And that ends up doing two things, a lot more people can do that job than used to be the case and it’s no longer as difficult a job as it used to be, which means that wage growth doesn’t really take off.
People will ask the question: technology is always an incremental change, what's different now? Well, three things have come together. The first is the existence of what we call big data. So for example, there are parts of New York City, but I can no longer buy coffee with cash. I just have to use a credit card, or a digital wallet, and as a result, a data stream is created.
The second is the ability to store that big data because the cost of data storage is continued to exponentially come down. And the third is that the cost of computing has also come down which means that pattern recognition, in fancy terms called machine learning artificial intelligence, is now commercially easy-to-use.
You are going to have technology in grey areas that historically were thought of as the domain purely of humans and that means humans will have to relearn things.
When we think about China, people struggle to comprehend how important this part of the world is. For my money, in terms of economic growth, China arguably is the single most important economy in the world. Yes, it is smaller than the United States still by a margin, but remember that the US is a largely inwardly facing economy. China by contrast exerts a huge influence on emerging Asia, in the commodity space, in agriculture space, et cetera, et cetera.
The pace of growth will slow down, it almost has to, but if there is one part of the world that has the ability to break what is called the “middle income trap”, I think it's this part of the world.
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