MARKET PERSPECTIVE
By J Mulraj
May 18-24, 2024
Technological disruptions promise huge benefits, but at a cost
It was Victor Hugo who averred that ‘there was no force that could stop an idea whose time has come’. One such idea is robotics. Like it or not, robots will replace humans in several jobs, improving work efficiency and enhancing productivity by leaps and bounds.
But how will Governments be able to cope with the fallout of such job losses. Having the largest population in the world, India would be the country most impacted. In 2024, as many as 65 of the 195 countries in the world go to the polls, and will elect Governments to lead them through these tumultuous changes.
Will the elected Governments wisely debate the societal changes needed, as portrayed in the functioning of an ancient Greek senate in the image above, or will it become a rumbustious display of petulance, as portrayed below?
The inevitability of an idea whose time has come is demonstrated by the advent of automobiles. Tony Seba, an authority in technological disruptions and Co-founder of think tank RethinkX, points out that in 1907 horse drawn carriages provided 97% of the personal transportation needs in USA. Just 15 years later, the figure fell to under 20%, as the motor car was developed. The idea of motorized transport saw it’s time had come; the resultant disruption of the dominant horse carriage industry was brutal. The horses were eaten!
In the link in the first para, the idea of human labour getting disrupted by robots is seeing its time coming, due to the confluence of 4 enabling technologies, whose costs are falling. These are Sensors, Computer hardware and software, Actuators and Batteries and power electronics.
Watch this video to understand the economic compulsions of the robotic disruptions. Today, a high end robot costing $200,000, used in warehousing, factories and commercial settings, may appear expensive. It has a lifespan of 20,000 hours, so costs $10/hour, which is less than the prevailing $18/hour wage rate in America. As robot factories scale up, the cost of the robot can drop to $20,000, thus lowering the per hour cost to $1/ hour! One company, Unitree has already announced a $16,000 price tag for a robot. Now, if the robots are then used to build more robots, the hourly cost will drop to 10 cents per hour! And fall further as the life cycle of the robot improves! This will happen within the next twenty years!
Since labour is the principal cost across all industries, a reduction in its cost to just one cent per hour, using robots, will benefit any industry.
Just consider one – the environment. All environmental problems will become much more feasible to solve, with negligibly low labour costs. With robots costing a cent an hour, it’s possible to do anything where labour cost was the inhibiting factor. Using them, e.g., it would be eminently possible to undertake reforestation, or clean up garbage dumps, or any other environmental challenge.
Negligible robotic labour costs will also solve problems in the sectors of transportation, energy and food. With robots, countries can swiftly set up solar/wind farms, or build plants for EVs or plants for precision fermentation and cellular agriculture to replace animal farming.
So the drastic reduction in labour cost with robotics is an idea whose time has come. However it poses huge societal challenge as it displaces human labour. The labour can be compensated (basic minimum income) from the enormous productivity gains made using robotics and the solving of energy, transportation and food problem. If animal husbandry can be replaced by precision fermentation, it would release half the land and water resources it currently uses for the breeding and feeding of animals to produce meet to supply proteins.
So the challenge now is how Governments prepare societies for the displacement of labour and how they can cope with protests. One wonders if a hodgepodge coalition of parties who have united only to be able to have a common front, and have no common agenda, would be fit for such a challenge.
India has, sadly, not prepared itself to meet such technology disruptions. The primary education system has been neglected, and in 2009, Indian students ranked 72nd out of 73 countries, a deplorable show. Since then, Government has not participated in PISA (Program for International Student Assessment). Besides Neglecting the education system, India’s judicial system is in a disgraceful mess, with a backlog of 50 million criminal and civil cases that would take 300 years to resolve. Physical infrastructure (roads, rails, ports etc), though improving, have a long way to go. Potholed roads in metropolis are a disgrace. India prides itself on being the largest democracy; but it is ironic that the electorate can’t change their vote, once cast but the politician can change parties, once elected, with impunity and without penalty.
So, there is a huge amount of work to be done, a huge amount of co-ordinated thinking between political parties, and a huge amount of communication of coming disruptions with the people, to prepare for the future.
Not embracing the coming changes will put a country at a serious disadvantage.
Embracing the changes will need a lot of preparatory work. There is no sign that the Indian polity is preparing for the technological tsunami that threatens to engulf it.
Last week the Sensex closed at 75410, for a weekly gain of 1493 points.
Indian election results will be declared in second week of June. If the ruling coalition gets a comfortable majority, as currently seems likely, foreign investors, who have been selling, fearing uncertainty, would re-enter, causing a rally. The threats are largely geopolitical. The death, in a helicopter accident, of the Iranian President has not, so far, raised tensions in the Middle East, though it could. China is baring its fangs against Taiwan, which is on high alert. This situation is a powder keg.
One should look for signs that the incoming Indian Government is aware of the challenges of the coming technological disruptions, and is preparing the populace for it. So far, sadly, none are visible.
Picture Source: https://www.quora.com/How-did-Ancient-Romes-senate-work
Comments may be sent to jmulraj@asiaconverge.com
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