WCA March 2017

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62 Wire & Cable ASIA – March/April 2017
From the Americas
The ‘robot revolution’
The economy may be humming, but
technological advances threaten
ever more American workers with
displacement
“The next wave of economic dislocations won’t come
from overseas. It will come from the relentless pace of
automation that makes a lot of good, middle-class jobs
obsolete.”
This alert, from USA President Barack Obama, sounded a
dark note in his otherwise nostalgic and hopeful farewell
address on 19th January.
As noted by Claire Cain Miller of the New York Times, Mr
Obama’s successor Donald Trump has tended to blame
trade, offshoring, and immigration for the struggles of
Americans on the losing end of technological change. While
acknowledging that these things have caused economic
stress, Mr Obama in his last address to the nation as
president held that they divert attention from a bigger
culprit. (“In Obama’s Farewell, a Warning on Automation’s
Perils,” 12 th January)
Economists agree that automation has played a far greater
role in job loss, over the long run, than globalisation. And
Ms Miller observed that technological change — what she
terms “the robot revolution” – will soon be a problem for
many more Americans. Fifty-one per cent of their worktime
activities involve physical work, data collection, and data
processing – all highly susceptible to being automated,
according to a report published by the New York-based
management consulting firm McKinsey in July 2016.
“Where Machines Could Replace Humans and Where They
Can’t – Yet” used data from the Bureau of Labor Statistics
and O*Net (the online version of the occupational network
database published by the Department of Labor) in a
detailed analysis of 2,000-plus work activities in more than
800 occupations.
McKinsey found that 28 per cent of these tasks (eg
unpredictable physical work or interacting with people),
while less susceptible to automation, are nonetheless at
risk. Just 21 per cent of tasks can be considered safe for
now, because they require applying expertise to make
decisions, do something creative, or manage other workers.
 As summarised by Ms Miller, the McKinsey report
said that no one can know how many people will be
in jeopardy, or how soon. It cited various researchers’
estimates that from nine per cent to 47 per cent of
American jobs could be affected. In the best case,
according to Kinsey, workers will have higher wages and
more leisure time. In the worst, there will be “significantly
more workers in need of assistance and retraining
as their skills no longer match the demands of the job
market.”
 In December, the Obama White House released the
report Artificial Intelligence, Automation, and the
Economy, on the ways that AI will transform the USA
economy over the coming years and decades, asserting
that the consequences could be dire: “The country
risks leaving millions of Americans behind and losing
its position as the global economic leader.” The Trump
administration has been warned. Among the biggest
problems confronted by the United States will be the
economic consequences of automation.
The surging greenback
An upward run for the dollar is causing
anxiety for the USA manufacturing sector
as well as the global economy
A more proximate economic worry than artificial intelligence
is the strength of the American dollar, driven upward by
the day under the prompts of higher interest rates and the
prospects of a Trump tax cut. In BloombergBusinessWeek
(5th January), Peter Coy posed the question, if the dollar’s
rise – to a 14-year high against a basket of six major
currencies – is causing trouble, “imagine how much worse
things could get if it went on a serious upward run.”
Economists consulted by Mr Coy fear that the dollar’s
strength will hurt USA manufacturing while triggering capital
flight from emerging markets. David Beckworth, a senior
research fellow at the Mercatus Center at George Mason
University (Arlington, Virginia), said in November that the
appreciation “is a real serious noose around the neck of the
global economy.”
A strong dollar is bad for USA growth, making American
goods and services less competitive in world markets. A
rule of thumb cited by Brad Setser, a senior fellow at the
Council on Foreign Relations in New York, says that a 10
per cent rise in the dollar increases the US trade deficit
by one per cent of gross domestic product (GDP), with an
associated loss of hundreds of thousands of jobs. Mr Coy
reported that USA companies including Boeing, Emerson
Electric, 3M, and United Technologies have expressed
concern about damage from a strong dollar.
According to a December research report by economists
Nikola Tarashev, Stefan Avdjiev, and Ben Cohen of
the Swiss-based Bank for International Settlements
(BIS), whatever gains in trade competitiveness that
emerging-market economies enjoy when the dollar rises
against their currencies can be outweighed by the rise in
their borrowing costs. That is mainly true of countries whose
finances are already fragile.
Of course, not every analyst is worried about the rising
dollar – still below historic highs. “We think [it] has pretty
much run its course,” BloombergBusinessWeek was told
by Gorky Urquieta, co-head of emerging-markets debt for
the New York-based asset management firm Neuberger
Berman.
Even so, an educated guess would be that economists
everywhere are keeping a close eye on the streaming chart
for the USA Dollar Index.
Dorothy Fabian – Features Editor