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Social Challenges and public policies in a global world

Jul 15 2019

By Fernando Reyes Matta*  

There are three fears that cross citizenship in different parts of the world: a) the fear of how work life will be changed by automation and robotics; b) the fear of stress in urban life, if the city becomes oppressive; c) the fear of long and unprotected old age not only in terms of money but also lacking in closeness and affection.

There are three realities that demand public policies to address these situations, charged with emotionality. They are fears that, in one way or another, have become part of the individual and collective agenda in the emerging middle classes on all continents. Large sectors have crossed the line of poverty and do not want to return to it. It is there – when men and women of the middle classes feel that globalization does not meet their expectations – and then, those sectors begin to look for political solutions that already seemed overcome. This is what happens in Europe, in Latin America and elsewhere where populist discourse finds fertile ground.

The consequences of the 2008 crisis in the world economy made it more evident that contemporary governance is grounded in the feasible balance between State, Market and Society. A State with capacity to lead, guide and build a development plan considering fundamental policies to achieve it. A Market with the strength to create innovation and produce growth. And, a Society where opportunities and protections are clear. The search for this balance always goes through paths of complex political and social tensions. The urgency of this balance is evident, for example, with the costs that the world has experienced in the environment and climate change in recent decades. It is in this framework that these three dominant fears mentioned above are installed.

  1. a) Robotics and Work. – According to figures from the 2016 report of the International Federation of Robotics (IFR in English), by 2019 the number of industrial robots installed in the world will increase to about 2.6 million units, i.e., about one million more units than there were in 2015, a record year for that industry. Seeing the disaggregated, about 70 percent of robots are now deployed in the automotive, electronics / electrical, metals and industrial machinery sectors. According to data from the World Bank, the proportion of jobs displaced by automation reaches 69% in India, 77% in China[1]. In turn, according to a report by McKinsey in this regard, in Mexico it is estimated that robots and programs are able to do 52% of the work that exists today in that country, while in Peru that percentage reaches 53%, in Brazil 50% and in Argentina 48%[2]. A study by McKinsey Consulting indicates that in Chile 3.2 million jobs could be replaced by automated systems in the next 20-40 years. This will allow companies great savings: US $ 9 billion in retail, US $ 6 billion in the industry[3].

What will happen to jobs as we see and value them today? There is a strong debate at the international level, but history shows that technologies have created new jobs and a need for new specialists. That is where public policies that bring deep transformations to education become fundamental. As some experts say – vision that I share – robotization and Artificial Intelligence bring profound changes in the forms of production and in everyday life. But machines work on data, not on intuitions, or on creativities based on what does not yet exist, or on human negotiations where emotional subtlety is key. It is a subject that worries young people – doubting if their preparation will have capacity of action in the future -, but also to the middle-aged that will try to remain more time as active workers to face the crisis in the pension system that appears in many countries.

  1. b) The city and the quality of life. – At present, 55% of the planet´s population lives in cities and generates around 80% of the world´s GDP. Moreover, the predictions point to the fact that the growth of the world population will be concentrated in the cities, which will lead to the fact that in 2050 about 70% of the world population will be urban. In any case, urban development presents major differences in different areas of the planet. In the American continent (North America and Latin America) the urban population is 80%. In Europe, reaches 75%. China already has more than 100 cities with more than one million inhabitants and will reach 200 by 2030. All this indicates that on all continents the subject of the city and the quality of life of its citizens has become a higher challenge.

Urban concentration favors economies of scale, which allows a more efficient use of resources. The productive agents are close; there is a greater interaction in the transmission of knowledge, in the search for innovations and in the proximity of public services. But we all know, as UN-Habitat studies have shown, that agglomeration brings new problems. Congestion, pollution, the price of housing or the need for large movements of citizens within cities are factors that generate states of social dissatisfaction. Therefore, it was timely that the Shanghai World Expo 2010 chose as theme “Better City, better life”. And the innovative developments in Shenzhen are viewed from outside as a cutting-edge experience, while the containment and management measures in all the other major Chinese cities are analyzed with high interest. But in this and other Asian countries, as in Europe and Latin America, as well as increasingly in Africa, life in the cities will bring new demands for “citizen participation”. Each country will have to solve it in its own political systems, but that participation – especially of the middle classes today with their iPhones and other digital means of horizontal communication – will be a persistent reality.

  1. c) The extension of life, old age and the challenges of the passive sector. – Between 2015 and 2050, the proportion of the world population over 60 years old will increase from 900 million to 2,000 million, which represents an increase from 12% to 22%. The aging of the population is faster now than in previous years: in 1960 the global average life expectancy was 52 years; in 2016 it was estimated at 72 years. The birth rate and mortality of the world population have had a considerable decrease, particularly during the second half of the last century. The birth rate decreased between 1950 and 2000 from 37.6 to 22.7 births per thousand inhabitants; while mortality went from 19.6 deaths per thousand inhabitants to 9.2, in the same period[4]. This transformation, which has adopted the name of demographic transition, has caused a progressive increase in the size of the world population and, simultaneously, in its aging.

As we know, if the proportion of people over 65 years old increases, so does social spending, because the number of pensioners increases; if this does not correspond to the proportion of people employed, the income of the elderly is put at risk. And this is happening in many places. In Japan, the challenge is critical. So far in Chile, we have had a negative rate of population growth, but it is possible that this figure changes in part, with a strong Venezuelan and Haitian migration. By the way, there is the mythical image of the retired: by reaching the age there will be an opportunity to travel, have more leisure time to engage in hobbies and to take care of oneself. But this is only possible when there is good health, sufficient income and a consolidated family and institutional support network. And there are regions, as Latin America, where old age and poverty coincide to a great extent.

In Latin America and the Caribbean, the phenomenon of demographic change is more critical than in other regions of the world: the number of older people compared to those under the age of 15 will surpass all expectations in the next 25 years. In 2010, in Latin America and the Caribbean, there were approximately 36 elderly people per 100 children. It is projected that, after 2036, this ratio will be reversed and that by 2040 there will be 116 elderly people per 100 children under the age of 15. On the other hand, in 2040, the Caribbean aging rate would reach 142 elderly people per 100 children[5]. In Europe, the population over sixty years old grows at a rate of around two million a year; almost double the increase observed in the late 1990s and the beginning of the 2000s[6]. In short, the challenge of aging and its projections is leading to debates and reforms that, in many cases, are generating major political tensions.

It is within the framework of these three areas of fear that the middle sectors want certainty, to know where their country is going.

In this sense, the experience of China and its way of doing politics with medium and long-term plans is guiding. The way to go it is known, even if it is difficult at times.  The perception of the inescapable task was given by President Xi Jinping himself in his Report to the XIX Congress of the CPC.  For the current leader of China “the principal contradiction facing Chinese society is the one between unbalanced and inadequate development and the people’s ever-growing needs for a better life”. The affirmation is valid for what happens in many other societies. It is essential to be able to carry out efficient developments and with the capacity to respond to new social demands.

Xi´s explanation to the Congress that took place on October 18th, opened a perspective of analysis for the crisis of many other forms of socialism that, after having generated great advances and social development, have been found in the inability to respond to new demands and broad visions of sectors whose quality of life improved, precisely, by those public policies that favored them. Realities of Latin America and Europe are concrete examples. The description of Xi is highly illustrative:

“China has seen the basic needs of over a billion people met, has basically made it possible for people to live decent lives, and will soon bring the building of a moderately prosperous society to a successful completion. The needs to be met for the people to live better lives are increasingly broad. Not only have their material and cultural needs grown; their demands for democracy, rule of law, fairness and justice, security, and a better environment are increasing. At the same time, China’s overall productive forces have significantly improved and in many areas our production capacity leads the world. The more prominent problem is that our development is unbalanced and inadequate. This has become the main constraining factor in meeting the people’s increasing needs for a better life.”[7]

By the way, the report proposed ways to move toward greater development, especially linked to three areas of action: innovation and advanced technology to be a country of high level of development; promotion of the Belt and Road Initiative as a profound transformation project for cooperation and shared developments in the 21st century; substantial support for multilateralism, free trade and respectful cultural coexistence. These are strategic decisions with high coincidence to the 2030 Agenda defined by the United Nations to achieve the Sustainable Development Goals.

And that´s where it becomes clear that the US government and President Donald Trump´s current policies are not moving toward the idea of ??creating good answers to those fears and to the new emerging demands. Protectionism and unilateralism, together with forceful actions that are contrary to dialogue, weaken the collective analysis among all countries to elaborate new answers demanded by 21st century societies. Promoting confrontation as a method may win an election, but it does not lead to medium- and long-term solutions for the future of mankind. Thinking about the future with a long-term look is a very strong practice in China: maybe that is your great contribution to the rest of the world in this century.

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[1] https://elpais.com/internacional/2017/02/17/america/1487362707_910276.html

[2] https://www.mckinsey.com/featured-insights/future-of-work/jobs-lost-jobs-gained-what-the-future-of-work-will-mean-for-jobs-skills-and-wages

[3] https://www.mckinsey.com/featured-insights/future-of-work/jobs-lost-jobs-gained-what-the-future-of-work-will-mean-for-jobs-skills-and-wages

[4] https://www.who.int/features/factfiles/ageing/es/

[5] https://repositorio.cepal.org/bitstream/handle/11362/2617/1/LCG2553P_es.pdf

[6] https://ec.europa.eu/info/sites/info/files/file_import/european-semester_thematic-factsheet_adequacy-sustainability-pensions_es.pdf

[7] Ssocialism with Chinese Characteristics for a New Era, Xi Jinping. Released by Xinhua News Agency. Nov. 3rd. 2017.

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*Former ambassador of Chile in China. Director at the Center for Studies on China, Andrés Bello University. University of Chile / University of Alcalá, Spain. He studied history and geography at the University of Chile and post-graduate studies at the Institute of Political Science of the Catholic University of Chile. Professor at the School of Journalism of the Catholic University of Chile. Text In the opening Panel: “International Symposium on China’s Development and Opportunities for the World” June 23-24, 2019 Beijing, sent to Other News by the author.

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