WCA March 2017

From the Americas

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 ‘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 19 th 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

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 (5 th 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

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Wire & Cable ASIA – March/April 2017

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