Winding Road Ahead · 2020. 12. 15. · 1 Winding Road Ahead Christopher Ragan OCA Conference,...
Transcript of Winding Road Ahead · 2020. 12. 15. · 1 Winding Road Ahead Christopher Ragan OCA Conference,...
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Winding Road AheadChristopher Ragan
OCA Conference, OttawaSeptember 28, 2018
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Some things I won’t discuss today.
Basic Storyline
1. Lots of economic transitions in our future;
2. They all require lots of adjustment;
3. Adjustment requires a “flexible” work force;
4. Where will this flexibility come from?
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1. The transition to a cleaner economy …
… means moving away from these ….
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… and toward these.
2. The aging of our populations …
80% of people 65 or older will live in low or middle-income countries.
For the first time in history, there will be more people over the age of 65 than under the age of 14.
The number of people worldwide aged 80 or older will quadruple.
The proportion of world’s population over age 65 will double.
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1. … about productivity growth…
2. … and about a looming “fiscal squeeze”
… creates two large challenges...
“Identity Economics”
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GDP/POP = (GDP/E) x (E/LF) x (LF/POP)
Past 40 years
Next 40 years
Per capita income = (labour productivity) X (employment rate) X (LF participation rate)
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32
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36
38
40
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50
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1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
% of GDPThe Fiscal Squeeze in Historical Perspective
Government revenue Government expenditure
What would happen if we don’tchange our taxes or other spending – if we just borrow this amount?
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20
30
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60
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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Total Government Net Debt-to-GDP Ratio
r - g = 0.5 ppt r - g = 1.0 ppt r - g = 1.5 ppts r - g = 2.0 ppts
Return to the “debt wall”?
No steering wheel
No blindspot
3. “Disruptive” technological change …
… includes now-familiar names …
Asset ownership
Distribution
Production cycle
500,000 rooms
1,500 stores
12-18 month production cycle
2M+ rooms, no physical assets
No physical stores
Monthly software updates
2005 2015
… and drives huge productivity gains …D
etro
it,
1990 $250 billion
$328 billion
Revenues
$36 billion
$1,467 billion
Market cap
1.2 million
155,000
Employees
Silic
on V
alle
y,
2015
Percent of activity that can be automated using existing technology
… but creates transition in the workforce …
SOURCE: “Where machines could replace humans—and where they can’t (yet),” McKinsey Quarterly, July 2016
Occupations that mostly require
predictable physical work
are most likely to be automated
Occupations that mostly require
interacting with others are least likely to be automated
78%
68% 69%25%20%18%
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… is expanding the “gig” economy …
Primary Income Supplemental Income
Preferred Choice Free Agents
30%(49 M people)
Casual Earners
40% (64 M people)
Out of Necessity Reluctants
14% (23 M people)
Financially Strapped
16% (26 M people)
Source: Independent Work: Choice, Necessity, and the Gig Economy, McKinsey & Company, 2016.
The Characteristics of Workers in the Gig Economy(162 million workers in the United States and Europe)
… and “hollowing out” the labour market.
20Earned Income ($)
% of Earners
High-income, servicesHigh educationHigh job security
HARD to automateor outsource
Low-wage, servicesLow educationLittle job security
HARD to automateor outsource Middle-wages, goods/services
Manufacturing, resources, construction
Low-middle education
EASIER to automate or outsource
This increases the value of “flexibility”.21
creative, articulate, bold, industrious, curious, cooperative, empathetic, …
“soft” or “social” skills
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Who’s Teaching the Skills?
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Firm Specific Transferable
“Hard”
“Soft” ???
Employer training
On-the-job learningUniversities and colleges
Can we do a better job?25
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Thank you.