Joe Studwell: prediction

Transcript context

…But think of automation more generally — it’s not that expensive. Most countries are de-industrializing. Even South Africa has been de-industrializing for a while, and China maybe has peaked out at industrialization, measured in terms of employment. It’s hard to trust their numbers. But maybe just everywhere is going to deindustrialize, and that will be very bad for Africa. I don’t think so. I think South Africa is deindustrializing because the ANC has followed a hyper-liberal approach to economic policy. I don’t think the ANC has ever really understood economic policy, frankly, so South Africa is an outlier in that respect. There are many other states in Africa, whether Nigeria or Ethiopia, which understand they’ve got to have a manufacturing future and intend to pursue one. Then, as I was saying, the other point is, what people miss is the flexibility with robotics and AI. There’s very limited flexibility with robotic and automated production. When demand goes up, you can’t just stick in more robots, but when demand goes up in a people-operated factory, where the cost of labor is low, you can stick in more people and produce more. Just one example: during COVID, when everybody was having home deliveries of supermarket goods, the price of a UK firm called Ocado, which runs a supermarket, but was also developing the software and consulting around building blind warehouses went up through the roof, but now it’s down through the floor. And only last week, Kroger supermarket in the US said, “We’re closing five of these super-modern blind warehouses.” And the reason, fundamentally, is because they lack the flexibility that human labor brings to the job. So, I’m not saying that robots, automation, and AI are not important. They are important. What I am saying is that they are not going to derail a manufacturing future for a number of African countries that aggressively pursue it. But there’re a lot of developing nations around the world — you could look at India, you could look at Pakistan, even Thailand — where manufacturing has not taken off the way one might have wanted. There’re just major forces operating against it. And in the US, manufacturing employment was once 37 percent of the workforce; now it’s 7 percent to 8 percent. It just seems like it’s swimming upstream for Africa — which again, has quite expensive energy — to think it will do that well. And again, South Africa had very good technology, pretty high state capacity. I don’t see the alternate world state where a wiser ANC would have made that work.…

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