Ever since the industrial revolution, humans have been ambivalent about technological progress. While new technology has been a major source of liberation, progress and prosperity, it has also fueled plenty of agony — not least owing to the fear that it will render labor redundant.
So far, experience has seemed to discredit this fear. Indeed, by boosting productivity and underpinning the emergence of new industries, technological progress has historically fueled economic growth and net job creation. New innovations accelerated — rather than disrupted — this positive cycle.
However, some are claiming that the cycle is now broken, especially in technologically savvy countries like the US. Indeed, machines are becoming smarter, with innovations like advanced robotics, 3D printing and big data analytics enabling companies to save money by eliminating even highly skilled workers. As a result of this “productivity paradox” (sometimes called the “great decoupling”), jobless growth is here to stay. We can no longer take human prosperity for granted, however rosy the aggregate indicators for profitability and GDP growth may be.
However, are we really in the throes of a Frankenstein’s dilemma, in which our own creations come back to haunt us? Or can we beat the productivity paradox by harnessing the power of machines to support development in ways that benefit more than the bottom line?
There is good reason to be optimistic. Many countries — even technologically savvy ones — can still benefit from the self-reinforcing cycle of technological advancement, rising productivity and employment growth. Luxembourg, Norway and the Netherlands — three innovative and capital-intensive economies that regularly appear in the upper quartile of productivity per hour and employment, according to Organisation of Economic Co-operation and Development (OECD) data from 2001-2013 — are prime examples.
Cynics will suspect that Luxembourg and Norway have managed to sustain this dynamic only because of their peculiar economic structures (a concentration in finance in the former, and in natural resources in the latter). So let us consider the Netherlands, which stands out as the only country that recently has appeared in the upper quartile not only in productivity and employment, but also in labor-market participation.
The Netherlands has been a champion of innovation, gaining a fifth-place ranking in the recent INSEAD Global Innovation Index. A striking 85 percent of large Dutch firms report innovative activities, while more than 50 percent of all firms are “innovation active.” Dutch firms are also world patent leaders; Eindhoven, the hometown of the electronics company Philips, is the world’s most patent-intensive city.
So what is the Dutch secret for ensuring that technological progress benefits all?
The Netherlands seems to be undergoing a sort of industrial revolution in reverse, with jobs moving from factories to homes. The Dutch labor market has the highest concentration of part-time and freelance workers in Europe, with nearly 50 percent of all Dutch workers, and 62 percent of young workers, engaged in part-time employment — a luxury afforded to them by the country’s relatively high hourly wages.
Many young Dutch work part-time as schoolteachers. However, a more lucrative — and common — source of part-time employment in the Netherlands is the subcontracting of “white-collar” services. Highly skilled or specialized workers sell their services to a wide range of businesses, supplementing the work of machines with human value-added activity.
Another key to the Netherlands’ success is entrepreneurship. In 1990-2010, self-employment rates fell across the OECD countries, with business ownership in the US, for example, having declined rapidly since 2002. In the Netherlands, however, business ownership has grown steadily since 1992, reaching 12 percent of the labor force in 2012. Almost 70 percent of Dutch business owners were exclusively self-employed in 2008.
To be sure, rates of business ownership and self-employment are also high in low-income countries like Mexico. However, the Netherlands is much wealthier, and boasts high levels of per-hour productivity, employment and participation — largely owing to its flexible and adaptive labor market.
In short, the Netherlands has restructured its economic value chain to accommodate a new division of labor between humans and machines, embracing new kinds of economic activity — especially part-time work and solo entrepreneurship — to balance human needs with technological advances. In doing so, it has highlighted the importance of “enterprising skills” — including creativity, entrepreneurship, leadership, self-management and communications — in enabling humans to keep pace with technology.
Machines may be reaching new heights of intelligence, but they are no match for human resourcefulness, imagination and interaction. This is a lesson that countries would do well to learn from the Dutch.
Sami Mahroum is academic director of innovation and policy at INSEAD. Elif Bascavusoglu-Moreau is a senior research fellow at INSEAD’s Innovation and Policy Initiative.
Copyright: Project Syndicate
On April 19, former president Chen Shui-bian (陳水扁) gave a public speech, his first in about 17 years. During the address at the Ketagalan Institute in Taipei, Chen’s words were vague and his tone was sour. He said that democracy should not be used as an echo chamber for a single politician, that people must be tolerant of other views, that the president should not act as a dictator and that the judiciary should not get involved in politics. He then went on to say that others with different opinions should not be criticized as “XX fellow travelers,” in reference to
Chinese President and Chinese Communist Party (CCP) Chairman Xi Jinping (習近平) said in a politburo speech late last month that his party must protect the “bottom line” to prevent systemic threats. The tone of his address was grave, revealing deep anxieties about China’s current state of affairs. Essentially, what he worries most about is systemic threats to China’s normal development as a country. The US-China trade war has turned white hot: China’s export orders have plummeted, Chinese firms and enterprises are shutting up shop, and local debt risks are mounting daily, causing China’s economy to flag externally and hemorrhage internally. China’s
During the “426 rally” organized by the Chinese Nationalist Party (KMT) and the Taiwan People’s Party under the slogan “fight green communism, resist dictatorship,” leaders from the two opposition parties framed it as a battle against an allegedly authoritarian administration led by President William Lai (賴清德). While criticism of the government can be a healthy expression of a vibrant, pluralistic society, and protests are quite common in Taiwan, the discourse of the 426 rally nonetheless betrayed troubling signs of collective amnesia. Specifically, the KMT, which imposed 38 years of martial law in Taiwan from 1949 to 1987, has never fully faced its
Taiwan People’s Party Legislator-at-large Liu Shu-pin (劉書彬) asked Premier Cho Jung-tai (卓榮泰) a question on Tuesday last week about President William Lai’s (賴清德) decision in March to officially define the People’s Republic of China (PRC), as governed by the Chinese Communist Party (CCP), as a foreign hostile force. Liu objected to Lai’s decision on two grounds. First, procedurally, suggesting that Lai did not have the right to unilaterally make that decision, and that Cho should have consulted with the Executive Yuan before he endorsed it. Second, Liu objected over national security concerns, saying that the CCP and Chinese President Xi
RSS