 Good morning, everybody. Thank you all for coming out at this early hour. This promises to be an interesting discussion this morning. We've tweaked the format a little bit. We're just going to have a free-flowing discussion, which I'm going to try to moderate. My name's Tom Friedman. I'm the columnist for The New York Times. And we got a terrific all-star panel this morning. To my right is Eric Bridgeson, who is a professor at the Sloan School of Management at MIT. And he's a co-author of a wonderful new book, which I recommend, The Second Machine Age. To his left is Professor Larry Somers from Harvard, our former Treasury Secretary. To my left is Gita Wirderon, who is the minister of trade from Indonesia. And next to him is Philip Jennings, who is the general secretary of UNI Global Union, which is a union of unions and has 1,000 union members from 150 countries. So the topic for this morning, the question on the table as it were, is economies see productivity rise and jobs decline. Is technological innovation in the 21st century driving jobless growth? And every year at Davos, there's a certain theme that tends to dominate the discussions. And if there is a theme that's dominated the discussions this year, I think it is this question and what are the implications for it. And I think it's really important that we explore both the degree to which this is the case, but also get into a discussion about the solutions. Now, we've actually done an online poll before you all arrived, putting this question to the Davos community. And do we have the results? Can you flash them up there? What the online voting is? Technology, technological innovation in the 21st century driving jobless growth. And the answer online was no. What am I? No, we're not voting yet. I want to see what the online voting should. Say it again. 117 yes and 30 no. But don't let that affect your voting, OK? We're going to ask everyone in the audience to we're going to vote at the beginning and the end. We're going to see how you've been affected by the conversation here. So we've asked you, you've got your voting pad in front of you, vote one for yes, vote two for no, and vote three for nothing, OK? One for yes, two for no. And we'll illustrate the results. And then we'll begin the discussion and see how we're impacted. Everybody vote. No fair, not voting. And the results are 57 yes, 42 no. So that's interesting. We've got a more mixed audience. Gita and Phillip, I think you'll be happy to hear that. You've really, I think, got some sympathetic members here. So we're going to kick off. I've asked Eric Brinjolson to start. He and his co-author, Andy McAfee, have really, I think, been both defining this debate and helping us change the conversation around it. So Eric, you want to kick off? Sure, thanks, Tom. It's a pleasure to be here and have a chance to discuss this really important issue. It's one that Andy and I call the great paradox of our era. If you talk to technologists or venture capitalists, they've told me that innovation has never been faster. We are at record levels of wealth in the United States, $77 trillion, record profit, record productivity, that could go on. But as you also know, employment has really been struggling. The employment to population ratio has kind of fallen off a cliff. And although unemployment has fallen a bit, most of that's because people are dropping out of the labor force, not because new people are getting jobs. Medium income is stagnated. The person at the 50th percentile is making about the same as what they made back in the 1990s, despite all this progress and increased wealth, the pie getting much bigger in the United States. So what's going on? And it's obviously a very complicated story. There are a lot of issues, globalizations, institutions are important. But I want to focus on technology, because I think that's not only the biggest driver right now, but more importantly, the one that's growing and it's going to be even more important in the next 10 years as we see the accelerating pace of technological change, especially information technology. Let me illustrate it maybe just with a story that I think you're all familiar with with simple tax preparation software, like TurboTax. That has codified a basic process, preparing your taxes, digitized it, and then replicated it. So you can take that process and once you have put it into a computer software program, you can make a copy of it. The copy is a perfect copy. You can do it at virtually zero marginal cost and you can replicate it and send it anywhere in the world almost instantaneously. Free, perfect and instant are characteristics that we haven't had a lot in goods and services in the past. And that has a number of effects. The first, perhaps the most important one is a tremendous increase in productivity and performance. Not all of it is measured. Much of it in that case is not measured. But it also leads to a new distribution of income, a different one before. There are some big winners. Scott Cook, the owner of Intuit that makes TurboTax, is a billionaire and many of his executives are doing very well. It's a small number of people needed to produce this and replicate it. Consumers is a very large group of winners having this very low-cost $39 software that can do wonderful things. But there are also some people who haven't done some well. The tax preparers at H&R Block and other companies, many of them who were college educated invest a lot of time in learning a set of skills. They're not really adding a lot of value anymore and the numbers of them has plummeted quite substantially. And of course it's not just tax preparation software. There are many, many categories that are changing. Mark Andreessen has said that software is eating the world. And I think it's true that we're facing the digitization of almost everything. And that's affecting travel agents, secretaries, bookkeepers, parts of, little parts of every jobs. My colleagues at David Otter and Daron Asamoglu and Frank Levine, others have looked at the parts of jobs that have been most affected and it's especially routine information processing work recently and you can look inside of, and you can classify jobs by what they do. And what they've seen is that that part of the job spectrum has fallen quite a bit. It's led not just to some falling medium incomes, but a polarization where a lot of middle-skilled jobs have disappeared. But it's also important to recognize that technology has always been destroying jobs and it's always been creating jobs. If you look back to the days of agriculture, when it dominated the United States economy and other economies, 90% roughly of Americans worked in farms in 1800 by 1900 was 42%. Today it's less than 2% and of course they produce more than enough food for everyone. And those people didn't simply become unemployed, at least not permanently. They ended up finding new jobs. They learned new skills. Entrepreneurs like Henry Ford and Steve Jobs and Bill Gates invented entirely new industries that we couldn't have imagined. The political system responded with what's been called the best idea that America ever had, which was compulsory universal education, training a whole millions, hundreds of millions of people to be able to handle these new jobs or have acquired new sets of cognitive skills. But nonetheless, there was a significant disruption that went on with that and there's no guarantee that job creation will always and everywhere occur at the same pace as job destruction. It can take years for people to reskill and for entrepreneurs to invent new industries and the whole new interdependent systems of trade and specialization that go with that. This kind of long-term disruption as people try to catch up with what the technology is enabling is not necessarily unprecedented. Susantou Basu and John Fernald and others have argued that technology improvements can often be contractionary as they take out costs quite dramatically. Joe Stiglitz has argued that the millions of farmers who had their farms automated with tractors in the 1930s had a lot of trouble finding new jobs and that was a contributor to the Great Depression and it took a long time for the economy to reorganize after that. And today it's not just the routine information processing skills that are being affected that I outlined earlier but technology is affecting a broader and broader set of skills. I recently wrote in a self-driving car something I thought I would never do. We can now talk to our machines. Many of us have smartphones. You can talk to them and tell them what to do and they respond back, they understand your language. That's something that is just, when you think about it, it's just staggering. It's never before happened in history that we can have a conversation with our machines and they'll follow our instructions that way. They can solve all sorts of problems. I brought the team from IBM Watson to MIT and we played a game of Jeopardy with them. This is a game show that involves a lot of unstructured questions about everything from geography to history to math to science. Put them against a team of our best students we've been practicing for this moment and the computer completely destroyed them. Watson was much better at it. And of course it's not just solving questions for game shows, it can be used legal discovery and call centers, medical diagnosis, investment decisions. So there's very rapidly, especially just really in the past five to seven years, category after category of tasks that can now be done by machines that couldn't be done before. And the time it takes to reskill and to invent new industries can be on the order of years or even a decade. And by that time, of course, the technology will have advanced further. So in closing, let me just say that the technology is driving tremendous productivity growth. I don't think there's much question about that. It can also eliminate jobs, but the important thing is that neither outcome is inevitable. Tech may be the biggest driver of some of these changes and I think it is, but that doesn't mean we should stop tech if we don't like some of the outcomes. The solution is in transforming our skills, our organizations, our macro policy so we get more of the growth and more of the productivity and less of the joblessness. And I think if we change the conversation in that direction, we'll have a lot better luck in succeeding in that goal. Thanks. Eric, thank you. Phillip, give us your perspective on this. Thank you. It is our job, the minister and I, to convince what we reckon about 12 of you to change your minds, to tilt the balance back in our favor because we've excluded the premier vote as not being valid constitutional terms for this morning. As you can see, as a union leader, we're used to this kind of approach when it comes to elections and so forth. What can I say? This is not a vote about how technology has transformed our lives. I think then that would probably be unanimous. This is a vote about whether technology has resulted in this current jobless recovery that we are seeing. And I put the question a different way. When we're looking for reasons why we find ourselves in the situation, do you look at the city of London and the financial practices of Wall Street? Or do you look at the innovation in Silicon Valley for being the reason? Do you look at the austerity hawks from G20 2010 onwards and the EU Troika? Or do you blame broadband? Do you blame Jordan Belfort, the wolf of Wall Street? Or do you look at Tim Berners-Lee, the pride of the internet? And the point that I'm trying to make to you is that the economics and politics that have driven us into a place where we have 205 million unemployed at this moment in time is more to do with the economic policy decisions that were taken, more to do with the politics of dealing with the financial crisis and an uneven, unfair emphasis on austerity. To put technology in the dock for all the lawyers in the room, Gita and I would consider a miscarriage of justice, and I don't think that is the kind of reputation that Davos likes to carry in this interconnected world. What we're saying is then that there are other places to look and to look just at the technology takes your mind of what has been happening in the real economy. As a result of this financial crash and recession, 32 million people out of work. In addition, 27 million are discouraged from working, which means a jobs gap of 62 million. Those 32 million are a result of the financial crash and burn that we saw. And that problem was so deep and profound and global, it's a mistake to blame the technology on the slow speed in uptake. And when we have a financial crisis of this nature, then clearly, then from our understanding and from the research, it takes longer for the job market to recover. Now if I go to Greece and Spain and Italy and Ireland and I go there frequently, and when I talk to a labor leader and say, you're losing 80,000 people from this country each year, you have an unemployment rate close to 15%, do I blame this or the EU troika? And if I stand up in front of a union audience and say sisters and brothers, comrades or whatever, is the iPad the source of the problem? Or was it the decisions that were taken that led Ireland and others into this financial and economic collapse? If I talk to young people in Spain and Portugal and Greece, where over 55% of the young people are without a job, it's gone beyond depression. I don't know if you can find a new word that goes beyond depression. We have a humanitarian crisis in that country. And if I stand up to the young people and say, sorry guys, sorry sisters and brothers, it's the iPad and it's the broadband and it's Tim Berners-Lee, I know what reaction I'm gonna get. I'd also like to say that as a result of this context, it is clear that things are changing out there in the world of work and it is clear that technology will transform it. But we've been in such a difficult place that it's changed behavior of people. Hiring by business has changed. We have a growth in power time work, zero hours contracts, insecure and uncertain. And that's real and again, I wouldn't say the fault of that is technology driven, that's market driven. That's because every CEO when he's reporting quarterly has to go to his board of directors, present to investment analysts. What are you doing about your headcount? Everybody else is carrying their headcount, putting different hiring policies into place. What are you doing? So it becomes a fashion and it becomes short term. We had some courageous companies in Europe that decided to do it a different way and to keep people in employment because they realized that if they dismissed them, that the skills that they had in the place would disappear. I'm not sure about the recent productivity figures that are so hopeful that you're talking about. The conference board last week talked about productivity beginning to slip. And when you look for the reasons why, it's because we've seen an investment strike. We have not seen a level of investment that is considered anything as normal. The figure's two trillion dollars sitting in corporate accounts in the States, in the States, two trillion outside, 700 billion in the UK alone. People aren't investing. If you're not investing, then you're not helping productivity. If you're not helping productivity at the end of the day, that has an impact on workers' earnings. We have a problem of demand in our economies, which is driving us inevitably to jobless growth. We have a lack of demand in the United States, a lack of demand in Europe. Our economies are comatose. And when you look at the economic recovery and see where the money is going, it's not going to my members. The wages and earnings of members of working people have been flat for three decades. The research would suggest that it's an economic recovery for some, that 95% of the economic gains from this recent recovery have gone to 1% of the population. We have a problem of economic demand. Now, I'm not naive to suggest that technology doesn't play a role in this, but there's some very harsh financial, economic and political decisions which has fed a whole pattern of behavior, which means that people are more conservative about their hiring. They're not so optimistic about hiring. That becomes a fashion. It becomes short-term. And that's why we have structural problems. Someone's unemployed today. They're employed longer than practically since records have been kept, more than six months in Greece and Italy. If you can get a job, that is, eight months before you get back into the workforce. There are other changes out there, demographic change. The demographic changes that we will see will have an impact on labor participation. Already, we see in the United States, for example, the participation late to beginning to slip. We have the process of globalization where one billion jobs have been created, which has changed the labor market dynamics. There are consequences. My organization had to deal with the collapse of Rana Plaza, a textile plant in Bangladesh which collapsed, losing the lives of 1,130 people's lives. That was the race to the bottom, $38 a month. The race to the bottom has an impact on job creation possibilities elsewhere. We have a skills mismatch. And also, I would say, we are appalling at all levels in having active labor market policies to deal with this problem. When we look at the G20 expenditure at the OECD because we're concerned about why the job's growing and we look at the skills that people have and the skills that this audience requires. Our government's suspending 0.6% of their budget on what we call active labor market policies, i.e. those institutions to reskill, redevelop, reinsert to make sure that that workforce has the skills which all of you need and which many of you, if you're of Davos had said, we simply don't have. So I think it would be a mistake to blame the driverless car. I think it would be more appropriate to blame those that had their hands on the economic wheels that have created a set of circumstances which has led to this jobless recovery. Thank you. Thank you very much for that passionate presentation, Philip. Gita. Thanks, Tom. And thanks for the opportunity to be here. I come from a country that has been a functioning democracy for the last 15 to 16 years. We learned about democracy in 1998 and we had a really tough economically and politically. But if we take a look at the last nine years under the current administration, we've been able to create millions of jobs. We've been able to quantify our GDP. And now our GDP is at $1 trillion, with 250 million people in the country. So we're still a $4,000 GDP per capita country. And if we take a look at our technological landscape, we have about less than 20% broadband penetration rate. We have about 28% penetration, internet penetration. We've got about 100% mobile penetration rate, 250 million mobile phones in the country. And we've got 30 million people who are poor, earning less than a dollar. We've got 15 million people who are unemployed. And this is actually a much better portrait than what we saw five years ago, nine years ago, worse yet, 15, 16 years ago. Now the common denominator for all of these is that only 50 million people in the country have access to financing. Out of 250 million people, only 50 million people have bank accounts or access to financing. We have 40 million farmers who basically don't know how to get financing in a cheap, efficient, or effective manner. But we have seen technology playing the role of creating space for people who didn't have jobs, people who didn't have whatever they wanted. Now I think it really depends on where you are on the GDP per capita level. It really depends on where you are geographically. And it really depends on where your priorities are in terms of maintaining the balance of economic, political, and social interest. I think most Indonesians now would like to see a sustained democracy in Indonesia. As such, I don't think decisions ought to be just purely economic. They ought to be political and social. Now the key is to make sure that a greater number of people in Indonesia than the 50 million people have access to financing. I think the game changer would be the use of technology, the use of handphone, how to make sure that this guy who has a handphone, who doesn't have a bank account, can transfer money to this lady who has a handphone, who doesn't have a bank account. Now this is something that's being worked out. What this will entail is, I think, the creation of jobs for most of, if not all of those 15 million people and the 30 million people who are poor in this country. And this will create marginal productivity for more than 40 million farmers who are in Indonesia. Now this is a country, if we take a look at the trade account, it tells you the whole story. We export lots of commodities. We import lots of agricultural products from Thailand, Australia, and even China. And we import a lot of electronic products. I think the plan for Indonesia in the next five to 10 years is to make sure that the handphones that will be consumed by Indonesians should be made in Indonesia. Now, will those handphones be made by robots? No. I think they can be made by most of the high school graduates or polytechnic graduates who are still in the labor force and who are still not in the labor force, who want to be in the labor force. And I think this is really a question of where we want to go, I think, from an economic standpoint. Technology, as much as the advancement, has a latent effect in terms of outpacing human employment. But for a country that's just a striving democracy, 15, 16 years in its age, and wanting to maintain and sustain that democracy, I think would like to see technology playing a role in terms of creating more human employment. And I think there's still a lot of space for that to happen. Thank you. Thank you very much. Larry, you want to close this opening round? Paul Krugman's not here. So I'm not sure there's anyone here who is more opposed to austerity, to the avatars of austerity, and more strongly supportive of Keynesian policies to raise demand and address the current recession than me. There is no question that the failure to adequately maintain demand and treat the macroeconomics properly is the dominant reason why there is excessive unemployment in the world today. There is no disagreement, Mr. Jenkins, on that. I think, though, that as urgent and pressing as that problem is, it is not the only issue that we face. Here's a result of a little bit of statistical work that I did. If you look at men 25 to 54 in the United States, I choose that group because it's a group for which there's a very strong social expectation of work. They're too old to be in school. They're too young to reasonably retire. If you look at that group, one in 20 were not working in 1965. And it's a reasonable guess that when the economy has had a full macroeconomic recovery, one in seven will not be working in 2017 or 2018, assuming a full recovery. That is nearly a tripling of the rate of non-work. And that is with no cyclical element. That is not a feature of the events of the last six or seven years. It is a feature of a long-term trend that has been with us for quite some time. It is a feature that is a trend that significantly anti-dates the opening up of meaningful trade with China and the developing world. And I think the right way to think about that is as being substantially driven by technology and being driven by a capital labor substitution that has resulted in not the absence of any possible job opportunity, but the absence of job opportunity with productivity sufficient to get people to work in a modern welfare state rather than accept benefits. And that is a profoundly important phenomenon. And if anything, the evidence is that the trend is accelerating. Eric, helpfully, I thought, introduced the analogy of the transition from agriculture. If you think about it, though, think about the magnitude of the sector where productivity growth is spectacular and therefore ejecting resources. Think about its size relative to the sector that has to accept increased employment. You have agriculture losing people and manufacturing and services gaining people. That's what you had in the agricultural revolution. Today, you have manufacturing revolutionized by robots. You have all kinds of information processing revolutionized by technology. You have transportation revolutionized by autopilots and auto cars. You have retailing transformed by automobile check by automatic checkouts of various kinds. The size of the sector being disrupted relative to the size of the sector that is potentially going to accept employment is that much greater. And the whole thing is happening on a more rapid timescale. And that's why the challenge and the opportunity is that much more immense. Obviously, what is the function of economics almost? What has humanity dreamed of? The ability to live well without toil. This is a profoundly positive thing. But to say that something is profoundly positive, electricity was a profoundly positive thing, but it did make possible electrocution. To say that something is profoundly positive is not to say that all of its aspects are good and is not to say that it does not require enormous attention to maximize the opportunity and minimize the costs. The Industrial Revolution was arguably the best thing that ever happened to humanity. It is the reason why life is no longer nasty, brutish, and short. But it required its Gladstone, Bismarck's, and Teddy Roosevelt to make the society work well for everyone. That didn't just happen because of the passage of time. And so, too, the revolutions underway with technology will require their social innovations to make this work for everyone. It'll affect the geography of the way we live. It will affect the institutions of the family that we take for granted. It will affect the schooling experiences that we share. It will affect the expectations of hierarchy structure or their absence in the workplace. These will be profound changes with very important potential. But to neglect this technological change or to suggest that it is not an important or profoundly driving force would, I think, be a grave error that would cause us to have much less chance of both seizing the opportunity and minimizing the risks. Larry, thank you. This has been a great framing of the debate. And the discussion, I want to just next go around to focus on Larry's number, the one out of seven, which is the long-term trend. Because I think there's actually a lot of agreement about the impact of the financial crisis on labor, but also this long-term secular trend. And Larry really threw down the gauntlet, which I think is the biggest political question of the day. What is the social innovation? What, in effect, is the new social contract? I mean, the Industrial Revolution brought a new social contract. What is the new social contract that we need for the second machine age? Let's try to focus on that as we go through this. So Eric, take a swing at that. Well, I agree entirely with Larry's diagnosis, which isn't surprising. And I think it's very important that we get the diagnosis right, so we get the right prescription. Because like Larry, I 100% agree we've had a terrible business cycle downturn. But I didn't think we were here to debate the business cycle. We were looking at some trends that were happening before the downturn. There was labor force participation rates were falling before then. The labor ratio as a share of GDP was falling before then. Median income was stagnating before then. Job polarization and the decline in routine work was falling before then. So yes, we need more demand. But I think we should focus on these more fundamental structural issues that are affecting prime age working men and increasingly people throughout the labor force. And to the extent to which technology is a driver of that, I want to be clear. That does not mean that Tim Berners-Lee or anyone else is guilty or we should slow down technology. The solution, as in the past, is to speed up our adjustment to that technology through changes in education. That was a great idea that we had in the 19th century to educate a lot of people. But we can't simply double down on that. We have to reinvent education. Having people sit in rows of desks learning how to follow instructions to sit quietly may have been a very valuable skill in the industrial age. But it's not the skill that we needed today because robots are very good at following rote instructions. We need creativity. We need interpersonal interactions. We need a lot of things that humans bring back to humanity to a lot of work in a ways that machines can't do. We need to boost entrepreneurship. You say, well, there's lots of entrepreneurs and everyone can't be an entrepreneur. The point isn't for everyone to be an entrepreneur. The point is that in our system, those are the people who are in charge of inventing those new industries, who are in charge of figuring out the new goods and services that people are going to demand. Policy makers may have some ideas. MIT or Harvard professors may have some ideas. But ultimately, we need to boost more entrepreneurship. And if we have a lot, we need more because the amount of new venture creation and new job creation is actually less now in the 2000s than before and manifestly not enough to create those new industries. And I don't think that Indonesia or other countries that have lower wages are at all immune from this. In some ways, I think they're in the bullseye. I'm not nearly as optimistic as you are that iPhone or any phone production is going to be moving to Indonesia in the long run. This is the 30th anniversary of the Mac book, of the Macintosh. And where is the Mac Pro being produced now? Which low wage country? Austin, Texas. Because wages don't matter. They moved it back to the United States. It's the extent of automation. And increasingly, that's going to affect more and more industries. So off-suring, I think it's just a way station on the road to automation and low wages are no protection. You don't want to compete with a robot by saying that we're going to do it cheaper than you can. Ultimately, if we get the diagnosis right and we understand the need to reskill, reinvent, and change our government policies, I should mention our tax policies also changed a lot in the past, and we'll have to change again, then we'll be able to grapple with these issues. If we misdiagnose it, we're going to come up with the wrong prescriptions. I think also. No, I'm going to go to you. I just want to say, as someone who's actually been on Jeopardy, scariest thing I've done since covering the Lebanese Civil War. Philip, go ahead. Let me just frame it quite if I could just slightly. I now want to hear it exactly. But I want to focus on this question because I really want your perspective on what is the new social contract we really should be thinking about? First of all, it would be very good for us to start talking about a social contract. I would welcome people developing a narrative about jobs as wealth creation. When we talk about jobs now, it's structural reform. The work is somehow inflexible, not prepared to adapt and so forth. That is wrong. It doesn't help us. So we have to get jobs and see it as wealth creation and to develop a new sense of the world of work has been central to the health of our economies. That hasn't been happening. That narrative hasn't been there. And I don't think you have to look too far towards moving in a new direction. I've taken Mark Carney and the Fed focusing on employment as opposed to inflation rates as being something positive. I'm not an economist, but it seems as if it's changing the narrative that when we have an ECB that is totally fixed on 2% and nothing else, then I think it leads to poor decisions. And you can't improve this without getting your fundamentals right. Curiously in the US, I've looked at the Bureau of Labor Statistics. They expect the workforce to grow by almost 11% in the next eight years. They expect to see something like 11 million new entrants into the workforce who will get a job, not where they were. The social contract. We have to get a sense of active labor market policies and to look at the average life cycle of a CEO these days, Tom, three to four years. So let's take that as a start. That means a worker will have to find new skills, new opportunities, reeducation every three to four years. Our labor market policies are singularly ill-equipped and cannot keep pace with the kinds of changes that Eric is making. So when you see the G20 looking at this and we see 0.6%, if they spent 0.6% more, they reckon it will create millions of jobs. So this social contract, change the center what a job is, change the sense about active labor market policies. In this country, the apprenticeship is over by the time you're 20. Why not apprenticeships when someone's 35, 45, 55, give people a chance to get back into the labor force? I know we get hammered because of welfare expenditure because of the problems in Europe. We have to find a way of doing what these things tried to do initially was to take people out of initial hardship but not put them on the unemployment scrappy. We have to get people back into some form of education and some kind of work and to make that a political priority. A new social contract is, why don't we do competitively league tables on the infrastructure of countries? Look at the states. I mean, I don't know much new investment can take place and how many new jobs you could create by making a new social contract between government and its people that we will have an infrastructure for transport, energy, electricity and broadband which is second to none. I think that's part of a social contract and I would also say that the workforce is part of the solution. This is what we're good at. That if we have a place where we can discuss apprenticeships and training and recycling and not just panicking in terms of short-term investment, analyst pressures, we can do a much better job. So a seat at the table for working people is part of this contract. Phil, let me just follow up with one quick question. Part of the argument that both Eric and Larry are making in effect is that this technological revolution is hitting both traditional white collar and blue collar employment now. And do you have, because you've got a thousand unions in your organization, do you have anyone who's really exploring the idea of what I would call the no collar job? And what I mean by that is this, that almost a different way of thinking about how people will earn income in terms of much more interpersonal behavior, interpersonal help, I'm not just, it's not just the cute, you will all give each other massages, but is the nature of jobs changing that getting out of both the factory floor thinking and the back room thinking but into something much more interpersonal that can also produce rising incomes? Is that something your members are thinking about in any way? I think on the labor movement, we also still infected too much, a little by, by short termism. This contract now, this job now. And it's extremely difficult to get people to project forward. And I asked them the question, if you have a union and convention in 2024, what's gonna be the key issue on the, what does that look like? What does union success look like in 2024? And we're not particularly adept at saying, oh no Philip, it's the convention, it's the local, I'm elected every four years. So this is sort of a cycle that builds in. And so what is happening is the ILO, they have a new director general and they're raising a major, major project on the future of work based on the centrality of work, but looking at work in all its new dimensions. And there is clearly a great deal of experimentation taking place away from nine to five, 24, seven. Do you work from, well in fact, where the location of work doesn't become as critical as it once did when you work and how you work. We see all of these things happening, but at the end of the day, there has to be some economic certainty that you've got a livelihood. So therefore that means your social safety nets are gonna have to be dealing not with a closure of a mine in Wales where I'm from, we lost 500,000 mining jobs, but you're gonna be dealing with different kinds of job transformations. And we're not equipped for that yet. We can be, but we're not. And therefore I think everybody has to wake up to this. I'm not disagreeing with Eric and Larry about the transformational nature of what's going on. And I realized when we've been in crisis mode for four years and this Davos has given us a bit of oxygen to say, oh dear, we now have an opportunity to see what that other world looks like. And it's very different, but we're not equipped to provide people with the skills or we're not sure about the quality of the social safety nets in place to provide the security which a dynamic economy requires. Great. Gita, I mean, is this terrifying from the point of view of the developing world or do you see opportunities here? And particularly focus on this point that Eric made that really off-shoring turns out was just a way station in this process to ultimate automation. I hold a different view. I mean, I'm not talking about 250 million Indonesians buying iPhones. You know, I think the price of iPhones, a lot of that is basically brand equity. It's not the price or the amount you pay for the labor that work in Austin, Texas, or even in China. Now in Indonesia, there's plans that are actually assembling, you know, a la what the Chinese brands are doing in China that sell the same kinds of smartphones for a fourth, the price of iPhones or even Samsung galaxies. These are the models that Indonesians can afford to buy. They're not dreaming every night to buy iPhones or Samsung galaxies. They can only pay probably $150 to $200 as opposed to $500 to $600. This is what we wanna do. Even if it costs 30 to 50% more, you know, from a labor standpoint, from a manufacturing standpoint, but there's a lot less brand equity in all of these. Now I think if we wanna talk about the social contract, we've gotta really be cognizant of the demographics. You know, Indonesia is rich with demographics. 60% of our population are younger than 39 years old. And if we go forward 15 to 20 years from today, the profile is gonna still look the same. So I think it is our duty as, you know, policymaker and also participants in the business community to make sure that these youth are going to be playing a part in the supply site. I got no problem with the demand side of the equation. I think it's the supply side of the equation that needs to be addressed. And the supply side of the equation, I think you just take a look at the fixed capital formation ratio to the GDP. It's still at 31%. China stands at 50%. Now if we wanna ramp that up to 35% to 40%, it's gonna take a lot of men pouring concrete, buying a lot of bulldozers and tractors and what? We're not talking about robots, you know, making stuff. And I think it boils down to where you are on the GDP per capita. We're not at the middle income level yet. I think beyond that, then you can start tinkering with, you know, the extent to which you wanna, but you've gotta have the right political recipe to create a political construct for the right social and economic construct. Thank you. Two questions I want you to focus on. One is this question of three things I'm interested in, actually, the new social contract. Do we need to think about the way government relates to workers in the workplace differently? Number one. Second, you know, this idea of a new kind of job, the no-collar, that there will be jobs that aren't either the traditional factory floor or the traditional service job that can provide for the middle-class rising incomes, that can sustain a middle-class lifestyle. And third, I'd like to get your sense, put your geopolitical hat on. I was just thinking, as Gito has speak in, and looking at the turmoil in the world today, how much do you think is about this issue to one degree or another? What's roiling governments? What was the first question? The new social contract. Look, I think we pay people too much not to work and not enough to work. And that's going to be an important part of a new social contract. OK, I got one quote for the day. You can go now. What do we pay people for being on unemployment insurance? What subsidies do we provide to jobs? That's a big change in systems of social support that I believe we can manage. I'm sorry, Tom, what was the second one? Are we going to see a new kind of job? I mean, again, the laugh lines, we all give each other massages. But something very real that is something uniquely human, that Baxter can't do, that Big Blue can't do, that the driverless Google car can't do, is there a job that things that are uniquely human that can also sustain a middle class lifestyle? Look, Eric, we'll know more about this than I. There was a computer program written in the 1960s called ELISA. What did ELISA do? You typed in, and it basically provided you with a kind of crude psychiatry. You told it your story. It said, that must have been very hard for you. You continued. It said, tell me more about it. You continued again. Well, how did you really feel when you thought about it? And there's actually a certain amount of evidence that it provides sauce. In Japan, there's a non-trivial industry around electronic pets that provide a sense of connection and response. So I'm sure there are going to be things that prove harder to mechanize, things that prove easier to mechanize. I am very much an optimist for our species that there are going to always be things that are uniquely human and can't be outsourced. But I think it is a mistake to be too confident and glib in speaking of broad categories. The example that was always given, two big examples that were always given of things that couldn't be susceptible to productivity growth improvement, were it was still going to take four people 45 minutes to play a heightened string quartet no matter what happened. Well, that's true. But it can now be consumed by millions of people off one production as a consequence of the digitization that Eric described. In my line of work, we're now seeing courses of a certain sort with 150,000 students. And by the way, those courses, because of the power of information technology, are better customized to the needs of the individual student than the old fashioned class of 50 people in a classroom. So yes, there are going to be these categories. But I think, frankly, no collar jobs is much too glib, a term. And I think the effort is very problematic to try to say just which are going to be the categories that are going to be less susceptible to mechanization. The geopolitics, I think it's hard. I look at what's most in the news this week here, which is Japan and China. And I think that's probably got more to do with unresolved history and changes in relative economic power than it does the changes that we're discussing here. I hesitate in your presence to offer opinions on the Middle East. But I think if I was looking for a non-ethnic kind of explanation, I would go more quickly to demography and the problematic character of societies that are extremely young, then I would go to the absence of job opportunity created by technology. I think there is one aspect that probably is there, which is the revolution of rising expectations. It's a pretty settled fact, as much as such things can be settled facts, in social science that revolution and restiveness do not come from distress, do not mostly come when people are in the worst situation. They come when it starts to get better and people feel it getting better and it doesn't get better fast enough. And that's sort of what happens with the iPhone and with being able to see everything and getting a new kind of openness. And so I think that aspect is the one that I would probably stress. But that's a bit different from all these people are mad because technology is displacing their jobs and therefore they go to war. Because I don't think the places where the jobs are getting displaced by the technology are the places where the geopolitical strains are greatest. Thanks. So I'm going to go to about 15 minutes and I want to give a chance to the audience to ask some questions. But there's something that Eric and Andy said the other day just to frame the question a little bit because I do think the speed at which this is coming is really fast. And the point, I don't remember if you made it or Andy made Eric, but that in the Jetsons, this futurist cartoon that we all grew up with in the 60s and 70s, George Jetson actually drove his car. And so that's how fast we couldn't even imagine the driverless car then. So the floor is open and I'd like to hear from people right up here in the front if you'd identify yourself. And you can ask it a general question or to one of the participants. I'd like to ask a question to Mr. Samrish. My name is Shahmar Morsoum, I'm from Azerbaijan. Someone well-sponsored. Throughout the last 10 years we've seen significant tremendous growth in emerging markets and majority of them are actually in the middle income zone. But there is a phenomenon called middle income trap where the countries which very fast come to the middle income level, they stuck there. There are many examples and very few exceptions. What would be your thoughts on the role of technology in helping those countries to get out of this middle income trap? Thank you. Thanks. Blair. Two responses. One, I've actually working with Lamp Pritchett, made a fairly careful statistical study of these matters. And it actually suggests a conclusion a bit different from the middle income trap notion. Here's the basic fact about countries' growth rates that's quite surprising. They are only barely persistent from one decade to the next. The human tendency is to extrapolate. You assume that somebody who grew fast over the last 10 years will grow fast over the next 10 years. But in fact, if you array 150 countries in the world and look at their growth rates in the 1980s, it's barely correlated with their growth rate either in the 1970s or in the 1990s. And so what's called the middle income trap is actually the statistical phenomenon known as regression to the mean. The classic version of it is look at a political figure who's on the cover of Time Magazine. On average, their career goes downhill afterwards. Why? Not because Time Magazine made them go down. It's because the reason they got on the cover of Time Magazine was they just had a terrific run. And on average, you don't have a terrific run after you've already had a terrific run. You regress to the mean. And so there's very little evidence for the proposition that somehow countries grow slower from a middle income position than they do from a low income position or a higher income position. It's mostly about regression to the mean. And I think that's actually significantly misunderstood. What does technology have to contribute? Look, I think the challenge of success is that you have something to lose. And when you don't have much, you're willing to try anything. And when you've got something, then when something new happens, you are reluctant because it threatens what's old. And so it is maintaining the sense of continuous ferment that is the challenge for the same thing with not the same thing, but I think it's a very good analogy between countries and companies. Small companies bet the company on a new technology. Mid-sized companies aren't willing to put their existing business at risk. Large-scale companies are committed to what they do. The cautionary tale for our age is Kodak. Kodak was a heroic institution. Kodak was a hugely successful, fundamentally positive technology, modern photography, not modern, traditional, traditional analog photography that brought vast pleasure to the lives of hundreds of millions of people around the world. And at the same time, the enterprise supported a thriving middle-class Rochester, New York that employed tens of thousands of people that was innovative and successful in research, that actually did some of the earliest work on what we today call digital photography. But they couldn't bring themselves to put their thing at risk. And the whole thing is no more. And with it, Rochester, New York and the community it's supported and the public institutions it's supported are not what they once were. And it's because once you had a lot to lose, you didn't continue to be willing to take chances. And that's the basic cautionary tale for our time. Who else? Right there. Go right ahead, yeah. Rakesh Karana, I guess it's questions for Eric. So for a long time, the social contract between productivity increases and wages was, as companies improve productivity, share those gains with workers. What were the factors that you think broke down in that sort of implicit contract that existed, what were the contributing factors? Because as you mentioned, productivity continues. It may be slowing down, but the wage stagnation started much earlier than that. Well, there are a whole set of factors and it would probably take a book to describe them all. But the one I probably would focus on is the way the technology has changed. And just to be a cold-blooded economist about it, the marginal product that people are producing is going to be correlated with what people are being willing to be paid. And ultimately, the education, the skills have to continually update and change. So you're right, over much of the 19th and 20th century, productivity and median wages grew together. Now that is becoming much more skewed and it reflects the kind of economics I described with turbo tax that's happening in lots of other areas where there's a very different return. And I think that CEOs and others are looking at that and are making different judgments. But I think that this does call for a new social contract and for us to rethink how we divide the pie because it is becoming more and more skewed. The top 100% has been getting an outside share of the gains. And this is a point where I very much agree with what Phil and Gita were saying and I want to emphasize a point of agreement here that when Tom asked for a social contract, they talked about the centrality of work. And I think that's exactly what we need to be focusing on is ways to encourage labor more. There's a quote in the book from Voltaire that work solves three great ills, boredom, vice, and need. And it's important not just to recover the wages and the median income, but the sense of meaning. Bob Putnam has done some amazing work describing how when work leaves a community, whether it's Rochester or other ones, that all sorts of social ills start creeping into a much greater extent, crime, teen pregnancy, divorce, drug use. And so the whole community suffers and you can think of it as a really big negative externality. One of the first principles of economics and public policy is if you want less of something, you tax it, and if you want more of something, you subsidize it. In the United States, one way or the other, about 80% of our taxes are on labor and we're putting a big wedge between what employers pay and what workers receive, essentially implicitly or explicitly telling our entrepreneurs and people who are starting companies, try and do it with as little labor as possible, get rid of your workers. I don't think that's the message we should be sending. It may not have been a very destructive message earlier, but now it is becoming a destructive message because of those externalities I'm describing. So we should look for ways to reduce or eliminate that wedge by changing our tax in our social policy, by subsidizing education and other and job training to help that. And this is I think a nice place and I know we're almost out of time here, that I'd like to see us work harder on that social contract to support work and labor and recover from some of the inequality and unemployment that we've seen over the past 10, 15 years. I want to go to Philip and then Larry. The social contract to which you referred, Eric, has been ruptured. The share of wages and the wealth produced is at historically low levels. The relationship between earnings and productivity is equally being ruptured. The wage line is flatlining, the productivity line is increasing. Now, if you look at, it's important to look behind what these figures say. And US, we always tend to talk about US, there is another world out there, but this tendency is followed elsewhere. That US labor compensation is at a 50 year low relative to company sales and US GDP. A 50 year low, that means that people can't make it. And if you look then at the profit performance, 75% of this historically good profit performance that we're seeing is because of the crushing weight on incomes and benefits. What it is mean is that the workforce organizations that I represent no longer have a seat at the table. Now, the question is, if we're going to have this improvement in income distribution, will the CEOs present here simply get out the wallet and swipe through a wage increase without any form of negotiation, without any consideration of a conversation with the workforce. Collective bargaining coverage in the United States now covers 6% of the workforce in the private sector. It's almost an extinct species. If you're gonna get back to have a fair and reasonable conversation, and I know it sounds retro, it's a reconversion of an old social contract into a new social contract, then we have to use some of the mechanisms that we have in place and there are signs of change. With respect to the minimum wage Barack Obama himself said just a few weeks ago, we need to make sure our labor laws work as they were originally intended and that there is a place for collective bargaining. The IMF is now involved in a major study in looking at, not the study, but how do we get these institutional levers back in place which give us fairness. And I know we're looking forward, but that's not right off the old economy. Where are jobs gonna grow in the next 10 years? In construction, one of the biggest chunks, one of the biggest job losses was in the construction industry. And we will need construction workers, bricks and mortar kind of stuff. And the other place where things will grow will be old economy based, but based on an aging population. Everything to do with the healthcare and the healthcare of the old and the aging population. Millions of jobs about to be created and that will create a new demand. That's why I'm saying that this rupture that has taken place, we have to, a social contract, a contract usually has two partners. It usually has a basis of consent. It usually has a legal basis. When it comes to wage distribution, we've lost that. Thank you. Just to pick up one thing you said, we have such a deficit, all of us. We in America, I know Europe as well, in infrastructure, roads, bridges, telecom, everything that could provide so of an enormous amount of construction labor, but it's interesting to note that Airbnb on New Year's Eve sold 252,000 rooms around the world. Those were all existing rooms. And you see how even the technology there can be impacting. Larry, you want to, this is gonna be the last word, so why don't you close it up before they throw us out of the room? Maybe we'll get time for one more question. Go ahead, Larry. We have one more comment. We need to distinguish here between the macro and the micro. There's a huge set of issues around rising inequality, around the change in the profit share, and so forth, but the old introductory economics teacher in me can't resist correcting Rakesh in something he said. He held out the idea that the norm was somehow that a worker, that a firm paid its workers in a way that related to its own productivity growth. That's not how economics works. Think about a semiconductor company. The productivity of the chips doubles every 18 months. Nobody thinks the workers' wages should double every 18 months, or that they will, or that they do. They think that the workers' wages track, at one firm, track not the productivity of that firm, they track the productivity of the overall economy. And so one has to think about this in a macro sense rather than draw that connection in a micro sense. I think, and maybe this is a good last thought, I think the phrase that is a huge part of this that has not been used here today is race to the bottom. You can't have reasonable organizing rules in the northern half of the United States if there are no reasonable union organizing rules in the southern half of the United States because of the power of competition. One country can't have serious estate and wealth taxation and progressive income taxation in a increasingly borderless world where people can move and profits can be relocated without substantial cooperation. One jurisdiction can't impose rules that keep work with dignity if other jurisdictions are unwilling to and there is competition. And so a significant part of that social contract agenda is a matter for cooperation to prevent races to the bottom and to institutionalize races to the top. And a very important aspect of that has to be international cooperation because it is a world where it is increasingly difficult for one country alone to impose a social contract. Very interesting, that's one of the new things. We've got to close. So I want to close with another vote and see how this incredibly informed discussion has impacted your thinking. And I'm going to repeat the question, as economies see productivity rise and jobs decline, is technological innovation in the 21st century driving jobless growth vote one for yes and two for no? And we're going to run it up there as soon as you're done voting, I'm not going to vote. We don't have time, sorry, we're out of the room. Ready? Now that's a good discussion. Thank you very much, thanks to all the panelists.