Baldwin argues that globalization takes shape in three distinct stages: the ability to move goods, then ideas, and finally people. Since the early 19th century, the cost of the first two has fallen dramatically, spurring the surge in international trade that is now a feature of the modern global economy.
while trade makes countries better off, it does not raise all boats… the benefits from trade are unequally spread across individuals and time.
The disruption won’t come because people will move more freely across borders, but because technologies will provide “a substitute for being there,”
When there wasn’t massive trade, every city and every village had its own butcher, baker, candlestick maker, and the bonfire of innovation in modern growth couldn’t get going. For a millennium, incomes for human civilization were stagnate. It wasn’t until 1820 or so, when you could move goods over long distances, that we started to see big factories and industrial clusters happening. But it was hard to move ideas over distance so those ideas stayed in the North. That was the Great Divergence. The North, the G7 more or less, had knowledge-driven growth that took off sooner and faster than the developing countries.
By the end of this whole thing, around 1990, there was a massive imbalance between know-how per worker in the rich countries and in the nearby poor countries. The information and communication technology revolution allowed the firms to move the knowledge across borders. This was transformative in rich countries, where it led to deindustrialization, and a wonderful thing in nearby developing countries, which saw rapid growth, rapid industrialization, and 650 million people rise out of poverty.
For example, Bombardier, a Canadian firm, moved the production of the tail of one of its aircraft from Canada to Mexico in a matter of months.
That sort of sudden, unpredictable, individual aspect of globalization has made everybody very anxious, frustrated, and afraid.
We shouldn’t try and protect jobs; we should protect workers.
There are jobs for people, even in manufacturing these days, but not for the low-skilled people who have been dispossessed by this. Their jobs were routine and the easiest to replace with automation. The first thing to do is accept the 21st–century reality that no matter what you do, these jobs aren’t coming back.
There are two technologies that are key: telepresence and telerobotics. They exist but are expensive and clunky. Telepresence is half of a table with life-size screens, good light, lots of cameras, and microphones. Then the other half of the table is somewhere else. When people sit at the table you have a very strong impression that they are in the same room.
The second is telerobotics. There are a couple of well-known ones. One is the surgeon operating at a 100-kilometer distance from the patient. But you can imagine that hotel rooms in London could be cleaned by people driving robots sitting in Kenya or Buenos Aires or wherever, for a tenth of the cost here. That’s coming, and it will be very disruptive.
We have to look for inspiration from northern European countries who have comprehensive retraining, help with housing, help with relocation. Typically they have the unions, governments, and companies working together to try and keep the social cohesion. It doesn’t always work, but at least they try and most people feel that the government is helping them.
We need to change the education system so you spend less time when you are young learning to be hyper-specialized and more lifelong learning. The jobs that will still be here will require face-to-face skills and making networks of human interactions work. Telepresence and telerobotics won’t replace those.