Technology Is About to Make Economics and Politics Much More Fraught
Like a parlor game, we often amaze ourselves with comparisons between the worlds of the past and the present. Who could have foreseen the changes brought by cars, or electricity, or telephones, let alone the Internet? As technology changed, governments adjusted economic and political policies to those changes: For example, allocating bandwidth for communication channels, issuing patents to protect inventions or subsidizing clean energy. Going forward, a number of new technologies on the horizon, in the fields of agriculture, manufacturing and energy, have the potential to foster dramatic transformations in national economies and global politics.
In the field of manufacturing, the combination of Artificial Intelligence (AI), three dimensional printers (3D) and robotics is changing how goods are produced. Design blueprints can be converted into instructions for 3D printers. The process is currently being used to print objects as small as jewelry and larger objects, including components for aircraft and buildings.
3D printing also changes where goods are produced. Instead of requiring large factories for mass production of products that must be shipped to distant end-users, production can occur at small scale, as few as a single unit, for a local user. Input materials can be metals, plastic, carbon fiber, and liquid resin, among others. Robotics reduces demand for human labor. On-demand production also reduces the need for large inventories and unreliable supply chains. Savings on labor and transportation offset advantages of cheap off-shore labor. Five years ago a publication by the National Defense University (NDU) reported, “Commercial firms are taking advantage of these advances. United Parcel Service (UPS) has established a new initiative called ‘Direct Digital Manufacturing’ focused on providing rapid 3D printing of any customer’s design.”
The NDU publication also described how indoor farming is undercutting global trade in high-value fruits, vegetables, and flowers. A factory in Kyoto, Japan produces eleven million heads of lettuce annually. Urban farms and vertical farms “do not require herbicides or pesticides, use 97 percent less water, waste 50 percent less food, use 40 percent less power, reduce shipping costs, and are not subject to weather irregularities. On a larger scale, these processes will seriously reduce the market for long-range shipping of high-value agricultural products.”
Lufa Farms in Montreal, billed as the largest rooftop greenhouse in the world, grows 100 varieties of vegetables and herbs year-round. Similar greenhouses have been built by Gotham Greens in New York, Chicago, Providence, Baltimore, and Denver. The UK, which imports almost half of its food and 84% of its fresh fruit, is vulnerable to food supply chain interruptions. The Covid-19 pandemic has forced a reevaluation of how food supply chains function under crisis conditions.
Another technology set to impact global agricultural trade is cultured meat. Unlike products such as so-called meatless beef, cultured meat is created from painlessly harvested cells from living animals. Cells are grown in a lab environment, drastically reducing demands for land, water, and energy, as well as moving production close to the end consumer.
Perhaps the greatest technology impacting global trade will be renewable energy. All nations have access to sun and wind. Local generation of energy from renewable sources removes reliance on oil-rich nations.
These trends foretell a comforting future for rich countries with high technical skills and aging populations. But for undeveloped countries, losing the cost advantage of inexpensive human labor may block the path enjoyed by Japan, South Korea, and China whose industrialization led to wide-spread prosperity. As a result, the NDU publication warns that “lack of economic opportunity in conjunction with youth bulges in many of these [undeveloped] nations will have major social and security impacts. Both internal instability and economic migration are likely to increase.” Which brings the discussion back to economics and politics.