Skip to 0 minutes and 13 secondsAnd then I guess this whole other question, Fabrizio, of the hollowing out of the middle class, whether though, and particularly post-GFC, and I'm interested in both of your views about this, but we've got a whole generation of young people in Europe who actually haven't entered the workforce because there's been no workforce for them to enter. How do we think about those things in this context? You see Anne, this is one of the reasons why I tend to be less optimistic than Ross. Economic growth is a process of innovation, as we said. Innovation is essentially about new discoveries.

Skip to 0 minutes and 45 secondsBut you don't just need to have a new scientific discovery, you need to be able to bring this scientific discovery into the economic process, and generate an economic innovation. Who does that? Entrepreneurs. You need entrepreneurs to take advantage of the new discoveries and use them to generate economic growth. Now, historically, entrepreneurs come from the middle class. And if we look at countries that generate new discoveries, like North America, Europe, well, we see that there, the middle class is not just shrinking, it's actually suffering, economically, socially. So, the likelihood to have that strong class of entrepreneurs that will drive the process of economic growth is also shrinking. And without entrepreneurs, there is no process of innovation.

Skip to 1 minute and 36 secondsNow we can see that in China and India, the middle class is growing large. The question is, can the middle class of China, India replace the middle class of North America and Europe in this process of economic innovation? We have no evidence of that. Ross. Well, I think that new jobs will emerge. Now, what sort of new jobs will emerge, we can't be sure. But, if we look at history, the types of jobs have changed. We don't have Blacksmiths anymore. We don't have the office typing pool. Does anybody miss the office typing pool? But we've found new jobs. And I think that the creation of new jobs is limited only by our ingenuity and imagination.

Skip to 2 minutes and 22 secondsI think as long as incomes increase, that is we have the means to spend, then that will create, that will lead to new jobs. It will create new jobs. We can't say for sure where they're going to be. I mean, sure, we see things like artificial intelligence. We see robots. We see the digitisation of everything. We see the Amazon revolution, if you like. We see all of these things, and maybe this is where the new jobs will be. But who knows?

Skip to 2 minutes and 55 secondsAll I can say is that when we look at the last 200 years of history, we've seen the types of jobs changing, and we have unemployment now that is not much higher than it has been 30, 40, 50, 60, 70 years ago. Might we have to moderate our expectations about living standards in light of a different work future, a different calibration of the work? I mean, Keynes thought we were all going to have huge amounts of leisure on our hands, didn't he. I'm so disappointed. Well, certainly, the way in which we are going to live our economic life in the future is going to change.

Skip to 3 minutes and 39 secondsPicking up on what Ross was saying, there will be with the fourth Industrial Revolution, which-- you know, it is the necessary condition for the next generation to improve their living standard -- there will be with this Industrial Revolution sectors and industries that will decline, where jobs will be lost, and there will be new sectors that emerge. Now, the problem is that if you're adding the sectors that are declining, you are losing your job. And the fact there is a job somewhere else is not necessarily to your advantage. What we need is a set of institutions and policies that moving forward will help workers shift from the declining sectors to the emerging sectors.

Skip to 4 minutes and 23 secondsNow, my concern is that in many industrial economies these policies are simply not there. Quite. Yeah. I mean, that is a dilemma, isn't it? Those institutional settings have been so crucial. And they are being weakened by populism, and some of these other forces that, at least, we're being told are about tensions, generational tensions, over wealth and equity. I guess coming back to the point about population ageing, one of the things that's going to help that problem that you've identified is the fact that fewer available workers relative to consumers is likely to mean that unemployment will become less of a problem in future, because the supply of workers relative to the demand for them will be falling.

Skip to 5 minutes and 12 secondsAnd, too, the community services and social and human services sectors must be the major source of growth in many economies. Exactly. And those aren't the kinds of things that-- well, you might have some automation in those, but they're still caring kind of-- They are. --professions, aren't they? They are. There will be automation in those roles. In fact, it's already happening in health and in education, for example. But, I'm an optimist about that. I think that new roles will be created. And that's not to say that, as Fabrizio points out, it's not to say that when somebody loses a job because of change in the structure of the economy, it's not to say that it's not a difficult process for them.

Skip to 5 minutes and 58 secondsAnd that's always been the case. There has always been. That process has always occurred. It puts a premium on education and skills, as you say. Absolutely. We know very well that most of the next generation, most of the individuals in the next generation will be employed in jobs that don't exist today. What worries me is the process for which these new jobs will be created, if they're going to be created. As I said, for new jobs to be created, we need to have new ideas. We need to have some sort of new innovation. And while we can make the assumption that this innovation will happen because it happened for the past 200 or 300 years, well, there is no guarantee.

Skip to 6 minutes and 41 secondsAs I said at the beginning, the history of the human being is a history of no growth, essentially. If we look at history in a long-term perspective, economic growth, as we know it, is just an episode of 300 years in the history of how many millenniums? So the idea that there can be automatic creation of new jobs, new professions, new sectors is not supported by historical evidence. There has to be something more. There has to be an intended process of investment in new discoveries and innovation. Do we have the conditions for this to happen today? I'm not totally sure. Do you think we have the conditions for that to happen today, Ross? Yes, I do.

Skip to 7 minutes and 24 secondsBecause I think that the conditions we need for new discoveries, for new innovations is education. The world is becoming more educated, not less. We need communications through IT, through computer technology. It's a lot faster, and more effective than it ever has been. So the spreading of new ideas is a lot more efficient. Also, I think that simply population growth is going to create those conditions for prosperity. More brains, more brains in 30 years means more likelihood of scientific discoveries. Think of all those people in China and India and Africa who are going to have access to computer technology, to knowledge, to education.

Skip to 8 minutes and 14 secondsThink of all of those people, and the probability of new scientific discoveries is going to increase, not decrease. May I speak on this point. I wish you would. If we look at the three Industrial Revolutions that we have had so far, their economic impact is actually declining. So the economic impact of the First Industrial Revolution was stronger than the impact of the Second Industrial Revolution, and that was stronger than the impact of the current Industrial Revolution, which is the Digital Revolution. So it seems to me that differently from what we're saying, the big economic impact of discoveries happened at a time when there were less people, less communication, less education.

Skip to 8 minutes and 57 secondsIt is possible that innovating to the extent that we need for economic growth is becoming more and more difficult as we are shifting the technological frontier forward. So in addition, innovation on what we already have is becoming much more difficult now. And innovation is not just about education. I think we need a little bit more of proactive intervention from the government, which is, again, not happening, at least not in the industrial economies today.

Debate Part 2: Innovation and unemployment

Professor Fabrizio Carmignani and Professor Ross Guest continue the debate as to what lies ahead for the next generation. Who will be the winners and who will be the losers?

As Fabrizio sees it…

Fabrizio presses the point that innovation drives growth, but from an economic point of view, it relies on more than just a new discovery. We also need entrepreneurs to take advantage of the discovery, to generate economic growth. The middle class is responsible for the highest levels of entrepreneurship. The problem, as Fabrizio sees it, is that the middle class is shrinking around the world and reducing the potential for entrepreneurial activity with it. Without mechanisms, such as improved government policy support, he maintains we will see a lowering of living standards, as jobs continue to be lost in the future.

As Ross sees it…

Ross argues that while many jobs will become obsolete in the future, new ones will continue to emerge, as they have always done. With continued technological progress driving productivity growth the prospects for generating income, education and growth will continue. This prosperity in turn provides the means for further technological change - a self-reinforcing process. He acknowledges that there will be bumps along the way and gentle headwinds due for example to an ageing population. But 200 years of history show that the process of economic growth and rising prosperity is robust and relentless.

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Exploring Economics: Will the Next Generation Be Worse Off?

Griffith University