Middle of the Road

I find myself stuck finding a position regarding the government’s introduction of T-Levels¹ and the Chancellor’s recent promise of more maths education.² There are a few things to acknowledge. The first is that we need skilled workers and that young people should have the opportunity to gain skills and pursue their ambitions. The second is, as a lover of mathematics myself, I do not object to a more comprehensive push for maths education.

The reason I find myself stuck is I must ask the question of whether these initiatives are really building an effective future labour force? Goos and Manning (2007) paper ‘Lovely and Lousy Jobs,’³ does a great job of explaining this issue.

The long-held belief is that automation (which doesn’t necessarily mean computers - automation has been happening for years, as we will come to see - but often does mean computers) would first reduce the demand for low-skilled work, as these were (apparently) simple jobs. The result of this automation would be an up-skilling of the workforce, which would be wonderful. This is the sentiment behind the government’s current strategy (which, I reiterate, I don’t condemn), and they have good reason to think this way.

Automation is a very popular topic in business schools, and whenever I am discussing it with my colleagues I raise the point of Adam Smith. Smith spends a respectable portion of The Wealth of Nations discussing the shift from an agricultural economy to an industrial economy.⁴ I proclaim, in said conversations, that all society need do is embrace change and implement the necessary skill-shift to accommodate the new dynamic, in the same vein as Smith, and any automation fears would be set aside (I am simplifying here). In this sense, the government’s policy seems to come from a sensible place (Smith I mean, not me).

Yet Goos and Manning argue that rather than targeting low-skill work, automotive processes target routine work, irrespective of skill requirement. And if we think about it, this makes a lot of sense. Computers can do extremely complicated and time-consuming mathematics almost immediately. In terms of raw cognitive power, computers have humans beat every time. In terms of abstract cognitive power, less so.

A good example of this is accountancy. Services such as Quick Books threaten many of the small accountancy firms.⁵ This is because of automation, yet many people would not classify accountancy as a low-skill profession. However, it is one that can be automated with a certain level of ease, and as such it has become susceptible to our digital overlords.

Whilst the consequence of low-skilled automation should be the up-skilling of the workforce, the consequence of routine automation is that only those roles that are physically and cognitively difficult for computers to perform will see growth in human labour demand. This is the infamous polarisation of work and the hollowing out of the middle class, where low-skilled but physically demanding jobs such as a cleaning see growth, high-skilled and cognitively challenging work such as a CEO remain in demand, and middling jobs fall away.⁶

Returning to the government’s policies, this is where my issue lies. The Chancellor recently stated he would like the British people to have good jobs, which is a noble but mathematically difficult ambition - we can’t all be CEOs. Similarly, mathematical knowledge will always be useful, but it will not be a distinguishing factor for many top jobs in a world where we all have impossibly powerful calculators in our pockets. Technical skills perhaps offer a ray of hope - for the time being trades such as electrician look pretty safe. But again, there is finite demand for all these things.

We already see the problem of over-qualified and under-demanded people in this country, given the number of graduates taking low-paid work.⁷ My fear is that a promise that would have worked previously is now just offering false hope.

I say this as someone who has optimistically espoused the wisdom of Adam Smith. The intention of the government is to train young people in the skills needed for the digital economy, much like Smith advocated for the industrial economy. Yet that wisdom needs to be dragged into the 21^st century. To answer this, I refer to The Second Machine Age by Brynjolfssen and McAfee.⁸

In this book, the authors argue that computers and humans are greater together than as the sum of their parts. Where computers can process data in a way humans never could, humans can apply the data and derive complex social links that a computer would be blind to. Behind every good algorithm is an insightful observation.

I have always been a supporter of a social contract for the digital age. Automation and human work is part of that contract. The solution in terms of up-skilling and re-skilling is to be more radical, and to embrace what we do well which computers do not. T-Levels have merit, but alone they do not tackle the growing polarisation of work. As part of a long-term strategy, the solution is complex, though it almost certainly involves investment in technology, robust institutions to ease the transition in work and a willingness to embrace new ideas about education and skills-training. Our role in work is changing, and so must we.

References

¹ https://www.gov.uk/government/news/education-secretary-announces-first-new-t-levels

² https://www.thetimes.co.uk/article/philip-hammond-to-give-schools-cash-for-teaching-more-maths-pupils-n8j7gdc52

³ Goos, M, Manning, A (2007) ‘Lovely and Lousy Jobs’ The Review of Economics and Statistics, 89(1), pp. 118-133

⁴ Smith, A (2012, 1776) ‘The Wealth of Nations’ Wordsworth Editions Limited, St. Ives

⁵ https://www.accountingweb.com/technology/accounting-software/can-software-really-replace-accountants

⁶ Autor, DH, Levy, F, Murname, RJ (2003) ‘The Skill Content of Recent Technological Change: An Empirical Exploration’ The Quarterly Journal of Economics, 118(4), pp. 1279-1333

⁷ https://www.theguardian.com/education/2016/aug/13/quarter-of-graduates-are-low-earners

⁸ McAfee, A, Brynjolfssen, E (2014) ‘The Second Machine Age: Work, Progress and Prosperity in a time of Brilliant Technologies’ Norton & Company Ltd., London

O-turning

The trouble with the Budget is it’s mired in show business - it’s made into a pivotal event. And it is, politically, but not to the extent as the BBC covered it, with a pre-show followed by a four hour long pre- and post- speech analysis which included a tracking aerial shot of Mr. Hammond’s Jaguar as he made his way to parliament. Now, I’m not criticising the BBC, in part because I adore the absurdity of it all. I’m just setting the scene.

Of course, almost as much show business and performance went into the address itself as did go into the coverage of it. A jokey Budget is how many newspapers are describing Mr. Hammond’s hour-long delivery in the Commons. Some will argue it shows confidence and gives the government a much-needed sense of swagger; some that it shows Mr. Hammond fighting for his corner; some will say it shows a government and a Chancellor who is already sinking, so why bother to be bothered about further perceptions?

From my point of view, and what is almost a defence of the Chancellor, though the jokes were awful, when we all know the content of whatever is said will be reduced to a half-dozen bullet points by the commentators covering it, why not give them more cheesy content to sift through? But this, nor the other reasons suggested, are really the reason the Chancellor put on a show.

Though more jovial than most, Mr. Hammond’s tone and turn of phrase was just mimicry of what is seen in that chamber every week, and indeed what was seen immediately before during PMQ’s. Politicians speak in such a way as to embed their real politicking within a defensible question or statement. Many see it as annoying, or sycophantic. Yet that is the reality, and one the Chancellor cannot shy away from.

When he speaks about his decision to, “choose the future,” as if he had a choice, or about his desire for his children to live in a country where people have good jobs, as if this were somehow a new revelation, surely the intention is to paint himself as some political visionary. Yet it says something about the orator, I suggest, when the entirety of a speech’s punch is found in the rhetoric. Indeed, those same words could have come out of Michael Gove’s mouth and they would have had the same impact. In a profession based on candidacy, this is a problem.

Now it is unfair to say this is the exact problem that faces this government, not because it’s untrue, but because such a statement implies this is the only government that is forced to hide behind vapid statements, bluster and stage lights. Indeed, much of Labour’s high and mighty tone invokes such methods. But it is this government, distinguished with a nightmare (bureaucratically and logistically, if not actually) in the form of Brexit on the one hand and a failed yet crucial economic policy on the other that mean it seems to consist almost entirely of empty phrases spoken by interchangeable and frankly forgettable characters.

This is of course the sign of a dying government - one with an obvious lack of vision and too much time spent in office to suddenly decide to find a new one. The fact such a government remains in power demonstrates the priority is not serving, but sustaining.

Brexit remains its own animal, yet the rhetoric spouted by the government of full sail ahead whilst fires break out left right and centre shows they are, somehow, also drowning. A stronger government might be honest with the public that there are challenges in the process, some of which were unforeseen and some which stubbornly persist. Yet this government cannot for fear of upsetting the balance of power and collapsing into civil war.

On the economy, we see a similar story. Seven years into an austerity policy and government debt to GDP (this week’s favourite statistic for citation) will only soon begin to peak. Meanwhile, Andrew Neil of the BBC questioned whether the promise to eliminate the deficit has been abandoned, and Norman Smith (also of the BBC) asked whether Britain just needed to accept we are a poorer country? Yet Mrs. May and Mr. Hammond will continue to refer to Britain’s, “strong economy,” and their party’s economic credentials.

This is the equivalent of closing one’s eyes and putting fingers in one’s ears and shouting, “la la la!” into the aether. A strong government would, at the very least, address these concerns and debate the effectiveness of their choices. Yet for the Conservatives to abandon austerity, they would also have to abandon their legacy of the past seven years. They would have to accept they were consistently wrong, and would have to acknowledge the sense of stagnation (at best) that is gripping the country. They’d self-destruct, shooting themselves with their own silver bullet - economic credibility.

The Budget serves as a fine example of all of this. Immediately after, buoyed by the announcement on stamp duty abolition, the Chancellor may have believed he’d done what many thought was impossible - delivered a good Budget. Yet within hours the maths had been run, and the projection looks an awful lot grimmer and problematic. Mr. Hammond had to U-turn on his previous budget. This is also a sign of weak government, as the Conservatives should most certainly know. But it is much more concerning when a government is so fragile they cannot even risk changing their mind.