Some call it “The Second Machine Age,” some call it “post-Fordism,” and some herald the emerging “information economy.” But no matter what you call the coming change, the march of technology will require a fundamental reorganization of how human capital is deployed in the economy, and nobody quite knows how to prepare for it. Latin America is especially vulnerable, and while the region’s economic leaders are officially optimistic, there’s also an unmistakable note of fear. President of the Inter-American Development Bank Luis Alberto Moreno writes in Project Syndicate:
The MIT economists Andrew McAfee and Erik Brynjolfsson, among others, identify the Second Machine Age with the rise of new automation technologies and artificial intelligence. While optimists predict that these innovations will usher in an era of unprecedented abundance, less sanguine analysts estimate that nearly half of all jobs currently performed by humans are vulnerable to replacement by robots and increasingly sophisticated software.
Advanced technologies are already making inroads into some of Latin America’s principal industries. For example, carmakers, which employ hundreds of thousands of people across the region, are rapidly deploying robots that are more efficient and precise than humans. In South America’s grain belt, GPS-guided machinery is diminishing the need for farmhands, even as output increases.
Service industries, which already account for two-thirds of all jobs in Latin America, are particularly vulnerable. One Brazilian startup’s tax-management software, for example, can perform in seconds operations that would demand thousands of billable hours from an army of accountants. Other sectors that currently account for a large share of employment in lower-income countries – including apparel, light manufacturing, logistics, and call centers – are forecast to undergo increasing automation.
Moreno is right to be sounding the alarm bell. Latin America never really managed to develop a successful and inclusive social and economic system in the age of the blue model—the “First Machine Age” when industrialization supported armies of well-paid manufacturing workers and clerical employees. The first-world countries of Europe, North America, and Japan built an age of middle-class mass prosperity in those years—and Latin America mostly had its nose pressed to the window, looking on enviously from outside.
Now, a new industrial revolution is challenging the blue model Fordist utopias of the First World—and Latin America faces changes for which it is poorly prepared. Let’s hope some of Moreno’s good advice is taken, and it’s certainly likely that some Latin American economies (like Chile’s) will do better than others. But from the standpoint of geopolitics and foreign policy, the most likely outcome is that in a large number and perhaps a majority of those economies the challenges of transition will not be met, or at least will be met more slowly than in other parts of the world.
Change is hard, and it is particularly hard to move to Stage Two when you never quite managed Stage One.