The digital future, rising productivity and economic growth
Technology modernization, like the transformation of farm tilling from animals to crude hand tractors to modern fast tractors, always leads to lower cultivation time, less waste, higher productivity, and higher incomes.
In the area of consumer electronics, corporate and personal finance, there has been a quantum leap in technology modernization, from the old slow mail to telegrams and pagers to e-mails and social media, and now artificial intelligence (AI) like ChatGPT.
At the BusinessWorld Economic Forum 2023, held on May 25 at the Grand Hyatt Manila in BGC Taguig City, the theme was “The Digital Future: Accelerating Business and Sustainability.” It was a big event with many face-to-face participants, from corporate sponsors and individual attendees. I attended the event, and several other BusinessWorld columnists also came. Very few speakers were from government and multilaterals, most speakers and participants were from the corporate world.
The presenters from Microsoft Asia Pacific, Peter Maquera, and from nChain, Stephan Matthews, discussed many digital concepts that looked to me like extended Greek equations in my undergrad and graduate economic studies. But I understand the end goal of that digital modernization — faster and more efficient work, fewer meetings, and inter-office coordination, better understanding of customers and the public, and an overall increase in productivity and, hence, corporate and personal income.
The other speakers and panelists echoed this perspective from their respective sectors — banking, land transportation, telecommunication, real estate, agribusiness, etc.
I checked the data on labor productivity of some countries. The International Labor Organization (ILO) has an updated measurement regarding this until 2022 — they use GDP at constant 2017 international dollars at Power Purchasing Parity (PPP) over total employment (Labor productivity = GDP/Employment).
The contribution of technological, financial and other modernization is reflected in rising labor productivity from 2011 to 2019. However, the dictatorial lockdowns worldwide in 2020-2021 has neutralized the increase in productivity in many countries — their output per worker in 2022 was either flat or lower than 2019’s level. This includes the G7 countries especially France, and ASEAN countries like Malaysia, Thailand, and the Philippines (see Table 1).
I do not believe that more AI will lead to massive job displacement, with millions of unemployed. When pagers replaced telegrams, when e-mails replaced snail mail, when drones replaced many photographers, it did not lead to massive job displacement. This is because new businesses and jobs sprouted — like cell phone trading, upgrades, and repairs, and now drones trading, upgrades, and repairs.
When people have higher incomes due to the adoption of AI, they will not burn or throw away their savings. They will spend — on more vacations and travel, on more exotic or fanciful food and parties, etc. And this creates new jobs elsewhere.
In the afternoon session, the presenter from Unilever SouthEast Asia, Kristine Go, talked about modernization in nutritional products — fine. But she started with a rather alarmist view — that “Our food system is the biggest contributor to environmental damage.” She cited figures like 30% of greenhouse emissions coming from the food system, that 50% of our soil has been lost in the last 150 years, that 75% of the world’s food supply comes only from 12 plants and five animals.
With all due respect to Ms. Go, I think her assessments are rather alarmist and dangerous and can justify the “war on farming” that is slowly being done by the government of the Netherlands and other countries in Europe. Farmers are being forced to drastically reduce their carbon and nitrogen emissions with the threat of farm takeovers by governments.
I checked the data on selected agricultural production — there is little or no indication of reduced farm output and productivity as a result of continuing soil erosion, monoculture of plantations and farms, or use of fossil fuel-based inputs like chemical fertilizers and pesticides. I use Food and Agriculture Organization (FAO) data from developing Asia — countries that are likely to ditch strict environmental regulations as they produce more food for their big populations.
From 2000 to 2020, as more big tractors plow rice fields, corn fields, sugarcane fields yearly — and even thrice a year during the rice-corn planting cycle in a year — soil erosion is greater and yet agricultural output is rising, an increase of up to double or nearly triple in corn output in just two decades. See China, India, Indonesia, the Philippines, Myanmar, etc. in Table 2.
This is not to justify tractor-induced soil erosion, but nature and gravity can partly replace the eroded topsoil with new soil from the uplands, especially organic matter from the forest floor, carried downstream by rainwater and flooding.
The biggest threat now to higher food production and forest protection actually comes from renewables like big solar farms and wind farms. Hundreds of hectares — and soon thousands of hectares — planted to rice, corn, sugarcane, coconut, fruits, etc. are being converted to solar and wind energy production. Since solar hates the shade from clouds, rain, and trees, all tall and mature trees must be removed and cleared. Many mountain tops and ridges are being flattened, thousands of trees killed and cleared, so that 18- or 24-wheeler trucks carrying long wind blades, long steel bars, huge turbines, and heavy cement can be transported high up in the mountains.
The digital future should be an ally of humanity, of more food production, forest protection, new jobs creation, higher labor productivity, higher life convenience and modernization. So far this is happening, with occasional blips from the mixing up of environmental and climate alarmism that are not conducive to humanity advancement, modernization, and faster economic growth.
Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers
