LETTERS: THE world economy has been slowing down since its recovery from the 2007 to 2008 Financial Crisis, hovering between 3.5 and 3.9 per cent of gross domestic product (GDP) growth and dipping to 2.9 per cent last year.
It is expected to dip to -3 per cent this year. To boost its growth, countries embarked on massive global infrastructure spending to US$94 trillion by 2040.
Unfortunately, the economy is still slowing down. There are three explanations: First, the widening wealth gap. One per cent of the population owning half of the world's wealth. According to the Organisation for Economic Co-operation and Development, 99 per cent of all businesses are small and medium enterprises (SMEs), with one out of three people working in a micro firm.
In Asean, SMEs represent 95 to 99 per cent of all businesses, generating 97 per cent of all employment. This means, only one to five per cent of businesses have the financial power to create a deep impact. Only one per cent of the population can afford to fund new creations and explore different frontiers. Most people can only survive and produce just enough to pay back their debts.
For example, Indonesia has an active workforce of 130 million people. The country depends largely on its energy and commodity sectors (70 per cent) and is unable to develop innovative industries effectively because a large number of its population is in the working class or mired in poverty.
No amount of education investment can change that situation because people are focused on surviving, not creating.
Second, the discovery of fossil fuels in the mid-19th century powered the second Industrial Revolution (IR), which changed the landscape on energy, technology and infrastructure in the global economy and gave birth to petrol-powered vehicles.
How are we supposed to conceive the fourth IR globally when we depend on fossil fuels for our transportation and industrial production?
Third, aggregate efficiency. At the height of the second IR in 1905, the aggregate efficiency of production was at three per cent, which means 97 per cent of energy used gets lost in the process.
We are at 20 per cent aggregate efficiency. Hence, we need to use vast amounts of energy to produce a smaller output and this creates massive pollution.
However, things are changing. Europe is investing heavily in renewable energy. China is working on achieving power grid parity between renewables and fossil fuels. But, to stand a chance to curb environmental disaster, this should be a global commitment at all levels.
Technology helps increase aggregate efficiency. It gives birth to Big Data which is utilised by technologies, such as Artificial Intelligence and the Internet of Things. These enhance our production systems to achieve a near-zero marginal cost and incentivises people to produce and share things with fellow humans for free, which creates a global sharing economy.
On the job front, creative destruction will step up in the next 10 years. Massive job loss due to automation will be followed equally by the creation of new jobs. But what is certain is the death of wage slavery, which was a feature of the 20th century, as those jobs will be taken over by robots.
So, the jobs that are left are those in sectors that preserves our humanity in a highly-digitalised world, such as nursing homes, nurseries and inter-faith institutions. Perhaps, by that time, most people can be emancipated and contribute value to the next frontier of human civilisation.
FAZIL IRWAN SOM
EXECUTIVE DIRECTOR, INTERNATIONAL STRATEGY INSTITUTE
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times