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The AFR View

ADC Forum shows a new Renaissance not secular stagnation

The Financial Review’s take on the principles at stake in major domestic and global stories.

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Amid great disruption, it is easy to become diverted from the basics. Many depict this age as a momentous and uplifting period in human history. Some call it the fourth industrial revolution since the steam-powered original in the late 1700s. Ian Goldin, the founding director of Britain's Oxford Martin School, who spoke at the weekend ADC Forum leadership retreat, pitches it higher still: a sequel to the 15th century Renaissance, where Facebook symbolises social change and prosperity as great as the Gutenberg press.

In contrast, others argue that "secular stagnation" means that the lower economic growth after the 2008 financial crisis is structurally entrenched. Amid record low interest rates, this perhaps reflects population ageing or environmental limits to growth manifested in a warmer planet. And, argues US economist Robert Gordon, marvels such as the internet of things, 3D printing and nanotechnology are of less import than electrification, mass production and even indoor plumbing.

White, working-class political disillusionment

Intersecting this is the debate over political populism, the global issue of 2016 with the surprises of Brexit and Donald Trump. New media technology is helping to fracture the established left-right political duopoly from the earlier industrial revolution division of capital versus labour. But many see Brexit, Trump and France's Marine Le Pen as manifestations of the white, working-class political disillusionment over technological disruption, economic globalisation and uncontrolled immigration. Also speaking at the ADC Forum, 50-year Silicon Valley venture capital veteran Joe Schoendorf worries that human redundancy from robotics and artificial intelligence will further erode middle class America. Those who think this tend to think the populist political disruption is in its early stages.

Ian Goldin from the Oxford Martin School. Simon Schluter

But today's political response to globalisation, technology and even "progressive" culture is not uniformly right-wing populist. Seven months before Brexit, Canadians elected a young left-progressive leader, Pierre Trudeau, who championed optimism and economic globalisation in line with their national economic interest. Seven months after Mr Trump, French voters elected a young centrist, Emmanuel Macron, on a pro-Europe platform, which, to deliver, will require orthodox market solutions such as winding back job-destroying labour regulations.

Astounding quality improvements

By definition, progress disrupts the established order. But, as old-timer US economist Woody Brock told the ADC Forum, the rich nation economic growth slowdown is statistically exaggerated because the numbers struggle to measure astounding quality improvements, such as the computer power in a smart phone. Rich-nation growth may have been clipped by the financial crisis and China's industrial over-capacity, such as in steel and autos. Yet China's remarkable rise is driving a stunning fall – not a rise – in global inequality. And, from the Renaissance to the end of the secretarial typing pool, history shows that technological advance generates more jobs than it displaces. Amid the confusion of this extraordinary era, Australia must focus on remaining open to the world and to the new technological opportunities it offers.

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