Saturday, October 25, 2014

Offshoring to Africa — or Outsourcing to Robots?

Why Africa might not expect to see a vast number of jobs offshored to them, as they have been from the U.S. to China, Vietnam and Cambodia (etc.) In his post, What Path for Development in Africa -- and Elsewhere? Tim Taylor writes:

"The issue isn't that manufacturing itself is going away, but that industrial robots are reaching the point where setting up a high-tech highly automated manufacturing plant is looking better and better compared to setting up a plant that relies heavily on low-wage human labor ... Many of Africa's workers are ending up in the service sector, like workers in countries all around the world. But at least so far, the services sector has not serve as the primary basis for a growth miracle in any country."

At first, some people were under the impression that Obama's reasoning for his plan to "Power Africa" was to put in place the infrastructure needed to move mass-production manufacturing to Africa for lower wages when wages in China and elsewhere became "too high". But just as Foxconn is attempting to replace one million workers with robots, so are all manufacturers.

This is why service industry jobs (e.g. retail and fast-food) for Walmart and McDonalds workers in the US need to earn $20-$30 an hour (what a low-skilled union manufacturing job might pay today) before those jobs are offshored or robotized — because (at least, for now) retail and fast-food jobs might be the last to be replaced by robots and can't be offshored.

One study shows that 1/3 of all current US jobs are still prone to offshoring, and why a Basic Income will eventually be needed when most human labor becomes obsolete. More education and skills isn’t the only answer, as only so many jobs would require STEM skills, and would only employee a smaller segment of the labor force. If the entire workforce had PhDs, it doesn’t mean they’d all find jobs. As it is now, college students are taking jobs that only require a GED and displacing those with less education — taking jobs that high school dropouts could once aspire to have. I believe the economists call this “job polarization” — when a college graduate with $40,000 of tuition debt takes a job as cab driver or bartender. (sarcasm)

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