The story that is now emerging to explain Donald Trump and Brexit -- at least among thoughtful analysts -- goes as follows: Political and business elites, with their retinue of experts in tow, sold globalization and free trade to the voters in the world's leading democracies on the grounds that it would make those countries even richer. And it did, but a very large fraction of the workers in those countries did not see their condition improve at all and a smaller fraction suffered terribly, while the political and professional elites got filthy rich. It was those same elites, of course, who, in their moral superiority, were opening up their country's borders to immigrants willing to take the few jobs that were left for the ordinary workers and do it for a pittance, driving those ordinary workers to unemployment and from there to drink, drugs and suicide. So, finally, the majorities who were patronized and ignored by the elites have risen up in one of history's great 'peasant revolts.'
The solution: renegotiate the trade treaties (or, if you are in the EU, get out of it, which amounts to the same thing) and stop the flow of immigrants. But it is too late. The cat is out of the bag. In 1990, 12 years after Deng Xiaoping opened China to foreign investment, manufacturing wages in China's coastal provinces were one one-hundredth of American manufacturing wages. Companies that did not take advantage of that cost differential would be put out of business by companies that did. But manufacturing wages in China's coastal provinces were recently about one quarter of American manufacturing wages. Chinese companies are now outsourcing more and more of their low-value-added manufacturing to lower cost countries in Southeast Asia and manufacturing is returning to the United States in the form of high value-added manufacturing
But manufacturing jobs are not returning to the United States. Foxconn, the giant Taiwanese manufacturing company that makes smart phones and computer equipment for the likes of Apple and Hewlett Packard in China, is now buying hundreds of thousands of robots to replace human workers in their Chinese manufacturing plants. The robots can do the work more reliably at less cost than the humans they are replacing, and they do not strike or require dormitories, cafeterias or days off. The manufacturing that is returning to the United States will mostly be done by automated machinery, not people.
The Chinese are in a race with technology. If the millions of workers who moved from the formerly destitute interior provinces to places on the coast like Shenzen, the vast industrial center near Hong Kong, cannot develop the knowledge and skills needed to do the high-value-added work the computers cannot do, they will get rolled by the machines and be just as out of work as the Americans who were previously put out of work by low-wage, low-skill Chinese.
There is no treaty that will solve this problem, either for the Chinese or the Americans. We are all in the same boat now. Highly educated and trained workers can use intelligent machinery to greatly extend their capacity to get their work done. But workers -- whether they are Chinese or American or Brits -- who have only basic skills will be replaced by these machines. They will either work for a pittance or have no work at all. This process is going on all around us, right now.
But what about the immigration part of this argument? How does that fit into this story? First, note that none of the advanced industrial countries are being overwhelmed by destitute and desperate Chinese who cannot find work in their own country and are willing to risk their own lives and those of their family to get into our countries. That is because, over the last half-century, 600 million Chinese entered the middle class for the first time, an accomplishment without precedent in world history.
The Chinese did not want to be poor forever. They wanted to get rich. Yes, the Chinese greatly improved their standard of living by offering their services to the world's manufacturers at bargain prices, but they knew from the beginning that they would not get rich without a literate workforce that could do the work to global standards.
The effort they made to educate and train their people so they could do the work that would enable them to enter the world's middle class was nothing short of astonishing. When they began, the vast majority of their adults were illiterate, enrollment of their primary school age students was low and few of their secondary age students were in any sort of schools. Their university sector was nearly nonexistent. Now, Shanghai, a province of 24 million people, leads the world in primary and secondary education, according to the OECD, there is near universal adult literacy and their university sector is very large and growing fast.
So, if the immigrants are not coming from China, because the opportunities in China
are so much more attractive than they used to be, then where are they coming from? The answer, in a nutshell, is countries that have failed to educate their citizens, most notably, the Middle East and North Africa. Polish plumbers are an irritant to English plumbers, but the real issue is large numbers of desperate refugees from countries in the Middle East and North Africa where far too many schools are not much more than incubators of the kind of resentment and hate sponsored by the Wahabi sect and others like them. These are not educational institutions so much as indoctrination centers.
The places that are the source of the immigration that is most destabilizing in the advanced industrial countries are poor countries with skyrocketing populations of very young people whose employment prospects are slim to nonexistent, not least because they do not have the education and skills required to compete in a world in which automated equipment is steadily wiping out the jobs at the bottom of the skills ladder.
And that is what binds the coal miner on America's Cumberland Plateau to the Chinese tiller of his small plot of vegetables in Chengdu to the unemployed 21-year-old in Albania considering joining ISIS to the young Libyan militiaman who has never had a job and has no prospect of getting one. What binds them all together is the resentment and anger that come from being left out, shoved aside, uneducated, unemployable and humiliated. Some, of course, literally have no education, but many have 7th or 8th grade literacy.
The problem, as I pointed out above, is that 7th or 8th grade literacy is no longer enough if wages in your country start to rise. If you are Chinese and that is all the skill you have, someone in Vietnam will do the jobs that can be done with that level of skill for less. If you are Vietnamese, someone in Bangladesh is happy to do it for less. And, as it turns out, those Vietnamese and Bangladeshis may never get a chance to offer their services at all, because robots can probably do the job more cheaply and reliably than they can, if not today, then certainly tomorrow.
Which brings me back to the United States. The majority of our high school graduates have no more than a 7th or 8th grade education. It is just as true for them as it is for their Chinese counterparts that they will be put out of work either by Vietnamese or the Bangladeshis or, much more likely, by a robot if they do not find a way to get a far better education and much more specialized technical education.
This crisis will not be solved by renegotiating trade treaties or shutting off immigration. It is, at bottom, an education and training crisis, here in the United State, in Great Britain, in Pakistan and, indeed, all over the world. Countries that figure out how to provide a high level general education and strong technical skills to not some, but all of their citizens, an education that enables their citizens to be creative, to learn whatever they need to know quickly and easily, to work collaboratively with others from different backgrounds all over the world and to not just know right from wrong but to do the right thing when it is hard to do, will not only survive, but thrive. Such nations will not be torn apart by the rising tensions caused by outlandish income inequality and the drugs, rising mortality rates and suicide found in countries like ours where a growing numbers of adults do not have the knowledge and skills needed to contribute to the work that needs to be done -- by humans.