Lawyers, Doctors & Banking

Eastern Cape Export Symposium

Innovated by the North-West University Francois Fouche 28 March 2019 Who we are

✓ Trade Research Unit @ the North-West University, Potchefstroom.

✓ International trade & economic development research.

✓ Holder of a WTO Chair.

✓ Developed a methodology (TRADE-DSM®) to identify realistic export opportunities. Deployed into software for easy access to applied research.

✓ Published an international book. Why do we do research?

A different angle of looking at our challenges. Politicians use statistics…

… the way a drunken man uses lamp posts…

… for support rather than illumination. Ask better questions… to get better answers South Africa = increasingly open

(Exports & Imports) as % of GDP Export opportunities matter

Factors in which firms value improvements most

Note: SMEs are defined as firms with < 250 employees. Survey responses of 418 SMEs and 103 large firms to the question: - What are the 3 factors in which you would most value improvements?

Source: OECD and WTO (2015) based on ITC Monitoring Survey (2015). Globalisation

The changing nature of globalisation. Article from economist The slowdown in some areas – slowbalisation. The growth in others. The future of globalisation. Chain reaction They were promised jobs, via a trade war Content

Change the way you think about globalisation.

Raise your anxiety.

Raise your level of excitement.

Future globalisation will be very different from today’s and the past.

Future globalisation • About the things that we do.

• Not only about things that we make. Picture globalisation. What do you see? Picture globalisation. What do you see? Picture globalisation. What do you see? Picture globalisation. What do you see? What drives globalisation? What drives globalisation? What drives globalisation?

A very simple idea.

Taking advantage of differences in price on essentially the same thing to make (risk free) profit. What drives globalisation?

When people go to Germany – they try the beer. When people go to France – they try the wine.

Countries are inherently good at making some things & less good at making other things.

Companies are exploiting these differences.

They buy low (some countries) & sell high (in others).

There is a very good reason for this. What drives globalisation?

Easier to ship: • things that we make (goods) across borders, • than things we do (services). Which services? If you do not work in a factory / farm, then YOUR job.

The reason your job has not been globalised as yet, it because it is harder to ship.

Why is it easier to ship goods vs services across borders? • the fundamental reality of services • service buyers & sellers typically need to be in the same place.

BUT digital technology is changing that reality. What drives globalisation?

Easier to ship: • things that we make (goods) across borders, • than things we do (services). Which services? If you do not work in a factory / farm, then YOUR job.

The reason your job has not been globalised as yet, it because it is harder to ship.

Why is it easier to ship goods vs services across borders? • the fundamental reality of services • service buyers & sellers typically need to be in the same place.

BUT digital technology is changing that reality. What drives globalisation?

Easier to ship: • things that we make (goods) across borders, • than things we do (services). Which services? If you do not work in a factory / farm, then YOUR job.

The reason your job has not been globalised as yet, it because it is harder to ship.

Why is it easier to ship goods vs services across borders? • the fundamental reality of services • service buyers & sellers typically need to be in the same place.

BUT digital technology is changing that reality. Digital technology’s enabling role

Digital technology is making it easier for people to sit in 1 nation & deliver services in another. Digital technology’s enabling role

Digital technology is making it easier for people to sit in 1 nation & deliver services in another.

Digital technology is making it possible. But which economic rationale makes it profitable? Digital technology’s enabling role

Digital technology is making it easier for people to sit in 1 nation & deliver services in another.

Digital technology is making it possible. But which economic rationale makes it profitable?

Imagine we lived in a Star Trek world… … where workers could TELEPORT from 1 country to another @ no cost.

The economic question is: “Would they have an incentive to do so?” Digital technology’s enabling role

Digital technology is making it easier for people to sit in 1 nation & deliver services in another.

Digital technology is making it possible. But which economic rationale makes it profitable?

Imagine we lived in a Star Trek world… … where workers could TELEPORT from 1 country to another @ no cost.

The economic question is: “Would they have an incentive to do so?”

YES…. given global wage differentials. A US accountant costs 5x more vs Polish accountant. Digital technology’s enabling role

But we don’t live in a Star-Trek world.

Yet digital technology is enabling something similar, TELEmigration.

People sitting in 1 nation, working in offices, in another nation.

Arbitrage drive globalisation. Up to now, mostly in goods.

Not because the is no economic incentive to do so, but because there were technical barriers.

How is digital tech tearing down barriers to enable digital migration? Digital technology’s enabling role

But we don’t live in a Star-Trek world.

Yet digital technology is enabling something similar, TELEmigration.

People sitting in 1 nation, working in offices, in another nation.

Arbitrage drives globalisation. Up to now, mostly in goods.

Not because there is no economic incentive to do so, but because there were technical barriers.

How is digital tech tearing down barriers to enable digital migration? Digital technology’s enabling role

But we don’t live in a Star-Trek world.

Yet digital technology is enabling something similar, TELEmigration.

People sitting in 1 nation, working in offices, in another nation.

Arbitrage drives globalisation. Up to now, mostly in goods.

Not because there is no economic incentive to do so, but because there were technical barriers.

How is digital tech tearing down barriers to enable digital migration? Digital migration

TELE-commuting 1 • Work-from-home… day-a-week… day-a-month. • Mostly domestic at present, BUT going global. • Arranging things at work to slot in foreign workers will make it profitable to hire foreign workers (freelancers) online. • Remote foreign intelligence not quite as good as in-person domestic talent. • BUT foreign talent is much CHEAPER, thus PROFITABLE. • So what will happen, apart from your anxiety levels rising?

Freelancing platforms (online) 2 • eBay/Gumtree/Junkmail made it easier to buy goods online. • Upwork.com makes is easier to buy services online. Digital migration

Machine translation 3 • Used to be a party trick. A rough first draft. • Today it is very good. Instant. And FREE. On your smartphone.

• to people who don’t speak English. Skype Translator. • YouTube to to watch foreign language videos. Auto Capture. • Out to translate emails. Microsoft Translator.

• Imagine how revolutionary this is to foreign freelancers. • Language barrier is solved, to some extend. • Some of them will be able to at least do some of your job. Digital migration

Machine translation 3 • Used to be a party trick. A rough first draft. • Today it is very good. Instant. And FREE. On your smartphone.

• to people who don’t speak English. Skype Translator. • YouTube to to watch foreign language videos. Auto Capture. • Out to translate emails. Microsoft Translator.

• Imagine how revolutionary this is to foreign freelancers. • Language barrier is solved, to some extend. • Some of them will be able to at least do some of your job. TELE-presence

Service buyers in a country in the same room as service sellers. Same meeting, not same country. TELE-presence robots

Robot’s in-room presence increases communication. TELE-presence robots

Robot’s in-room presence increases communication.

TELEmigration is POSSIBLE & PROFITABLE. TELEmedicine

Expensive & inefficient to move doctors. Doctors & patients don’t have to be in the same room. Diagnosis at distance.

TELEdiagnosis Medical images travel between healthcare centers for diagnosis. TELEconsultation Provision of knowledge by expert across distance (TELEradiology). TELEmonitoring Supervision of patients @ distance, who are not in the hospital (diabetes, pace makers). TELElearning Education & training of patients / doctors at distance.

Probably less labour disruptive, since rich countries are short of doctors. TELEmedicine

Expensive & inefficient to move doctors. Doctors & patients don’t have to be in the same room. Diagnosis at distance.

Probably less labour disruptive, since rich countries are short of doctors. TELEmedicine

Expensive & inefficient to move doctors. Doctors & patients don’t have to be in the same room. Diagnosis at distance.

Probably less labour disruptive, since rich countries are short of doctors. TELEmedicine & TELEsurgery

E Robots to the rescue Robots to the rescue How fast is it coming? How fast is it coming?

… faster than most believe. Digital technology development

Wonders of exponential growth.

Digital technology is driven by Moore’s law.

Our ability to transmit, store & process is doubling every couple of years. Moore’s Law

Log scale iPhone 6

Apple A12X chip 10,000,000,000

Time Moore’s Law - example

Apollo Guidance Comp iPhone 6s iPhone X (1969) (2015) (2017) 120 million x faster 2x powerful

More progress in 2 vs 40 yrs. Moore’s Law - example

Apollo Guidance Comp iPhone 6s iPhone X (1969) (2015) (2017) 120 million x faster 2x powerful Moore’s Law - example

Apollo Guidance Comp iPhone 6s iPhone X (1969) (2015) (2017) 120 million x faster 2 x powerful Moore’s Law - example

Apollo Guidance Comp iPhone 6s iPhone X (1969) (2015) (2017) 120 million x faster 2 x powerful

More progress in 2 vs 40 yrs. What seemed implausible in 2015…

Like… instant free translation on your smartphone… … is becoming universal in 2019. What seemed implausible in 2015…

Like… instant free translation on your smartphone… … is becoming universal in 2019. Summary

Future globalisation = about things we do, not only things we make. Digital technology is enabling TELEmigration. People sitting in 1 country are able to do things in other countries. It is coming faster than most believe. This may raise your anxiety. But your excitement levels as well. Summary

Globalisation means more: • Opportunities for a nation’s most competitive citizens.

• Competition for a nations least competitive citizens. Summary

Globalisation means more: • Opportunities for a nation’s most competitive citizens.

• Competition for a nations least competitive citizens. How does globalisation make you feel? The talent tsunami is a threat

etc The talent tsunami is a threat, if…

You are in the service sector. You areetc in a high wage country. You are somewhat skilled. You are not globally competitive.

Some of your tasks (& perhaps eventually your job) will be replaced. The talent tsunami is an opportunity

etc The talent tsunami is an opportunity, if

You are in the service sector. You areetc in a low wage country. You are highly skilled. You are globally competitive.

This will allow you to sell to a bigger client base. Opportunities in services trade

Automation & globalisation will impact service workers. But service workers are not ready for it.

They’ve never seen automation. Computers could not think before. They’ve never seen globalisation. Face-to-face important in services.

There was a barrier to arbitrage in services. Digital tech overcame it. Some substitutes for some white collar works are being created.

1. Global arbitrage in goods most matured. 2. Global arbitrage of knowledge maturing. Global value chains. 3. Global arbitrage in services only started. Big price differences remain. (Nurse in Kenya earns 20x less vs German equivalent). Opportunities in services trade

Automation & globalisation will impact service workers. But service workers are not ready for it.

They’ve never seen automation. Computers could not think before. They’ve never seen globalisation. Face-to-face important in services.

There was a barrier to arbitrage in services. Digital tech overcame it. Some substitutes for some white collar workers are being created.

Automation & globalisation will impact service workers. But service workers are not ready for it.

They’ve never seen automation. Computers could not think before. They’ve never seen globalisation. Face-to-face important in services.

There was a barrier to arbitrage in services. Digital tech overcame it. Some substitutes for some white collar workers are being created.

1. Global arbitrage in goods most matured. 2. Global arbitrage of knowledge maturing. GVCs. 3. Global arbitrage in services only started. Big price differences remain. (nurse in Kenya earns 20x less vs German equivalent). Fall of duties… the result

Avg tariff rates for US, EU & Japan, %

Doha round (ongoing) Trade in services vs goods

Source: WTO What barriers remain for services trade?

Some regulatory barriers remain for lawyers, doctors & banking. BUT not in all professions, i.e. bookkeepers, acc (CPAs), PA’s & travel agents, have no regulations. As barriers come down, firms will increasingly arbitrage services.

• Used to have bookstores (Barnes & Noble). Now we have Amazon. • Amazon for services already exist. • Disintermediation function performed by platforms. Go direct. • Democratised global services trade. What barriers remain for services trade?

etc Upwork.com… available skills categories Upwork.com… available skills categories Regulatory barriers

Privacy • Swiss banking industry. • If client data leaves Switzerland, people go to jail. • No back-office operations are offshored. • back office outsourced to the Philippines. Law industry… labour displacement

eDiscovery is flattening law firm structures. Disruptive technology.

home.ravellaw.com

The pyramid which used to build-up to partnership is disappearing. Less opportunities for young lawyers (paralegal). Fewer lawyers. New lawyers struggling to find law jobs (US & UK). Young, debt laden ($ 000s) lawyers will be angry. Big student debts & long study periods don’t work. Current academia not designed to solve these problems. Law industry… labour displacement

eDiscovery is flattening law firm structures. Disruptive technology.

home.ravellaw.com

eDiscovery is flattening law firm structures. Disruptive technology.

home.ravellaw.com

Future export success may look more like India’s (services) vs China’s (goods). Singapore & Japan governments intentionally using automation to avoid low-skilled immigration. Singapore subsidised tablets to order drinks (need less waiters) & hotel room service. Robotic busboy to pick up dishes in restaurants. Japan teaching English remotely vs teachers coming into country. Some technology is substituting labour. Some jurisdictions are embracing tech

Zurich airport - scan your passport. Camera recognises if you are the individual in the passport. Cross the border without talking to a person. What to look out for? Where does it start?

Look around you • Who is TELEcommuting to work? Highly trained people. • 1st sign - you do some work from another place than the office. • Eventually a much cheaper (well-qualified) foreign worker may do some of your tasks. No sick leave. No paid leave. No medical aid contributions. No pension plan. Short-term contracts. What to look out for? Where does it start?

Machine TRANSLATION • The UN (& others) accumulated massive datasets online. • AI used to translate sentence-by-sentence. Not word-by-word. • Low cost talented foreigners previously excl from intl labour market (due to language barrier) are now in play. • In 90s, factory workers entered global trade via manufacturing. • Today, high-skilled workers come into global trade via services. (wage differences make arbitrage profitable) Tools to control services

Governments already have good technology to control: • People, capital & goods crossing borders. • Government have less good tools to control services crossing borders.

International online services collaboration will go mainstream.

Government awareness is low: • They don’t pay tax in-country. • Upwork.com makes earnings data available to US IRS & issue 10-99 (miscellaneous income) certificates. • But no other governments have asked for this. Tools to control services

Governments already have good technology to control: • People, capital & goods crossing borders. • Government have less good tools to control services crossing borders.

International online services collaboration will go mainstream.

etc GVCs & goods trade dominate global trade

Emergence of (micro) global services platforms will change this picture. And transform the way we work.

etc Where does Artificial Intelligence (AI) fit in?

Can we completely arbitrage individuals? Digital tech is affecting globalisation & robots. Thus, globotics. Robots are more in our face via media, but globalisation less so. Machine learning (via large structured datasets) have enabled computers to gain cognitive capacities… which they never had. They can now see, read, think, write & produce output fairly naturally. They could not a few years ago. Some of those capacities are gateway skills to the workplace. Machine translation, i.e Google Translate. These new capacities are substitutes for certain types of service jobs. Most people are unaware of this. Machine learning is pattern recognition (on large structured datasets). Highly skilled humans are paid to perform experienced based pattern recognition (law, accounting, medicine). Where does Artificial Intelligence (AI) fit in?

That part of your job where data can be gathered, can be automated. It may not be the entire part of a human’s job, but some (repetitive / cognitive) tasks will eventually be automated. Systematic misunderstanding of what AI is. People think of AI in law for instance as a robo-lawyer, a baby lawyer. In kindergarten - eventually he’ll graduate & be just like a lawyer. A better way

Tractor cannot become the farmer. Instead its just a precise tool. It will change everybody’s job. Mostly cannot do all of anybody’s job. Lots of job displacement. But not removing occupations. Understanding Artificial Intelligence (AI)

Tractor cannot become the farmer. Instead its just a precise tool. AI will change everybody’s job. Mostly cannot do all of anybody’s job. AI will cause lots of job displacement. But not removing occupations. Which of these professions will remain?

All professions will remain, but with fewer people in each. All of our jobs will change, but we do not now how. The future is unknowable. No consensus on exact labour displacement. Fluid labour force, unbound by physical borders. International labour forces are weakening the nation state. A form of denationalisation is taking place. Blue collar job displacement influenced 2016 US elections. People were (are) mad about different things. Big tech companies have become easy to hate. It’s tech’s fault. Firewalls can stop these TELEmigrants, but concrete walls cannot. Physical migration may become less of an issue. Opportunity for EM people to work in stay-at-home jobs. Great EM export opportunities in services. Which of these professions will remain?

Great EM export opportunities in services. Not even the future is what it used to be. Artificial Intelligence under the radar Artificial Intelligence under the radar Artificial Intelligence under the radar Artificial Intelligence under the radar Fundamental opposing forces

Job displacement is driven by the pace of digital technology. AI geniuses are making money by replacing workers.

Job creation is driven by human ingenuity & entrepreneurship. Progressing at its usual leisurely pace.

Industrialisation history During the previous industrialisation, people left farms for factories. When they left the farms they had no idea what they would be making. Never heard of pharmaceuticals, an electric fan. Only knew will be in a factory doing manual repetitive work. When we left the factories into the offices… …many of the services provided nobody had even heard of (circa 1970). Fundamental opposing forces

Job displacement is driven by the pace of digital technology. AI geniuses are making money by replacing workers.

Job creation is driven by human ingenuity & entrepreneurship. Progressing at its usual leisurely pace.

Job displacement is driven by the pace of digital technology. AI geniuses are making money by replacing workers.

Job creation is driven by human ingenuity & entrepreneurship. Progressing at its usual leisurely pace.

Industrialisation history During the previous industrialisation, people left farms for factories. When they left the farms - had no idea what they would be making. Never heard of pharmaceuticals, an electric fan. Only knew it will be in a factory doing manual repetitive work. When we left the factories into the offices… …many of the services provided, nobody had even heard of (circa 197). Which jobs will disappear & appear?

We have to stop asking which jobs will appear & disappear. We have to ask, instead what will future jobs be like? We will do what the globots cannot do.. Whatever AI cannot do, we will do. Whatever remote workers cannot do, we will do. Simple process of elimination. Which jobs will disappear & appear?

Skills, for which no large datasets exist, will remain. The most human tasks we perform: • Dealing with unknown situations. • Applying empathy. • Ethics. • Being creative. • Motivating people. • Education people. • Coordination & motivation of large groups.

Your job is like a list of chores. For some of those you can get a structured dataset on. For some of those you cannot get a structured dataset on = future jobs. What can TELEmigrants not do - be in the same room. Which jobs will disappear & appear?

AI is any brief expert judgement, faster, cheaper, & better than a human. How to think about technology?

AI is any brief expert judgement, faster, cheaper, & better than a human.

Intelligence as a commodity. How to think about technology?

Technology is neither the problem, nor the solution.

It’s just a tool. How to think about technology?

Technology is neither the problem, nor the solution.

It’s just a tool.

In the end, these are all human problems, which need human-focused solutions. Mindset required for policy implications Policy implications

Containerships for global services trade = freelancing web platforms.

Great export opportunities for emerging markets.

Most platforms established by the rich countries. Some in China.

Not regulated:

• Perhaps a code of good conduct is a to start (no child labour).

• Report the tax revenue.

• Should be taxed, not crazy %, otherwise they simply move. Policy implications

Containerships for global services trade = freelancing web platforms.

Great export opportunities for emerging markets.

Most platforms established by the rich countries. Some in China.

Not regulated:

• Perhaps a code of good conduct is a to start (no child labour).

• Report the tax revenue.

• Should be taxed, not crazy %, otherwise they simply move. Policy implications