Harnessing change through understanding technology’s impact

Despite what you hear, change is not constant.

Change is accelerating.

Throughout history and certainly in our own lifetimes, it’s no big surprise that technology has been a key driver of change, progressing mankind’s standard of living. For instance, technology has made work quicker, safer, and more productive. Perhaps more beneficial, technology has helped spread knowledge further and faster. Better, cheaper goods and services, together with ideas that people had previously never thought of, have also been great drivers of progress.

Yet that progress and technology have sometimes been associated with civil and political disruption and the loss of jobs, which have challenged the status quo. However, I believe rapid technological progress, an unquestioned benefit to humanity, is leading to misinterpretation and misreading of some of the basic measurements that define our lives, our livelihoods, and our economies.

The current strain of global populism portrays job losses as the predation of foreign countries and immigrants taking “our” jobs. But, this is misinterpretation; changing technology is the primary reason behind fewer jobs in industries like manufacturing. Should we then demonize technology and blame robots for unemployment? Quite the opposite. Embracing the technological trend and adjusting how we approach skills training are the only real long‐term solutions.

Another potential source of misinterpretation involves technology and the economy. Recently, it seems to me that GDP has not fully reflected the quality improvements brought about by technology. It’s possible that real growth and productivity are growing faster than the official statistics suggest. Many economists recognize such measurement errors, but suggest they are insignificant. I submit that the higher pace of technology adoption in the last 10 years has caused real confusion. This would suggest that inflation is lower than the official numbers. The real problem is that measures of inflation or economic growth that do not reflect the reality of the underlying economy could lead to inaction when action is warranted, or vice versa.

The rapid pace of technological innovation also has investment implications. Policy changes and macro events will make a big difference in the coming years, but there are clear structural changes in the world economy that will also tend to drive returns. In my mind, the foremost of these structural factors are technology and demographics. To me, these are structural factors that seem more predictable than the vagaries of political sentiment or the randomness of global macro events. That said, long‐term savers, both retail and institutional, should incorporate these structural changes into their thinking to avoid misinterpreting the facts that lay before them.

Indeed, ingenuity and innovation have driven technological advancement throughout history. We must now apply that same ingenuity and innovation to researching the economic and investment impacts of technological progress, and to finding new educational systems that will serve our workers over an entire lifetime. If successful, we could prepare future generations not just to effectively react to rapid change, but to harness it.

Read my paper, “Interpreting the facts: Technology, populism, and the economy” and attend my panel sessions at FundForum Berlin on June 12, for more thoughts on these themes.

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