In search of efficiency – financial exclusion and technological unemployment

Every day we hear about the firms that try to make the world a better place. The new age technology firms want to erase the sources of inconvenience and delay that irritate their consumers. Every time I take the ride-hailing services of Uber to avoid the waiting time for taxis, the Book my show to avoid the queues in the cinema halls, and pay through PayTM to avoid the inconvenience of cash, I always hear about operational efficiency. Such applications claim to bring convenience for the users and run campaigns on their ethos of innovations.
But are they sincerely doing what they are supposed to solve? Do the end users need such innovations? Do these product innovations eliminate too much of hassle? In short, are they aiding society rather than harm?
Let us take a recent economic hype created by the politicians and central bankers – the demonetization. When I went through the pain of demonetization, I realised that it is not just Indians who are suffering through the pain of cashless economy. This time when my quarterly debit card statement came, I scrolled through it. To my surprise hardly there was any cash debit from my account. Enormous emphasis is placed on improving online infrastructure and online activity, particularly in the Banking and Finance sector. When we are moving so aggressively to the presence-less, paper-less and cash-less economy, we tend to forget a few fundamentals.
Many of us are happy to tap cards or phones to get to a taxi, buy a coffee or pay for groceries. But it raises the prospect of a time when we no longer carry any cash at all.
This results in no spare change for the busker on the streets, the person sleeping rough in need of a hot drink, and the donation box. This might be the rise of a cashless nation that would be mean with street vendors, small merchants and the poorest inhabitants who cannot afford the instruments of so-called convenience. It may so happen then we may further divide the mainstream society based on such media of convenience – The traditional and the modern. The societies that are in dearth need for the financial inclusion may put pressure on the same traditional who are to be banked and signed up to the financial system through financial inclusion. Many of such poorest traditional are likely to remain outside of that system creating a bigger danger of financial exclusion.
In a keynote delivered at Mobile World Congress by Ajay Banga, Mastercard’s CEO spoke about the growing global risk of creating islands, where the unbanked traditionals transact only with each other. According to Fung Global Retail & Technology, even in Sweden and Netherlands that could become the world’s first completely cashless society, significant enthusiasm gap has emerged between the traditionals and the moderns.
Now let us look at the second aspect of automation and convenience. To give a perspective, a report put out in February 2016 by Citibank, in partnership with the University of Oxford, predicted that 47 percent of US jobs and 35 per cent of UK jobs are at risk of automation. In China, it’s a whopping 77 per cent, while across the OECD it’s an average of 57 percent. And three of the world’s ten largest employers, Foxconn, Walmart, and the US Department of Defence, are now replacing their workers with robots.
Predictions that automation will make humans redundant have been made before. During the Industrial Revolution textile workers, protested that machines and steam engines would destroy their livelihoods. The difference between the previous waves of automation and the current one is that workers had the option of moving from routine jobs in one industry to routine jobs in another in the earlier. But now the same data techniques that allow companies to improve their marketing and customer-service operations also give them the raw material to train machine-learning systems to perform the jobs of more and more people.
Are these developments leading to the concept of Universal Basic Income proposed by Thomas Paine, the 18th-century radical? Is this the price tag that we have given for the new era of the unemployed? Need to wait and see how the technologists, governments and central bankers would tame this problem.

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