BUS604: Innovation and Sustainability

Society has made progress in recent years. Between 1988 and 2008, the poorest third of humanity saw their incomes rise by 40-70 percent, with those of the middle third rising by 80 percent. The proportion of people in extreme poverty declined by more than half between 1990 and 2015, as did the number of children who die before the age of five. However, over 750 million people still lived in extreme poverty in 2013, the most recent year for which data are available. And women have benefited less than men – whether on pay, seniority, or access to decent jobs. 

Some of the gains are fragile too: many who escaped poverty in the last 15 years could slide back in if growth slows. Moreover, automation driven by the "fourth industrial revolution" – the fusion of technologies that is increasingly merging the physical, digital and biological spheres – could have a huge impact on the number and location of jobs across the world, and raise big questions about how to protect incomes for the unemployed.

By 2030, there will be seven percent more people aged 15-24, over 80 percent of them in Africa or Asia. Overall, 600 million new jobs are needed over the next 15 years to match growth in the global workforce. Global unemployment today stands at 5.8 percent, or 200 million people worldwide – still well above the pre-crisis level of 5.5 percent in 2007. (Exhibit 14) And young people are much more likely to be out of work or underemployed: in 2014, youth unemployment worldwide was 13 percent. If development leaves young people behind, they could easily become a source of dependency, anger, and instability.

Exhibit 14: 
Global unemployment rate and total unemployment, 2005-15

More automation could push unemployment higher. As artificial intelligence, software, and robotics take on more work from humans, there may simply be less work to be done. Then more radical options may be needed to guarantee that people's basic needs are maintained. These include the idea of a universal basic income, a form of social security in which all citizens or residents of a country regularly receive an unconditional sum of money, either from government or from some other source. This is currently the subject of a major study funded by Silicon Valley seed accelerator Y Combinator. Given the structural challenges in many labor markets, there is a mounting case for considering more radical fiscal approaches such as shifting taxation away from income (especially on incomes below the median income line) towards resources, carbon pollution, and land. Beyond income, essential services including health care, education, child-care, and care in old age form the foundation of sustainable society.