Manuel Muñiz on Democracy and Prosperity in the 21st Century
Manuel Muñiz, Dean of the School of International Relations at IE University, participated in the Global Forum of IE Law School where he discussed Democracy and Prosperity in the 21st Century.
The Global Forum consists in a series of sessions carried by renowned professionals dealing with current topics in the areas of Corporate Law, Politics, Leadership, the Future of Work, Compliance, Technology and Entrepreneurship, among others. The Global Forum aims to provide students with multidisciplinary knowledge and enhance their critical understanding of the world, shaping them into well-rounded professionals that are ready to overcome the challenges and discover new opportunities in the 21th century.
During the Global Forum´s final session, Manuel Muñiz discussed the new paradigm as a process of exponential change caused by the increasing processing capacity and technology advancement. His discussion revolved around the topic of political convulsion caused by this structural change in society that comes with two main challenges or externalities: a shift in the job market and wage stagnation, which causes greater inequality and generates a collapse in employment (but an explosion in productivity).
“We will undergo one of the deepest transformations in the job market in the next few years. Automation is growing quite fast, to a point where 47% of current jobs are in the risk of automation in the next 20 years”.
Before, the economy used to be agronomy-based, it then involved to an industrial economy and today it is a services-based economy. In the services sector, automation is growing quite fast, to a point where 47% of current jobs are in the risk of automation in the next 20 years.
This new paradigm has had an aggregate impact (based on data in the US) in which productivity has decoupled from labor wages and inequality has increased. Wages have not been increasing but productivity has, generating a level of stagnation of households in the middle of the income distribution, which is not sustainable. Thus, the chance of earning more than your parents had, decreased, giving birth to what has been called the “death of the American Dream.” Between 1980 and 2014, the top 1% of the US population captured an enormous amount of the growth, and only this portion is better off during time. This situation comes with a series of consequences:
Anti-elitism. This means that there are low levels of trust among bankers, politicians, economists, and academics, among other groups. In addition, it is relevant to note that the correlation between a poor economy and populism is positive, as it is correlated with an increase in unemployment.
Who is feeling the consequences of this revolt? Those with highly automatable jobs as the advances in technology tend to, first decrease the wages of these jobs, and subsequently, drive them out. Subsequently, a new class of unemployed, sub employed and under-employed is suffering these consequences. Thus, there is an anti-liberal, anti-globalization and anti-immigration feeling, which result in the weakening of the EU and the world-trading regime.
A loss of faith in democracy. This new paradigm has increased the support for proletarianism in liberal democracies: today young people don’t describe a democracy as essential.
Manuel Muñiz concluded the conference saying that there is a poor management of abundance regarding technological advancements, and that democracy is a system that allows social pain to manifest itself politically. As a result of the structural change in society, there is a political convulsion and a collapse of the liberal order. Lastly, he asked law students a thoughtful question: What could be a solution to this issue? Perhaps, a new social contract?