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- [00:00]
Felix Salmon
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- [00:47]
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- [01:43]
Jason Palmer
The economist. Hello and welcome to the Intelligence from the Economist. I'm Jason Palmer.
- [01:54]
Callum Williams
Rosie Blore.
- [01:59]
Jason Palmer
Today on the show why the scramble for Africa's minerals might be different this time. And the latest in our World cup contender profiles. First up though, Here's one definite thing that AI is affecting among American the mood. The average person believes they've got about a one in five chance of losing their job in the next five years. Another poll found a similar fraction thinks that AI is very or somewhat likely to replace them in that same time. Who can blame these pessimists? That's what the big shots of AI are telling them. Dario Amadei, the boss of anthropic, says AI could push unemployment as high as that same 1 in 5 fraction.
- [02:55]
Callum Williams
Yes, people will adapt, but they may
- [02:58]
Capital One Advertiser
not adapt fast enough.
- [02:59]
John Fazman
And so here's Bill Gates, Microsoft co
- [03:03]
Jason Palmer
founder and general techie Bellwether, casually telling a nightly talk show that fraction will be higher still.
- [03:09]
Callum Williams
I mean, will we still need humans?
- [03:12]
John McDermott
Not for most things.
- [03:14]
Jason Palmer
Okay, okay, we need to calm this down. Let's talk about what could happen, not will. And let's give it some historical context.
- [03:23]
Callum Williams
Advances in AI could totally reshape the global labor market. It could theoretically result in millions of people being put out of work. No one really knows what's going to happen.
- [03:40]
Jason Palmer
Callum Williams is our senior economics writer and San Francisco bureau chief.
- [03:45]
Callum Williams
But what we do know from looking at the history is that if that did happen, it would in a very profound and fundamental way, be unprecedented. Nothing even close to this has happened in the past. And this is largely because new technologies never spread through the economy fast enough to put large numbers of people out of work for a long time.
- [04:12]
Interviewer
And I suppose the example that people always lean on when they talk about technologies revolutionizing things is the Industrial Revolution. That certainly put a lot of people out of work, didn't it?
- [04:23]
Callum Williams
Well, not really. The Industrial Revolution is known by the general public to the extent that it is known as an extremely disruptive period. You had the invention in the 1760s and 1770s of steam engines that were good enough to power factories. The Dickensian notion of the Industrial Revolution is that this ushered in a period of blistering economic growth that appeared to coincide with real stagnation in real wages for the average person. And when you talk to people in Silicon Valley about what they expect to happen with AI, they often bring up the Industrial Revolution and say, this is going to happen again. They point in particular to this period from about 1790 to 1840, which is known as Engels Pause. And there is some research which suggests that during this 50 year period, real wages for the average person in Britain didn't change at all. But there is a bunch of recent scholarship that really casts doubt on Engels Pause and provides a sort of more optimistic interpretation of the Industrial Revolution.
- [05:32]
Interviewer
Okay, so a new view on this old story. Bring me to it. What do we understand now that we didn't before?
- [05:38]
Callum Williams
Okay, so there's a few planks to this. One is, was it the case that these new technologies destroyed jobs? That quite clearly did not happen. Or to the extent that technology did destroy jobs, it created plenty more. If you look in the century after 1760, the number of Britons who were actually in work nearly tripled. And then you can look at how much job churn there was, how quickly were jobs being created and destroyed? And really, you can measure this quantitatively. There was an increase in job disruption from about the 1850s, so almost a century into the Industrial Revolution. But before then it was pretty low. And then we look at wage growth, which really is the crux of the Engels poor's argument, yes, wage growth was slow, but, but it wasn't obviously slower than before the Industrial Revolution. And this actually reflects the fact that in the early part of the Industrial Revolution, productivity growth was actually pretty weak. And that was basically because the new steam powered technology took a long time to spread over the British economy. So it's not that surprising given that. And then another important thing to bear in mind is that during this period, population growth was pretty rapid. Now in, in a pre industrial world, population growth almost always meant declining real wages. So the fact that real wages held steady is actually a pretty good outcome given rapid population growth.
- [07:05]
Interviewer
And one view that keeps coming up about the current AI revolution on this show is the degree to which it's not going to happen overnight in any case, that basically economies take a while to adjust to new technologies, even the really, really transformative ones.
- [07:20]
Callum Williams
Absolutely. And to say that it's not going to happen overnight is really understating it. For example, if you look at something like agriculture, there's been very profound technological change in farming really over the past thousand years. But what you can see in England, which has the longest run data on agricultural employment, is that the share of English people working in agriculture has been falling for like 800 years. Then there's a very interesting question of are there any examples where technological disruption actually did happen quite quickly? And one interesting example here is the middle of the 20th century, both in the US and the UK during this period you have the first computers, the spread of plastics, shipping containers, new manufacturing methods, that kind of thing. And if you look at the amount of job disruption that took place at the time, it was actually really high. It was much higher than it is today, and it was much, much higher than it was during the Industrial Revolution. And of course, the funny thing is that people today look back on that period as a golden age for workers.
- [08:23]
Interviewer
I suppose that might be true in aggregate and looking in the rearview mirror perhaps decades later, but for right now, that disruption is, you know, terrifying for many, fueled by the Silicon Valley folk. Grads are terrified. They're not sure if the skills they're getting right now are going to be of any use.
- [08:40]
Callum Williams
Totally. So grads are definitely suffering right now. For the first time ever, the unemployment rate of new grads is higher than the overall unemployment rate. That is historically quite unusual. The question is though, why is that? And there's a lot of debate about this. But what is clear is that the labor market position of new grads started to weaken long before ChatGPT came along. So this does not appear to be something that's happening because of AI. It appears to be something that's happening because of other things. And so that's not to discount the troubles that many new grads are going through. It's just to say it might be a bit hasty to blame AI for that.
- [09:19]
Interviewer
So, as we have repeatedly revealed on the show, we don't know what's going to happen either, but we are keeping a close eye on this. What is the way to find out whether AI is going to be roughly as disruptive as past technological change or whether as many people wish to promise, that it's going to be completely out of bounds, completely new thing?
- [09:39]
Callum Williams
Okay, so let's assume that it really is going to be a completely new thing. I think one early sign would be that productivity growth is extremely rapid. There is a general rule looking back over a thousand years of history, that per person GDP growth of the most technologically advanced country never exceeds about two to two and a half percent per year. So if America were to exceed that, that would be one sign. You'd also want to see, though, a simultaneous jump in corporate profitability. You'd also see people losing their jobs in large numbers, not just in specific industries, but across the economy as a whole. So at the moment we're not seeing this. Yes, it is true that corporate profits are doing quite well in the US at the moment, but the labor market is still very strong and productivity growth in the US economy is not bad, but definitely not historically unprecedented, far from it.
- [10:37]
Interviewer
And so what do you make of the fact that AI leaders are giving all of these doom saying messages about it and that the change will be historically unprecedented and wildly disruptive? What do you read into those kind of messages?
- [10:49]
Callum Williams
I mean, some people say it's all to do with branding, and I think that could be partly it. These companies want to ipo. If the CEO makes some kind of blood hurdling prediction about job loss, it will get a headline and people will be more interested in the company. There's part of me that thinks that people in tech do genuinely believe this. And I think there's two reasons for that. I think one is that I think a sort of corollary of Silicon Valley being so forward looking is that people there are actually quite ignorant of history. And it's remarkable how little interest people have in previous technologies. They're only interested in the technologies that are still to come. And then the second reason, I think, again, I think people on the whole in Silicon Valley have quite a poor model of how normal people use technology. I mean, if you just read or listen to interviews with say, the heads of OpenAI or Anthropic, they really do genuinely believe that the average person wants to vibe code their own app, which is clearly not the case. And so I think if you're that kind of person and this amazing new technology comes along, it's quite easy to imagine that because your day to day life has massively changed, everyone else's day to day life is going to massively change too. So I think those reasons are actually more important than the branding reasons.
- [12:06]
Interviewer
Callum, thanks very much for joining us.
- [12:07]
Callum Williams
Thanks Jason.
- [12:22]
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- [12:52]
Felix Salmon
this message is a paid partnership with Apple Card this is Felix Salmon from Slate Money and I'm here to tell you about Apple Card. Even as a seasoned traveler, things can still get stressful, which is why I use Apple Card on my international Trips and with 2% daily cash back on every purchase with Apple Pay, I'm actually earning daily cash as I travel. Instead of coming home feeling like I've drained my bank account, I come back with cash back I can put toward my next trip. Apply in the Wallet app on iPhone Subject to credit approval Apple Card issued by Goldman Sachs Bank USA Salt Lake City Branch Terms and more at Apple Code Apple Card benefits.
- [13:47]
John McDermott
Recently I went to East Africa to join the hunt for critical minerals.
- [13:52]
Jason Palmer
John McDermott is our chief Africa Correspondent.
- [13:55]
John McDermott
I'm staring out over a spectacularly beautiful valley in western Tanzania. I'm told that just over the undulating hills to my left, one can see the Burundi border. As I walk across the vantage point, I have to be careful not to step in the defecations of the local Ankoli cattle. But I'm not just here to admire the view. I'm here because underneath the ground is perhaps the world's most valuable store of untapped nickel, a critical mineral that has uses from stainless steel to electric vehicle batteries. Those deposits have been in the ground for more than a billion years and known about for at least 50 yet they've never been dug up. But all that could be about to change.
- [14:56]
Jason Palmer
So why the surge of interest now
- [14:58]
Interviewer
if it's been there and known about
- [15:00]
John McDermott
for decades in the west, it's because most of the global nickel supply chain is dominated by China, or rather Chinese firms operating in Indonesia. And this potential mine, Kabanga, which is operated by Life Zone Metals, a firm that's listed on the New York Stock Exchange, is probably the single best alternative source of supply. But it doesn't just matter for the west, it also matters for the Tanzanian government because it wants to show that it can get big economic projects off
- [15:34]
Interviewer
the ground in the sense that it hasn't shown the ability to do that in recent years.
- [15:38]
John McDermott
On the face of it, Tanzania is one of the best performing economies in the region, tends to grow 5, 6, perhaps even 7% a year, but it should probably be growing even faster. And one of the reasons why it hasn't is because things can be pretty slow to move in the country. And under President Simia Saluhu Hassan, she is keen, especially in light of some post election unrest last year, to show that she can make some progress on these big projects. And that's partly for Tanzania themselves, but it's also because she feels under diplomatic pressure to do so.
- [16:22]
Interviewer
Diplomatic pressure coming from where?
- [16:24]
John McDermott
America, basically. And this is where you get into the bigger story. So the second Trump administration is taking unprecedented steps to try and loosen what it sees as China's stranglehold on critical mineral supply chains. And Africa is a big part of that plan. So what you are seeing is the administration using various tools that were previously to do with independent ends being used to further its commercial goals. So in Tanzania, support for the government from Washington is conditional upon making progress on this Kabanga mine, but also a couple of other projects that American firms are involved in. And it's part of this bigger story. So in drc, in Zambia, other resource rich places, we're seeing a much more muscular effort by the US to try and have a greater role for American firms in African mining, whether that's doing the mining themselves or accessing the mining once it's coming out of the continent.
- [17:30]
Jason Palmer
And what about the point that China
- [17:32]
Interviewer
had or has a stranglehold?
- [17:35]
John McDermott
Well, it's the result of being the primary player for the past 20, 25 years and America is still very much playing catch up. Even the Kabanga project, there seems to have been several Chinese companies sniffing around and making bids for it. And I think the most interesting development of all, especially for the perspective of African governments is that China, having seen this renewed Western interest, is actually becoming more amenable to some of the requests that these African governments are making, especially around processing some of the raw materials. Because this age old African concern that all we do in mining is just ship out the ore and none of the refined stuff with more value. China has been following that model as well. But there is some evidence that it is responding, perhaps because of this new competition from the west and doing a bit more of the processing on site as well.
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Interviewer
So is that to say then that you think Africa's role in the supply chain is changing, that the spoils will ultimately redound more to them this time around?
- [18:42]
John McDermott
Potentially, but it's not going to happen by default. Every now and again you get these kind of huge estimates of Africa's untapped mineral wealth. So the last one I saw was something like kind of $9 trillion. This was an estimate by the Africa Finance Corporation. But it doesn't mean anything so long as it's just a line on a piece of paper. What African countries need to do is have the infrastructure and policy environment where those critical minerals can be extracted in a way that is of most benefit to them. At the moment you are seeing a kind of slapdash effort to put in export bans on a lot of the raw materials, which often comes from an understandable place. They don't just want to be selling the raw material, but the risk is it actually leads to a decrease in the very investment they need. So what is happening? There is resource competition in Africa. It is hotting up. This gives African countries huge potential to take advantage, but that won't happen automatically. It will need the sort of careful policy making and high quality infrastructure that mining has always needed but has so often been lacking on the continent.
- [19:55]
Jason Palmer
John, thanks very much for joining us.
- [19:57]
John McDermott
Thank you, Jason.
- [20:16]
John Fazman
Outside the Amex Stadium in Brighton, fans gather as the Premier League winds down for the season.
- [20:22]
Jason Palmer
John Fazman is our senior culture correspondent and is counting down to this summer's FIFA World cup by introducing us to 10 of the teams taking part.
- [20:30]
John Fazman
And among the supporters are fans from Japan who have come to cheer one of the stars of the team, Keyaru Mitoma. They're dressed, of course, in his jersey. Number one. Mitoma. Mitom. Japan first made it to the World cup in 1998 and they've qualified for every one since. The best they've done is reaching the round of 16, which they did in the last two World Cups in Russia and Qatar. But this year Supporters have high hopes for this dark horse.
- [21:05]
John McDermott
We really expect a good opportunity and good results in the next World Cup. I hope they will win and they will be in top eight or top four. Moriyasu is the best manager I have seen. Japanese manager. Yeah. So that's why. And we have Mitoma. So.
- [21:26]
John Fazman
The Samurai Blue are coached by Hajime Moriyasu. He's been in the position since 2018. Under his tenure, Japan has delivered some big upsets, including wins over Germany and Spain at the 2022 World cup in Qatar.
- [21:39]
John McDermott
The sunset will take a long time
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Interviewer
to come for this party.
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Callum Williams
They beat Germany 2 1.
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John Fazman
The squad this year has a lot of experience, but there have been some small setbacks. Their captain, Wataro Endo, was injured in February as he played for Liverpool. He hopes to be on the field for the World Cup. And then at this match in Brighton last Saturday, another devastating blow. Mitoma went off with a hamstring injury. His participation is now in doubt. The group stage will see Japan play against Sweden, Tunisia and the Netherlands. The team has set their sights on winning, as their coach told reporters. He said, it's a big goal. A championship that we have not been able to achieve until now. But we want to show through our performance and results that Japan can definitely do it. While baseball has been Japan's most popular sport for decades, football began to gain traction after the domestic J League was created in the 1990s.
- [22:45]
John McDermott
I'm from Japan and Nagano City and we have two teams in J League and we have Nagano Derby also like London Derby or another. Sometimes we get angry, but really enjoying
- [23:01]
Callum Williams
new cats footballs, it's like more polite.
- [23:07]
John McDermott
Football's popularity is gradually increasing. So I say 50 50.
- [23:14]
John Fazman
In Japan, fans adopted traditions like singing from the terraces with gusto. They put a lot of work into this. Chants are rehearsed and leaders known as capos choreograph the entire section like conductors of an orchestra. And this year for the World Cup, G Blue, a J pop band, created an anthem in honor of the Samurai Blue. Will all that enthusiasm drive the team past the round of 16? We'll see. Starting next month.
- [24:12]
Jason Palmer
That's all for this episode of the Intelligence. We'll see you back here tomorrow.
- [24:35]
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