What The Foxconn Robots Mean For Globalization
- Posted by Leigh Drogen
- on November 15th, 2012
The story of Foxconn building its own robots to replace its own workers is significant on so many levels. They had 500 workers build robots that replaced 10,000 people.
First, it underlies a main theme of mine that robotics, automation, and software are eating the world. Many people will drone on about how we need to return to manufacturing in America, and you know what, I think they are going to get their wish. We will return to manufacturing, because we are the best equipped and advanced country in the world at utilizing robotics and software to make things. The problem, this growth in manufacturing will certainly not come with a net positive number of jobs, in fact it will most likely destroy 10X the amount of jobs it creates. So careful what you wish for.
The story is amazing as it relates to China’s economic growth and the march of globalization. Up until a few years ago those of us who have studied globalization and its effect on developing countries had assumed that it would eat the entire world eventually. In time, each country would move up the ladder of economic production and join the developed world. But this thesis may not hold water any longer. If China is successful at replacing a decent portion of its manual textile and hardware manufacturing labor pool with robotics, there will be a huge gaping hole on the economic ladder. How will rural pesants take the first step into the broader economy, which is normally manufacturing. They aren’t going to jump straight to knowledge work that’s for sure.
As well, if robotics and software continue to develop at their exponential pace, will Africa and other parts of the Asian continent ever have a chance to take that first step up the ladder? There’s no need to continually outsource labor to the cheapest country when you can build robots right here at home, or in China’s case, right in the same factory where you are looking to replace workers you deem to be getting too expensive.
I think it’s time for the political scientists who study globalization to rethink their model of development because this will have a huge impact on how Africa develops in the coming decades. Many of us were counting on Africa following in the footsteps of Asia, but I wouldn’t be so sure of that now. If there’s no need to outsource labor to Africa, what is the incentive to build up its infrastructure? Will Africa end up forever “dark” and shut out of the developing world? What process will lead to its development once cheap labor isn’t an issue anymore?
The Foxconn story raises a lot of questions, both for the developing world and developed world. Remember, humans have a difficult time thinking non linearly. The exponential growth curve of robotics and software and systems like IBM’s Watson are about to hit, or may already have, a point on the curve where their impact on our world is going to be severe. Until now the growth has been compounding on a small base.
It’s about to get real.
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Leigh Drogen is the founder and chief investment officer of Surfview Capital, LLC, a New York based investment management firm employing an intermediate term long/short momentum strategy. More »
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