The Bank of England has warned that the housing market is “broken” and that a wave of new technology could see up to 15 million jobs in the UK wiped out.
Speaking at the Trade Union Congress in London, Andy Haldane, chief economist at the BoE, said: “The housing market is broken. There is a chronic and accumulated imbalance between demand and supply, and it is that which is sending skyward – and has sent skyward – house prices.”
Haldane told the audience that Britain needs to build upward of 200,000 homes a year and that failure to do this had caused house prices to rocket.
He believes an interest rate rise was still someway off as inflation was currently 2 percentage points below the target and a change could “increase unnecessarily the chances of the economy falling below critical velocity”.
Haldane also said that up to 15 million British workers could see their jobs go in a wave of automation he called the “third machine age”.
He argued that the current “hollowing” out of jobs was the latest technological cycle, similar to the changes that occurred during the industrial revolution in the 18th and 19th centuries.
This could lead to a widening wage gap between high and low-skilled workers across the economy.
As machines become ever smarter the labour market patterns of the past three centuries could shift to “warp speed”.
Whereas robots have previously replaced human labour in industries such as car manufacturing, they are now predicted take over in white collar jobs too.
Google is developing a self-drive car and software has been developed in the US that can write news stories. According to the Financial Times, over half of trades on global markets are carried out by algorithms, while self-service tills now dominate our supermarkets.
Robots are currently analysing information and doing tasks once exclusively done by humans in a fraction of the time. In fact, many experts believe they will one day replace lawyers, doctors and journalists.
“Technology appears to be resulting in faster, wider and deeper degrees of hollowing-out than in the past. Why? Because 20th century machines have substituted not just for manual human tasks, but cognitive ones too. The set of human skills machines could reproduce, at lower cost, has both widened and deepened.
“If the option of skilling-up is no longer available, this increases the risk of large scale un- or under-employment. The wage premium for those occupying skilled positions could explode, further widening wage differentials,” Haldane said.
How the content of this article could have come from the chief economist of the Bank of England is frightening! Nothing in the article is new and a considerable amount spoken about has been known for years. Yes, the housing market is broken and needs to be addressed. Yes, we need to build in excess of 200,000 houses year on year (last year it seems around 170,000 were built). Take people under the age of 16 and over the age of 65 out of the current population. Then take the unemployed, those unable to work and other groups of non workers out of the population and what will you be left with? The UK Office of National Statistics 2012 figures consider there to be around 37 million people officially working in Britain. Do the Bank of England really think that close on 40% of the working population will be put out of jobs by automation? What has the self drive car got to do with putting people out of jobs? Show me a robot that can spot a news worthy story developing, research it, go out into the field and talk to those involved and then write an article. Yes, given facts, automation can produce a story and just maybe in time automation will decrease people involvement but a robot journalist not in Andy Haldanes life! What’s new about half of the world financial trades being done by automation – that has been the growing case since markets went digital years ago. Who are the big earners in Banks today? The back office geeks turning out those algorithms in dark rooms. When did Andy Haldane last go to a Supermarket? Self service tills now dominate supermarkets – what rubbish. Why should we be surprised that robots are analysing and producing information quicker than humans – that is what computerisation is all about.
If this is the best a chief economist can come up with, we should all be very, very worried. Instead of stating obvious known facts, why not try and put those supposed economic skills to good use and help build an economic future for generations to come.