Brussels Forum

March 24, 2017

Plenary 3: Inclusive Innovation: Can the Digital

Economy Benefit Everyone?

Ms. Sylke Tempel: --great because it goes to the

core of many of the problems that we are dealing with

right now. One of which, you know, yesterday evening,

I don't know who joined the Oxford Debate on the

democratization potential of the Internet--which

started off pretty positively and optimistic. And

then, I guess it was very much also due to the

convincing powers of Ivan Krastev, ended on a much more

mellow note, that perhaps, you know, I mean, the

enthusiasm about the Internet and it's democratizing

forces is a bit overblown.

If you are looking, and we do this very often--and

I'm actually a historian by training. If we look at

historical analogies, we very often, especially in

times of populism, go back to the '20s or the '30s of

the 20th century. It seems to me that we got the wrong

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analogy. I think we should go back more to the 19th

century, the late 19th century, which was an age of

technological innovation, a communication revolution

with the rise of the telegraphy which has changed the

way we were communicating within societies, and even

the way governments were governing, much like it--I

think like now. So I think there are more elements in

studying the 19th century than it is now, including,

you know, that this age started with quite a bit of

enthusiasm about technological innovation, and then saw

the rise of the Luddites, who thought that this

technology is kind of disrupting everything they knew,

and everything they were familiar with, and it ended in

something that we're--which is probably much more

realistic than what we see now, technologies both.

And my feeling is that we're living in a time where

we face what we could call a technological

schizophrenia in the sense that, on one hand, we

embrace modern technology very enthusiastically. No

one in this room--there's no one in this room who would

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not have a smartphone, and probably a tablet, and

probably a laptop as well and probably has all three

devices with him right now. So we embrace it happily.

On the other way, we are facing fears about the

disruptive forces of technology. What will it do to

our job landscape? Will it take away jobs? What about

robotics? What about the enormously quick innovation

in the field of artificial intelligence, autonomous

driving, I mean, all of these things.

So this is exactly what we are talking about. And

since this is the Brussels Forum, of course, we are not

talking about the diagnosis once again. I think we are

all familiar with it. We are talking about therapy.

How can we tackle this technological schizophrenia? Is

it only--only, quote, unquote, about economic measures

that we can have to make innovation more inclusive, or

does it also have to do with mindsets, and this is

exactly what I will ask this wonderful panel.

Before I introduce this panel to you, though, we'll

have a poll up. And I would like you to put up the

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question because I would like to measure your pulse on

your technological schizophrenia right now, and then I

would like to ask the panelists to convince you that

technology has more opportunities than challenges. So

do you think that the digital economy can be a path

towards inclusive growth, or is it a disrupting force?

One is path to inclusive growth, B is disruptive force.

You see it's a very yes and no question. Vote and I'll

show you the results a bit later.

And in the meantime, I'll introduce the wonderful

panel to you. Caroline Atkinson, right here is the

head of Global Public Policy, Google. And, of course,

she is every experienced when it comes to governance

because you were an advisor on global economics in the

Obama administrations. Thanks very much for coming.

Robert Atkinson is the president of the Information

Technology and Innovation Foundation. And when I had a

glimpse at your CV, I thought you were kind of the guru

of technological innovation. Thanks for coming. We're

very curious to hear what you have to say.

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Ambroise Fayolle is the vice president of the

European Investment Bank, and very much dealing with,

of course, innovation. So, we of course would like to

hear where do we invest and what exactly do we do.

And then we have James Manyika, the director of the

McKinsey Global Institute, and I was very impressed

that you have a MA and AI in Robotics, right?

Mr. Ambroise Fayolle: Yes, I do.

Ms. Sylke Tempel: Wonderful. Thanks for coming.

James, I would like to start with you because when we

were talking about it before, you said inclusive

technology. Yes, yes, maybe. A very short answer, but

I would like you to elaborate a bit.

Dr. James Manyika: Well, thank you. I'm delighted

to be here. As you pointed out, I did my Ph.D. in

robotics years ago, and I live in Silicon Valley. But

I think to this question of is digital--is a digital

economy good for inclusive growth? My response, as I

said (inaudible), is yes, yes, maybe. Let me talk

about each of those yes, yes, and maybe portions.

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The yes--the first yes speaks to the role that

technological progress and innovation plays in driving

productivity which leads to economic growth, which

leads to prosperity. And this has been the story of

economic growth for the last 200 years, you could

argue. And, in fact, especially in the last 50 years,

most of our economies have benefited from the

technological progress that's led to productivity

growth and then prosperity. So that's a good thing.

And, in fact, you see this beyond the micro level.

If you go to the economy level, you see this in

businesses. Businesses that are more digital,

businesses that are more technologically advanced have

higher growth rates in terms of their revenue growth

rates. They have higher profit growth. In fact, wage

growth for those businesses is far higher, and they

tend to be the companies that are disrupting and

changing everything. You also see at the level of

small business. Small business, entrepreneurs today,

do much better when they are more digitally enabled.

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We know that, for example, small SMBs that are on

global platforms export at 80 times the rate of

businesses that are not on global platforms where they

can reach supplies, customers, and so forth. So it's

good for business both large and small. It's also good

for startup entrepreneurs who are able to do things

that they couldn't do before. So that's all part of

the big yes.

The second part of the yes goes to what technology

does for us as users and consumers. And I think you

made the point about the devices and so forth. But I

think there are two parts of that, that are important

to elaborate on. One is the massive amount of utility

we get from that as users and consumers of these

technologies. Also related to that is the fact that

many of these products and services are mostly free or

very, very cheap. And even that's changed dramatically

in the last 20 years. Think about all of the free

services, applications we have, service technology,

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communication technology. So as users, I think it's

almost unequivocally a good thing for us as consumers.

Ms. Sylke Tempel: Apart from the media, which has

been suffering greatly from free content that it has

put out for you, but--

Dr. James Manyika: Oh, but we users love it. I

still say the users love it.

Ms. Sylke Tempel: Yeah, but the providers love it

less.

Dr. James Manyika: I think the users love it.

They get free information. They can search all kinds

of news. I think it's a good thing for users. I think

the businesses have to figure out how they adjust to

that. I think it's also good for users from the point

of view of we're now at the cusp of technological

breakthroughs that are going to benefit us as members

of society. Think about what A.I. and machine

learning, artificial intelligence is going to start to

do to things like synthetic biology, to climate change,

and help us address those things in quite novel and

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interesting ways. So that's the yes for the--it's good

for business, for the economy. Yes, it's good for

users and consumers.

Let's get to the maybe. The maybe has to do with

what it means for workers, work and wages, and that is

a real maybe, because I think, there, what happens

depends a lot on the choices that we make. And here I

just want to highlight two particular areas of this,

workers and wages question. The first one has to do

with automation. I think there's no denying it that

automation is upon us. In fact, as we've been on for a

very long time. But I think, at this point, we are

making the kind of breakthroughs that are going to

cause us to ask new questions about automation.

I'll give you just three numbers, 50, 5 and 60.

The 50 refers to the percentage of the share of worker

activities that can be automated. We've done some

studies and others have done, too, that tried to assess

the level, the number of activities in work. Not jobs,

activities that could be automated. The five percent

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speaks to when you put it all together, and most

people's jobs consist of 20, 30 different activities.

So if you then say what proportion of occupations today

have close to 100 percent of their activities that

could be automated, that number is roughly five

percent. In fact, the O.E.C. has done a recent study

that has a number that's, like, nine percent. So we're

talking single digits by and large.

The 60 percent, in some ways, is more interesting.

The 60 percent speaks to the share of occupations where

a part of them, about 30 percent, can be automated.

That says people are going to be working machines. The

reason that's important, it starts to get us to

questions around skilling to enable workers to work

those machines. It gets us to important economic

concepts like, skill bias technical change. We know

that when people work with machines alongside them,

typically it's the higher skilled workers who benefit

from that. So what happens to lower skilled workers is

something we need to think through.

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Let me get to second part, the automation. This

has to do with wages. When we get to wages, we know

that the share of wages has been under a lot of

pressure. But in particular, we know that the gains

from productivity have not always in recent times

translated to wage growth, and that's actually

important, but, now, part of that--

Ms. Sylke Tempel: It might be a bit of an

understatement, though.

Dr. James Manyika: It is an understatement, but I

think we've always taught ourselves a story that when

we have productivity growth, we'll have wage growth.

That story is largely true for a very long time. That

relationship is not as robust as it used to be, and

technology is part of that, although there are other

factors. So I think we need to get to that.

But my final point is about the choices that we

make. I think the choices that we make there could

change the work wages part of this in a better

direction is if we can think about skilling, what

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choice do we make about who we encourage skilling and

learning. This is a governed question, a private

sector question. It's an individual question. How do

we think about helping transition workers who are

dislocated through these means? We know that most

economies spend some time and money on this. I think

the average for the OECD, something like 0.6 percent of

GDP across the OECD time span, active labor policies to

help workers transition, is particularly low in some

countries like the United States. It's very high in

the Nordics, for example.

So arguably, what choices do we make about that?

And then I'll put the final point on the table, which

is, what choices do we make about incomes? Today we

are having lots of discussions and debate about

universal, basic income. Some discussions about do we

do that from the point of view from minimum wages? Do

we do that in terms of transfers? But what do we do

about incomes. I think it's hard enough to avoid that

question.

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Ms. Sylke Tempel: We'll have this. Wait a minute.

Stay with me here. Can you put up the opinion poll

again? Can you put up the opinion poll again now, the

one that we had in the beginning? You only have to

convince 50 percent--40 percent of the people in the

room. So we have--we have a majority for the path to

inclusive growth. So wait and (inaudible), of course,

be very, very important. Caroline, you've been working

on these--thank you so much, James.

Dr. James Manyika: Sure.

Ms. Sylke Tempel: You've been working exactly on

these points when it comes to economy, and, actually,

what you are saying, also, is what we see is a

disruptive force. It's not so much technology. It's

the bad mistakes that we've been made policy and

economy-wise. Elaborate, please.

Ms. Caroline Atkinson: Yes. Well, first of all, I

think that the question has a--you could answer it both

ways. Absolutely, the digital economy can be, and I

would argue as James described, already is a path

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towards inclusive growth. But, of course, yes, there

are elements of it that are disruptive. That's not

new. We've seen that with other changes that have come

in economic possibilities, and productivity changes,

and all sorts of automation.

The first assembly line, we were discussing

yesterday how people moved off the lines and off

agriculture in order to come into factories. So that

was a big change. What I believe is that a lot of the

unhappiness, discontent, feeling of separation that

we're seeing, and there's a very big political problem

for us now, and economic problem, is a response, or is

a reaction not so much to technology or automation,

which, after all, does enable us to have hiring incomes

for the same amount of input, but is rather a response

to a long period, a decade now since the financial

crisis when real incomes have just not grown very much.

And I believe that, as governments have responded

to the crisis, first of all, we avoided a Great

Depression, again. That was terrific. That was all

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about macroeconomic, monetary and budgetary policy.

Especially, monetary policy. And secondly, we are now

seeing pretty reasonable growth across much of the

Western world, but it has been really slow, and that is

what is making people feel disconnected and upset.

On top of that there has been changes in employment

patterns, changes, as we were discussing, in income,

and people want to understand, why has that happened?

And what are the fearful, possible change? But I think

it's important to remember that we've had 10 years, a

decade, of very disappointing, economic growth, which

followed a financial crisis and was nothing to do with

automation.

Now, on the positive side, I just want--because

we've had a lot of kind of depressing thoughts despite

this outcome, and even the 40 percent, if it's a

concern, is a large number. I want people just to step

back and remember some of the magic. And James pointed

to some of this with his two yes's. Right now, there

are 3 billion people in the world that are online.

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That means they have access to information that was

unthinkable. That is--Google, the company that I now

work for, has a, sort of--its mission statement is

about providing the Internet an access to information,

useful information for everyone. We're not there yet.

We have this project called NBU, or Next Billion

Users, which is about bringing the next billion users

online. But when you're online, in a single minute

now--I'll just give you a couple more numbers. There

are more than 4 million Google searches in one minute.

There are $400 million Ali Baba sales, so it's not just

Google. There is a whole lot of commerce--

Ms. Sylke Tempel: Ali Baba being the Chinese

search engine.

Ms. Caroline Atkinson: Yes, the Chinese E-commerce

company. There are 400 hours of video uploaded every

single minute. Now, you might think, well, that's kind

of useless because it's all cat videos or maybe even

some of it is--which my kids love, but.

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Ms. Sylke Tempel: But never mind about cat videos

every once in a while.

Ms. Carolina Atkinson: What's wrong with cat

videos? Yes. It increases our happiness. And of

course, much more seriously there are concerns about,

you know, extremist or ugly content online, and we and

others commit to review that and take it down very

quickly. But I want also to tell people, remind

people, that YouTube, most of the use of YouTube or

much of it is about people learning how to do things.

They may be learning how to start a business online.

They may be learning how to tie a tie.

Also, there are 3 million people in the United

States who are subscribers to the Khan Academy, which

teaches calculus and a whole lot of other skills, which

was begun by a professor who wanted to teach his niece

calculus, a teacher, and he put that online and it's

become huge.

Ms. Sylke Tempel: Open universities, yep.

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Ms. Caroline Atkinson: Yes. Well, there are the

big universities that use MOOCs, but this Kahn Academy,

which my colleagues and I were discussing this morning,

is a way for people to learn things. So there are huge

possibilities of making people's lives better through

the Internet.

I completely agree with James that governments and

the private sector have to work together to make sure

that everybody does get included in this digital

economy and we have--

Ms. Sylke Tempel: And we'll have to find out how

exactly they're going to do this.

Ms. Caroline Atkinson: Yes.

Ms. Sylke Tempel: And this is where we want to go

back to your maybe because maybe isn't a field, it's

not unimportant.

Ms. Caroline Atkinson: That's right.

Ms. Sylke Tempel: It's about wages. It's about,

you know, some--it couldn't be more existential to

people's lives and then there's an element in it that I

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thought was also--we could talk about basic income. We

could talk about minimum wage, but hey, think about

for--in almost any language, many of our last names are

modeled after what our ancestors were doing once. So

if it's not us doing it anymore, but artificial

intelligence, even if we are safe and sound and, you

know, we can pay our apartments and, you know, our

lights. How do we get a sense of life if you, you

know, don't have something that really defines us?

Ms. Caroline Atkinson: Of course, work is really

important, but just think even 5, 10, 15 years ago.

Would any of us have been able to imagine the--nobody

would've imagined my current job. Nobody probably--

maybe your job was still there, but there are many of

us--

Ms. Sylke Tempel: There are some people out there

who are afraid. There are people in 20 years from now

cannot imagine my job anymore.

Ms. Caroline Atkinson: Yes, of course.

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Ms. Sylke Tempel: You know, because algorithms can

write sometimes better pieces--no offense to some of

the really awful academic text that I have to edit so

perhaps my job will go away because--

Ms. Caroline Atkinson: Well, that's great because

they can do--

Ms. Sylke Tempel: --you know, A.I. can do it much

better and it never gets tired and it doesn't need as

much coffee as I need.

Ms. Caroline Atkinson: Okay, I'm going to give you

one other fact. ATMs, that's one of the biggest

innovations, as Paul Volcker once said. Forget all the

derivatives and everything, banks actually came up with

cash machines, which many, many people use. You would

think that the establishment of automatic tellers would

stop the need for people tellers, but that's wrong.

Actually, in the United States, there are more bank

service employees because there are other things for

them to do.

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So I think that we may not be able to imagine--this

is one place where the economists, who are normally

called, you know, the dismal science of economics, the

economists, I think, actually are more optimistic about

the future of work than some technologists because

economists have maybe looked more at all of the changes

that have occurred in the past and the way that

economics can--the way that societies can adapt and

people start doing things that no one would've dreamed

of. Instead of riding a horse and cart, people are

flying airplanes. Who would've thought of that?

Ms. Sylke Tempel: Well, but obviously they have

to--thanks a lot.

Ms. Caroline Atkinson: Thank you.

Ms. Sylke Tempel: Obviously, they have to adapt a

lot faster than they did. And then, there's another

phenomenon (inaudible) would like to throw at you.

What we see is a kind of jump over the technological

gap into developing countries. We've seen it in the

realm of telecommunications. You know, land lines were

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never a big thing. They just jumped basically to

mobile phones, used the opportunities that were there

with mobile devices. What we can see, specifically for

Germany, is that very often small and medium

enterprises are not very fast to adapt to what industry

offers them in opportunities. So we have a gap, not

only within societies that's growing much more in

sophisticated, industrialized economy, and we have a

gap between developing economies and developed

economies when it comes to embracing new technologies.

What is it that you would like to do about closing

these two gaps?

Mr. Ambroise Fayolle: At EIB, we, as the bank of

the European Union, we are more working on trying to

get solutions within the European Union (inaudible)

related to the working countries.

Ms. Sylke Tempel: Of course, naturally, yes.

Mr. Ambroise Fayolle: But let me start with a

small anecdote. Last year, I met with the mayor of a

small village in Erzus (phonetic), which is a beautiful

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part of Eastern France next to Germany. And what he

said was he had just won something that is well known

in France. We have a competition to have the most

beautiful village and he won that. And what he told

me, after this award, the president of the region came

to him and said, well, I know you're going to ask me

for something. You're going to ask me for more parking

spaces so that tourists can come in numbers. And he

told me, I told him I don’t want that. Give me

broadband. And what he was needing was to have access

to digital for the reputation of the rural part of

Erzus.

What we see, more and more--and this is a project

that we have financed as a public bank to develop

access to broadband and this kind of Internet access in

rural or low density areas where the private sector

does not necessarily come or not enough to get this

increase and improvement in access to technology. We

have done just a study with (inaudible) with the

Brueghel Institute, which is a think tank here in

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Brussels and with the World Economic Forum that shows

clearly that while it was clear in the past that you

could say, well, let's have growth come first and then

increase (inaudible) will come next, we have, today, to

see that together. And we will not have growth if we

do not have at the same time grows and inclusiveness.

Ms. Sylke Tempel: But how do you go about

inclusiveness? What is it that you exactly do? How do

you invest? What is the message that you're taking to

provide for this inclusiveness?

Mr. Ambroise Fayolle: So what we try to do is to--

we are a bank that make projects. We try to develop

projects that, for example, give access to those who

don't have access, that give money--this are our loans

to (inaudible) access to (inaudible) that--and when you

talk to these kind of people, what they say is--quite

often and I've witnessed this many times. You are

financing three years of research and development for

us. This is something that is great for one reason.

We should concentrate on our future which is create the

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right products and finding the right markets and what

we have to do is get financing. And that is very time

consuming and it was very--

Ms. Sylke Tempel: Yeah, and from what I

understanding from Karen, what you also have to do is

you have to, sort of, have to convince these people

that in the digital world there is a market for them

because it seems to me that they haven't discovered the

opportunities yet that they have to find for different

markets. It's not the next door neighbor anymore and

it's not the old business acquaintances or business

relations to have to really, kind of, conquer new

markets for themselves don't they?

Mr. Ambroise Fayolle: Yeah, they don't.

Absolutely, and actually--

Ms. Sylke Tempel: How do you help with that?

Mr. Ambroise Fayolle: Well, with financing and

with giving examples of what we do.

Ms. Sylke Tempel: Education as well?

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Mr. Ambroise Fayolle: Education as well. And here

I have something to say. We've made a survey of 12,000

entrepreneurs in whole Europe and asked them which are

the big impediments for you to invest? By the way,

they were quite positive in terms of the level of

investment and future investment that they were

expecting to do, which is good news for Europe. What

they said was, to my surprise, not business regulations

are too cumbersome or labor market is not functioning

properly. What they said was something that did not

surprise me that much, which is uncertainty about the

future is the biggest impediment for investment. But

the second one was we don’t have the available workers

with appropriate skills.

Ms. Sylke Tempel: So that's one--yeah, we can take

this away. This is one of the major things that we

have to do and I think, I mean, so far you would all

agree. You have to do a much more rapid education,

qualification program to do what--you know, when

Chancellor Merkel was in Washington, she took with her

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an apprentice who said, well, he's the guy who fixes

the robot when the robot is sick and can't fix the cars

any more.

So it's not the mechanic who's doing the fixing of

the cars, it's the mechanic who's fixing the robot

who's doing the mechanics on the car so he needs

different qualifications and obviously it's not enough

what we do right now. So there has to be more of it,

right?

Mr. Ambroise Fayolle: There has to be more and

that's why actually the Europeans are implementing what

we call the Unga (phonetic) Plan, which is a plan to

speed up the process of investments.

Ms. Sylke Tempel: I'm not sure if this is a very

sexy name.

Mr. Ambroise Fayolle: The official name is not

sexy either. This is an investment plan for Europe

so--

Ms. Sylke Tempel: No, I never deal with your

official names because it's a lot of big capital

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letters and I never get it straight so yeah, call it

the Unga Plan then.

Mr. Ambroise Fayolle: Yeah, the idea is let's--we

have a deficit actually in Europe. We have two

problems in terms of what we're talking about now. The

first one is we have a deficit in innovation. We are

not at the level of innovation that is commensurate

with the target we have set for 2020.

Ms. Sylke Tempel: Yep.

Mr. Ambroise Fayolle: And we have a deficit in

investment and prior to this we have talked

significantly and the rebunk (phonetic) is less

pronounced than the one that we see in the U.S. and in

Asia, etcetera. So the idea beyond this initiative was

to boost investment, especially investment that has a

high level of risk.

Ms. Sylke Tempel: Thank you. That's a very

important point to also take away because we know that

Europe is by far not as competitive as it could be and

it should be when it comes to the digital area.

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All right, I would like to ask you something

because you are all for innovation. We were just

talking a bit before we came in here and you are the

most--I mean, you are all enthusiast, you're a techy

enthusiast, which is great, but you're the greatest

enthusiast in this round, in my feeling, but I really

would like to ask you. Donald Trump really won the

elections also because he made a very 19th century

promise. He basically pretended that the jobs were

going away because of Mexico and China and, you know,

all these unfair traders, but that's not the case and

they're not coming back the way 19th century style.

There are not going to be manufacturing jobs. It's

going to be jobs in a digital world, right? So how

often do you venture out to these people who still

dream about the steel mills coming back and you would

have to convince them, guys, it's not the still mills,

get some digital education because this is how you get

back into the work force?

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What do you do with them, because we are all in a

bubble? We all like to know technology apart from the

40 percent that will be convinced easily by you, but,

you know, how do you convince these people?

Mr. Robert Atkinson: Well, thank you. Look, I

think part of the problem here as you alluded to

earlier is that we have the diagnosis right, we've got

to figure out the solution. I actually don't think we

have the diagnosis right. We've done work. When you

look at actually the loss of U.S. manufacturing jobs,

when you measure it properly, half of the jobs we lost

in the 2000s, over a 1/3 or our manufacturing jobs,

highest rate of loss since the great depression, half

of that was due to trade. Half of it was due to unfair

trade practices that other countries engage in. So I

think we've got to think about that.

The other part of the diagnosis that we all sort of

bought into is the economies growing at a robust rate,

but there are a few people being left out and that's

simply not true. Carol made, I think, a very good

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point. You've seen lowest rates of U.S. productivity

growth in American History in the last 10 years. Never

have we seen this low a rate of productivity growth and

Europe is half of the American rate of growth. Why

aren't we talking about productivity? How can you

raise wages for people at the bottom or the middle when

you don’t even raise productivity?

So James said he's a yes-yes-maybe. I'm a yes-yes-

almost certain framework and let me tell you why. So

the frame of this--all discussion is somehow we're all

zooming ahead because we've got our iPad and there's a

whole bunch of people who are not zooming ahead, in

fact, maybe they're even actively being hurt by that.

And let me, first of all, reject that. One of the

claims that is in that argument is that there's a few

people, probably Caroline's bosses who are, you know,

making bazillions of dollars in the software industry

and that there's this sort of unequal industry.

Well, let me give you a really interesting study

that Jonathan Rothwell at Brookings did about--just

31

last summer. And Jonathan looked at who are the top

one-percenters in the American economy, who are the--

what occupations and industries do the one-percenters

work in? There are five times more dentists in the one

percent than there are people who work in Caroline's

industry. So if you really want to look at it--

Ms. Sylke Tempel: But dentists work a lot with 3D

printing right now so, you know, basically--

Mr. Robert Atkinson: That's not why they're in the

one percent. They're in the one percent because they

have a protected guild. So let's think about that.

That's not what's going on with inequality. What's

going on with inequality is a set of professions,

largely, and financiers who are able to extract rents.

It has nothing to do with digital.

The other thing I think we have to recognize--I

think we have a false expectation that somehow, these

new technologies automatically get adopted immediately

by everybody in the world and therefore, if they don't,

there's something wrong. Well, let me take you back to

32

1940 in the United States and in Massachusetts. Five

percent of the households did not have a flush toilet.

This was a sort of relatively new innovation in

America. Kind of came about in the 1910s. Eighty-one

percent of Mississippi residents did not have a flush

toilet in 1940. Did we say that flush toilets were

holding people back and keeping people out? No. What

we said was as technologies emerge, as people get more

money, they're able to buy in. So I think we have to

recognize the same dynamic is there.

The other thing that I think James really hit the

nail on the head. Even if you're not a user, even if

you, for some reason, has chosen not to be engaged in

this enterprise, you get enormous benefits today from

all of us using it. Let's give you an example. When I

use a Nest thermostat at home, I'm saving energy and

I'm reducing the cost of energy for people who don't

use a Nest thermostat. And I'm reducing global air

emissions for people who don't use a Nest thermostat.

33

When I do e-government, I'm reducing the cost of

government, so people who aren't using e-government get

lower-cost services. One I like a lot, when I use

Amazon, which I think is every day I get a package at

my door, I am saving 14 times the amount of energy than

if I were to drive to the store and pick up the package

and bring it to my home.

So the non-user, the person--

Ms. Sylke Tempel: Don't tell that to your local

librarian, please.

Mr. Robert Atkinson: Pardon me?

Ms. Sylke Tempel: Don't tell that to your local

librarian, please.

Mr. Robert Atkinson: Well, the local librarian is

going to lose their job, there's no question, which

I'll come back to. I’m just saying. We'll hear. And

lastly--

Ms. Sylke Tempel: Well, I see the numbers dropping

right now, you know. You have to put in something

34

really positive now to make up for a librarian losing

his job.

Ms. Caroline Atkinson: Can I just put in one

positive thing and then back to you. We at Google are

making it easier for libraries in the United States to

be online, to have high-speed Internet, to be small

areas where people who don’t have the broadband access

can go to get it. So there are actually--I don't think

the librarian will lose his or her job, I think their

job will evolve and that's great.

Mr. Robert Atkinson: There are fewer librarians

today. What is going to happen, I think, particularly

for low-income people, is you're going to have, which

we already have in most libraries, at least in the

U.S., digitized collections. And you can rent out, you

know, loan out your book on your Kindle. I think

libraries will evolve and become digital hubs.

There'll be fewer people going to the library.

One last other example on this, by the way. I

don't know how many people use Yelp here, but it's a

35

rating system in the U.S. There's very clear evidence

when people use Yelp to rate a restaurant, that the

restaurant quality goes up, the inspections for disease

and, you know, all these other problems go down. So

again, uses are benefitting non-users.

You look at it from the business side, there's a

very good OECD study from about two months ago. Looked

at 117 countries around the world and it said, "How do

companies that use the Internet--what is the spillover

of that effect?" And what they found was that

companies that use the Internet benefit companies in

those 117 developed countries that don't use the

Internet.

So the last point I'll just make on this is, you

can look at all these applications, which I think

people really don't recognize. There are thousands of

applications today. Text-to-speech software for blind

people. We are tracking disease outbreaks. Google's

doing this and others, so we can know diseases in real

time. Customized lesson plans. Microsoft has

36

developed software that they've piloted in the Tacoma

School District that predicts high school drop-out

rates. After the school system adopted this software,

drop-outs went down--excuse me, graduation rates went

up from 55 to 78 percent.

So you see this. Mapping poverty, mapping vision

loss for people with diabetes. Refugee mental health.

So I think to say somehow that this technology is not

massively improving people's lives is to miss the

point.

And the last thing I'll just say, you know, we have

this sort of mythology in here, which I've heard

constantly this morning that we're in the most

disruptive time we've ever been in. It's actually the

exact opposite. So we've done new research which will

be out in about three weeks where we've looked at every

decade in the U.S. from 1850 to the present. And what

decade had the most occupational churn? In other

words, the most people losing their jobs and new

occupations? It was 1850. 1860 was number two.

37

And what we forget about that--and what was the

lowest? 2000 to 2015. Absolutely lowest rate of

occupational churn. We forget that there used to be an

awful lot of occupational churn. People lose their

jobs and I worry that we're in a world now where we

don't accept any occupational loss. The point to the

librarian. We're in a world where we can't say that we

can't have any technological change? I don't think we

want to be in that world. I wouldn't want to have told

farmers 100 years ago, by the way, your kids are going

to have to work on a farm and not make very much money.

And what we did is we got rid of 70, 80, 90 percent of

the farmers who then moved up and did other things.

Ms. Sylke Tempel: Thanks. Are we at a core of the

problem here? James, come in. Yeah, do you want to

say something?

Dr. James Manyika: Yeah, I was going to jump in.

I think one thing that's coming clearly from everybody

and I think I agree with my colleagues, is that the

benefits to the economy, to users and to society, I

38

think, are overwhelmingly positive. The reason I want

to come back to the maybes is because I think we

shouldn't be complacent about that because otherwise,

if we ignore the maybe portion of what I suggested,

we'll go along blithely and suddenly, we don't do

enough to adjust.

So let me point out two things in the maybe that I

think are important. One of the big debates that many

of us are having right now is, is this time different

when it comes to questions of automation? Is this

different, should we look to the past for examples or

is this time different? And there's a sense in which

it isn't, actually, because we've gone and seen this

with agriculture, with manufacturing, with new jobs

being created in other sectors, so we've done that

well.

But I think there are two reasons why it's worth

considering why it may be different this time. One of

those is if you look at the previous ways of

automation, almost all of them were about mechanical

39

automation. We were simply making things that humans

could do faster, better, stronger at larger scale. It

was more mechanical, more, faster, heavier and so

forth.

I think what may be different this time is that

we're now tackling mostly cognitive things, with

machine learning artificial intelligence.

Ms. Sylke Tempel: This is what makes it so

difficult because, you know, it has to do with a mental

mindset, you know, yeah.

Dr. James Manyika: It's got to do with the mental

mind-set, it starts to touch many more things across

the board. And also, when you start to make kind of

the advances that machine learning and AI are making,

you're starting to go beyond simply making labor

capital trade-offs. Because you're now getting

benefits that potentially go beyond human capabilities.

I think that may be different.

40

The other thing that maybe also different this time

is the fact that the rates of change are different than

in previous periods.

Ms. Sylke Tempel: It's the 19th century on speed.

Dr. James Manyika: Yeah, we had time to adapt. We

had time to get our educational institutions, our--

Ms. Sylke Tempel: And people back then felt that

they didn't have time to adapt.

Dr. James Manyika: Absolutely. And I think we

know that now people are going through four or five

different changes in their career. So I think it's

worth considering what's different this time. And then

I would also maybe take a little bit of issue with my

good friend and colleague, Caroline, to say I think the

wage question I don't think is just about the crash. I

think it's easy for us to say, oh, if only the

financial crisis hadn't happened, wages would've been

fine.

I think if you look at the wage trains, they

started to change before that, even before the crash.

41

Well, I think that's quite striking to me, and this has

actually work that various people have done, is that if

you looked at the share of the national income that

goes to the bottom 90 percent, which is basically

everybody, that was largely stable up until about the

1980s. It was basically in the U.S. economy. It's

basically two-thirds of national income.

Since 1980, it's been coming down. Now it's about

half and that's changing, so this increase in

divergence between wage share that goes to wage income

versus--so I think it's a mistake to simply think that

as long as--as soon as icons grow again, wages will be

fine. I don't think that's quite right.

Ms. Sylke Tempel: Let's take (inaudible) I would

like to get all of you in here. First of all, let's do

a Word Cloud. Can we get the Word Cloud up? What is

it that comes to your mind when you think of an

inclusive innovation? Just get a feel of what you

expect and what it is and what it should be.

42

So you vote now. And in the meantime, I'll just go

to these young people here and I would like to ask

them--can we have a mic over here somewhere? And I

would like to ask them, those are the people in

different capacities be responsible to make innovation

more inclusive? What is it that you want from these

guys?

Unidentified Female: Hi, everyone, I'm (inaudible)

from France and I'm currently in the campaign of the

(inaudible) for the presidential actions, so actually,

I'm for the basic universal income. And why is that?

Because I think that, sure, we have--for a more

inclusive society, we have to give the skills to people

to adapt to the new technologies because I'm convinced

that new technologies of the future and they drive the

society up.

And I think that the basic universal income is a

temporary solution to get the time to make people

adapt. And I just wanted to have your points, your

point of views on this conception. Thank you.

43

Ms. Sylke Tempel: Thanks. Would you agree? Would

you agree that education--because look at Word Cloud.

Education is very high up there. Education,

opportunities, skills, so it's going into this

direction. Education. Caroline?

Ms. Aroosa Khan: Yes. We heard the example of

(inaudible) which is a perfect example to create an

inclusive platform, accessible for everyone, so--

Ms. Sylke Tempel: Yeah, so should it be public,

private partnerships, as well?

Ms. Caroline Atkinson: I was going to say on the

economies, as James pointed out, that comes from

YouTube, which is free. Which is a free service, and

therefore--but you do need the access, you need the

broadband, you need people to have Smartphones,

although, as I mentioned earlier, you know, now--I was

told that there is a Smartphone for every individual on

Earth. Now, of course, those are not equally

distributed, either.

44

I want to say two things about the Word Cloud.

Education. We need digital skills. We need to partner

the public and the private sector and we've been doing

that. We, at Google, have committed to educate 2

million people across Europe on digital skills. One

million's already done and the other million is going.

And the way that's happening is, for example, in Italy,

we had a program--we realized that a lot of people in

China, for example, want high quality Italian products

but they don't know how to get them. And so we

trained--worked with the government, local and national

in Italy, to train young, unemployed people on skills

and how to market things digitally and put them

together with companies.

And this is an amazing thing that's now possible.

Digital skills and teaching small businesses how to get

online. A French example, about 70 percent of French

shoppers use online shopping, but only about 15 percent

of French producer and stores put their goods online.

So you also need to educate business.

45

Ms. Sylke Tempel: That's looking for new markets.

Ms. Caroline Atkinson: So that they can get to the

new markets. On opportunity and access, just to say

that we make--Google has this platform called Android

which is--the idea was to make Smartphone technology

available for any manufacturer, any service. And the

cost of Smartphones, which, you know, the big,

expensive nice iPhones probably many of you have, is

closer to six--

Ms. Sylke Tempel: I have a very old one.

Ms. Caroline Atkinson: Okay. Probably around $600

per phone. We now have phones that, on average, the

Android ones are about $200. But more excitingly,

there are phones available in Nigeria, in India for

less than $50 per phone. So that's another way that we

need to work to get things made available to many

people.

Ms. Sylke Tempel: Thank you so much. Quickly come

in, yeah, I think we're good, yeah.

46

Ms. Aroosa Khan: Can I just quickly say--My name

is Aroosa Khan. I'm from Amsterdam. I'm not related

to Mr. Khan but I'm really proud of him. I just wanted

to make a point about accessibility. In Amsterdam, the

municipality of Amsterdam gives free laptop or computer

and Internet stipend to parents with low income. So I

think that's a great way to make Internet digital

accessibility possible for people with low income.

Ms. Sylke Tempel: Yeah, thanks. James, very

quickly because I'm going here for questions then I'm

going over there for questions. Yeah.

Dr. James Manyika: Yeah, I wanted to respond to

the question on income that was asked, which is on the

universal basic income. I think we need to solve for

incomes. I'm not a big fan of universal basic income

and the reason is because I think work is so many

things bundled together. It's a way to get income.

It's a way to get dignity, a sense of self-respect,

creativity, community, and a whole bunch of things.

47

And universal-based income simply goes with the

income portion of that, and doesn't get at the other

things. I'd much rather think about how do we help and

engage on minimum wage, for example, because it's

linked to work. How do we do conditioned transfers

that are linked to people engaging, participating,

getting involved in things, whether they are their own

education or community activities.

So I'm more for those kinds of solutions to income

as opposed to universal-based, as currently and most

proposed.

Ms. Sylke Tempel: Thanks, James. Perhaps we

collect a few questions. You go first.

Ms. Gale Mattox: Yes, Gale Mattox from the Woodrow

Wilson International Center for Scholars. My question

has to do with the women in the field. And Caroline,

maybe you could address part of this, because I know

that Google's had--has had outreach programs and all.

But how do we solve that? I mean, then numbers

actually have not steadily gone up. I mean, there is

48

not the number of workers and all, and there's some

really very serious problems within the field. How do

we bring more women into that, and how do we solve some

of the problems with the women now in the field?

Ms. Sylke Tempel: Thanks.

Ms. Caroline Atkinson: So what--

Ms. Sylke Tempel: Can we just have two or three or

throw them in? Go ahead.

Mr. Owen Larter: Thank you. My name is Owen

Larter. I work for Microsoft in the U.K. It's picking

up a little bit on the UBI point, but it's a question

of our social institutions more broadly. And I think

it's interesting to look back at previous technological

revolutions and reassure and to see that by and large

they've lead to a better society, but they've also lead

to very different societies. I'm thinking particularly

about the ways that societies responded in the early

part of the 20th century with the welfare states, 40

hour working week labor laws.

49

Do we feel that our current social institutions are

equipped to deal with the disruption that is about to

unfold? And if not, how do we need to change them?

Ms. Sylke Tempel: Who do you want to answer this

question?

Mr. Owen Larter: All of them.

Ms. Sylke Tempel: Don't say all of them.

Mr. Owen Larter: Okay. Well, James in particular

because he was very engaged and nodding, so I like

that. And then also perhaps over here as well.

Ms. Sylke Tempel: Okay. Thanks. Okay, let's put

these two--I'll have (inaudible) Caroline. There's

another gap here. Too few women in the techy field.

Ms. Caroline Atkinson: Definitely too few women in

the techy field. Now, before I joined the techy field,

I was in economics and finance. And I can tell you

there are too few women there, as well. And I think--

Ms. Sylke Tempel: Let's move in on the audience

side of the question.

50

Ms. Caroline Atkinson: One nice piece of data is

that the people that we are training in digital skills

in Europe, 47 percent are women. And many--because you

don't need to be an engineer. We're talking about

skills that enable people to work in this society and

with these issues. And to get their businesses online,

to work for businesses that are online, to meet, as

Owen said, this lack of skilled workers that businesses

note.

So I think that the education and access are really

important elements of bringing more women into this

space. In terms of, and clearly at Google, they've

been very clear about, you know, sexual harassment and

so on is not allowed. And I think that that's also an

issue for society. Again, thinking of my previous

career.

And then the point about universal-based income, I

feel very--I agree with James. And I also want to say

that of course we need to take these issues and

concerns seriously. I think you put, you know, really

51

got the nail on the head, because there is a question

about our societies and how we respond. I think there

is a growing interest in improving things in the U.S.

are trade adjustment assistance, which is an old

program, and it's too small now. But we need to think

about how to boost the role of workers, how to adapt

with support for people as they make these transitions.

And I think those are questions for governments and for

societies and for economists, as opposed to

technologists, probably.

Ms. Sylke Tempel: Yeah. One suggestion for you in

the audience, you want to ask question. I have a few

more here, but if you throw them at me by the app, it

will be really helpful because then I can bundle them.

Because some of them go into the same direction. It

would be helpful.

James, to pick up this question, and then I also

have one here, how to deal with the (inaudible) between

technological innovation and policy response. And then

there's a question even about taxing robots. And it

52

goes basically in the direction of, you know,

technology and innovation by definition is fast.

Policy response sometimes, especially in open

democratic consensus based systems, is much slower.

How do we get these two together? That's basically,

yeah, how do we respond to this? And I find the robot

question actually really interesting, you know.

Dr. James Manyika: Well, I actually think that

robot question is referring to, I think, Bill Gates was

quoted recently saying maybe you should just tax the

robots. But I think even though that's a flippant

comment, I think there's something within that, because

if in fact the inputs that are going towards generating

output in our economy, which have largely been labor

and capital to a large extent, we tax one and not the

other at some level. So I think there's something to

think through in that question.

Related to the same question which goes to how

(inaudible) institutions are adapting. I think there

are at least two areas where I would like to see more

53

adaptation. One is around, you know, one of the

things, if you look at the incentive system in most

economies. I know it's certainly the case in the U.S.

and I think in most advanced economies. We've created

a set of--a whole set of incentives to encourage

businesses to make capital investments. We give them

R&D tax credits. We do all of these things to incent

those--that kind of behavior. There--we don't quite

have the same set of things that are oriented toward

incenting human capital investments by businesses. I

think that's something we ought maybe to think about.

How do we do more on that front than we've done

historically, similar to what we do with capital and

R&D investments, for example. So I'd love to see some

response there.

The other area I'd love to see response is back to

this point about helping people transition. I think

it's quite striking when I started to mention the

numbers earlier. I think it is quite striking that

across the OECD, as I said, the average, in terms of

54

labor market assistance programs, that's a broad

definition, but as a percent of GDP. It's about .6%.

Some countries, like the Nordics, are very high. It's

about 1.5 to 2.1 percent. For some countries, the U.S.

being one of them, it's actually quite low. In fact,

it's actually gone down in the last few years. So I

think there's something about how do we assist and help

people transition. I think this applies to the digital

economy, pretty much probably as much as it does to

globalization.

Ms. Sylke Tempel: Yeah.

Dr. James Manyika: Where we've not done as good a

response in helping people transition and adapt to the

dislocations.

Ms. Sylke Tempel: Okay, Cisco introduced response

and how we deal with it field and wheres. And Robert,

will you give a quick answer, and then I really would

like to get another round here.

Mr. Robert Atkinson: Yeah. So, look, I think the

idea that we would even take seriously Bill Gates' idea

55

that it would even emerge in the press is a really an

astounding indictment of how far down we've gone. We

have the single biggest problem in the developing

world. The single biggest economic challenge is

basically flat productivity growth. You cannot raise

wages without productivity growth. You cannot raise

productivity without new technology.

In the United States, we've had flat cap-ex

investment by the private sector for 15 years. That

rate has not gone up. They are not investing in

machinery and equipment. They're hoarding capital,

they're giving it back to the shareholders.

The worst thing we could do, by far, would be to

tax capital. Not capital when it comes out, but the

tax machines, because that means companies will not

invest, it means we're not going to raise productivity.

And the last point on this, again, it's striking to me

we have this conversation. We've looked at the data

from the BLS, Bureau of Labor Statistics. The odds of

losing your job in the United States from a downsizing

56

or a closure, are the lowest in 20 years. The lowest.

It's just continuing to go down.

The odds of losing your job in the last 10 years

from technological disruption, the lowest it's ever

been. So--

Ms. Sylke Tempel: Why is the impression then so

big that it's not the case? Why is it that so much--

Mr. Robert Atkinson: Because--

Ms. Sylke Tempel: --on technology.

Mr. Robert Atkinson: --we all--

Dr. James Manyika: Wages.

Mr. Robert Atkinson: Well, it--

Ms. Sylke Tempel: Wages?

Mr. Robert Atkinson: --could be wages, but it's

also this thing. We all look at this and we go, oh,

there must be disruption and now I'm doing Uber. There

actually was an increase in the last five years in the

U.S. in the number of travel agents. Nobody would have

guessed that. Nobody would have guessed that.

Ms. Sylke Tempel: Don't tell me it's going up.

57

Mr. Robert Atkinson: No, travel agents are going

up. Yeah. There are more travel agents now than there

were.

Ms. Sylke Tempel: Why do you use more travel

agents, and why not making all these mistakes, you

know, booking the wrong flight. Does this ever happen

to you?

Mr. Robert Atkinson: That's why you need more

travel agents.

Ms. Sylke Tempel: Booking the wrong flights?

Ambroise.

Mr. Ambroise Fayolle: Very quickly. For me to try

to close the gap between the policy and the reality of

all the perceptions. Perceptions are as important as

investment. We need to invest more. And when that's

going in (inaudible).

Ms. Sylke Tempel: But that goes for the public

sector, but obviously also goes for the private sector.

You can't, you know, innovation cannot go straight to

58

the shareholders. It has to be reinvested into kind of

adaptation to innovation, right? Sorry to interrupt.

Mr. Ambroise Fayolle: But then to just give you

two examples. The first one it there is a mining part

of Belgium. There is a mining part of France, that is

suffering a lot from the closing of the mines.

Ms. Sylke Tempel: Of course.

Mr. Ambroise Fayolle: And--

(crosstalk)

Mr. Ambroise Fayolle: --when you look at the

situation in this part, and we've done that in Northern

France, you see that 40 percent of the population

doesn't have any car.

Ms. Sylke Tempel: Mm-hmm.

Mr. Ambroise Fayolle: And you have jobs in some

pockets of the region that they don't have access to

that. So it's--

Ms. Sylke Tempel: Access is a big word on the Word

Cloud.

59

Mr. Ambroise Fayolle: Access is a big word. And

it's not only access to digital, it's just access,

physical access to sort of get a job. What we are

investing though is to create a transport system that

will be quick. A bus. A special bus line. For those

people to be able to try to get renewed access to the

labor markets. Because if we don't do that, then the

risk is that, yes, (inaudible) has the feeling that it

benefits from innovation.

Ms. Sylke Tempel: Mm.

Ms. Ambroise Fayolle: But the perception is that

this is concentrated on the big cities and the richest

part of the country, and you end up with--

Ms. Sylke Tempel: (Inaudible).

Mr. Ambroise Fayolle: Exactly.

Ms. Sylke Tempel: In every sense. Thanks. This

has to be a really question because my boss is telling

me I have about four minutes left.

Unidentified Female: Okay, so I'm going to ask

question about culture. So I work with cultural

60

heritage, and digital technology has done a lot for

culture, for culture, especially Google Arts and

Culture Project. It's amazing. But what we want to do

in heritage is to preserve traditional way of making

things. For one of the reasons is cultural tourism.

People pay like a lot of money to go somewhere and to

see how is something being traditionally done. And

like whole countries live from tourism.

So what digital technology and development can do

actually to help this, and to work altogether in a

meaningful idea in the future?

Ms. Sylke Tempel: Does any one of you want to take

up this question? You want to--what would come to my

mind would be Pompeii, where actually they found a way

of--of course everybody wants to see it because you

want to have a feel. I don't think the old analog

things go away because of digital innovation. But they

combined it with great digital, you know, kind of chose

to make it more haptic and--do you want--

61

Ms. Caroline Atkinson: Well, as you say, Google

has developed the, what was called the Cultural

Institute to develop arts and culture. And also allow

people from all over, the low income children in the

United States can have these, what are called

cardboards. Very simple technology. Well, it's very

complicated technology, but it's simple to use. It's

like putting on a pair of glasses where you can then

see the technology and the arts. The technology allows

you to see these beautiful cultural artifacts.

I think the other way that maybe we could work

together is again, on YouTube, you can see how to make

some original crafts. And my daughter's boyfriend has

learned how to make bread in a very basic way. That's

not a beautiful cultural artifact, but it is an old

skill. From looking at YouTube. So from learning and

from learning recipes. So there are ways that you can

preserve some of those things. But I wholeheartedly

agree with Robert that what we need is the encourage

62

more of this, but make sure that the benefits are

spread.

Ms. Sylke Tempel: Now, my boss is telling me to

wrap up. Okay. I know who my boss is here. The nice

gentleman in the back there. My apologies for everyone

who would like to ask questions. And my suggestion for

GMF is you should do even more techy sessions because

they're great, because they're really interesting,

because I think that to really get to the core of what

we are talking about, technologies, politics, these

days, like foreign policies, domestic politics these

days. So my apologies for all of you who couldn't ask

questions.

Use the app more. It's actually much easier to get

them on here because then I can throw them at these

guys immediately. What I would like to do is play me

the opinion poll from the beginning again, and let's

see whether our panel has managed to convince the 40

percent that was thinking that innovation is more for

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disrupting force. Can we have this vote again now?

And let's see what happens.

It's like a TED, it's like all these reality shows

where people are, your estimate is in, and say I want

this candidate in and this candidate out. So.

Ms. Caroline Atkinson: I think the robot--

Ms. Sylke Tempel: Here we are. So. What is the

result? You've done a pretty good job. Thank you so

much. And thank you, audience, for being here. Thanks

a lot. Oh, do I say that now it's lunchtime? It's

lunchtime. It's lunchtime. Enjoy your lunch. And

keep up with the conversation.

Announcer: Ladies and gentlemen, lunch will take

place both at the lobby lounge and at Wilcher's Café.

You're free to go to whichever one, whichever location

you prefer.

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