The great power of technology demands great responsibility

By Neil Patrick

Technology is not a panacea; who uses it for what end is what matters.

Two stories generated headlines in the UK media this week. Both involved the careers of British men who pursued entirely different paths to reaching their more or less simultaneous denouement.

One was a media celebrity and recognisable face to millions. The other virtually unknown and unlikely to recognised by anyone outside his immediate circle. The former was vilified; the latter applauded.

Jeremy Kyle at Radio Festival 2010
Photo Credit: James Cridland

The first is Jeremy Kyle. A sort of UK version of Jerry Springer. I say ‘sort of’ because while both used a similar show format, in comparison to Springer, Kyle comes off poorly.

"Jerry Springer was confrontational but had a charm to him that diffused some criticism," said TV commentator Cameron Yarde Jnr. "He was witty but never came across as sneering."

Kyle’s show was axed this week after it emerged that a show guest, Steve Dymond had committed suicide following his appearance when he failed a lie detector test. Today it’s being reported that two more deaths are being linked to his show.

Lie detector technology is old and crude. It’s cod-science. It can be gamed and even experts confess it's little more reliable than guessing. But its aura of science leads the public to believe it's infallible, when in fact it depends entirely on who is using it and for what purpose. When that purpose is sensationalism, it’s the devil’s own device.

Kyle’s show ran for fourteen years on ITV where he was both ringmaster and provocateur in a show which a judge once described as ‘human bear-baiting.’ District Judge Alan Berg made this comment in 2007 while sentencing one of the show's guests, who’d head-butted his love rival during filming.

Judges are not prone to exaggeration. Kyle’s show involved ‘guests’ who he’d bring on to his show to disclose their deepest and most troubling personal problems. The proposition to them was that Kyle would in some way ease their suffering and help resolve their problems.

Any normal person would be deeply dubious that appearing on national TV in front of a studio audience who regard you as scum could under any circumstances be genuinely helpful.

But these people are not normal. They exist in an impoverished parallel universe. They are educationally, economically and socially the least well-functioning members of society.

Guests would be chosen and then persuaded to appear on the basis of the shock value of their predicaments. Domestic abuse, gambling, drug and alcohol addiction, paternity, infidelity, incest, rape; all were grist to Kyle’s mill. The more sordid the better.

On The Jeremy Kyle Show, the host was "as confrontational as the audience". Kyle would adopt a scarcely merited position of moral superiority, switching between compassion and hostility as a pseudo-counsellor.

His program was carefully calculated to extract the ugliest and most shocking details of the lives of Britain’s underclass. And worse, to manipulate and goad them towards the inevitably violent outbursts which had to be restrained by the burly security types hovering sidestage.

The show used every lever available to find and persuade those in torment to air their darkest secrets and grievances to the nation. This would be traumatic enough in private counselling, but Kyle used a contrived environment calculated to extract maximum sensationalism for his sneering and jeering audience.

These lives are tragic enough without being used to generate ad revenue through the million or so daily viewers the show averaged. But there’s a market value to one million bored people with nothing better to do than delight in the life traumas of others. If any reality TV show revealed the ugly face of naked media capitalism, this was it.

If this proves to be Kyle’s career terminus then I’d suggest it could have been foreseen. We can tell a lot about a person from their CV.

Born in 1965, from 1986 to 1995, Kyle worked as a life insurance salesman, recruitment consultant, and radio advertising salesman before beginning his broadcasting career as a radio presenter in 1996.

These first nine years of his career were working in jobs which the goal was the achievement of sales targets. People are merely pawns to enable the sale. And they are controlled and manipulated with one goal only – making money from them.

Kyle’s show took this ideology (if it deserves such a title) to the big stage of national TV. And for years, no-one at ITV was in the slightest bit troubled by the dubious morality of the venture. Big ad revenues are a powerful way to diminish moral scruples after all.

I’m glad to see this monstrosity of television terminated, but beyond sad that it required someone’s death to bring it about.

But to end on a happier note, we should look at the other career story.

Julian Richer founded a business selling hi-fi in the 1970s. Today Richer Sounds has branches nationwide and around 500 employees.

Richer Sounds branch London Bridge
Photo credit: Richer Sounds

This week Richer, now aged 60, announced he would commence the transfer of ownership of his business to his employees. He put 60% of his shares in trust for this, as well as making a bonus payment of £1,000 for every year of work to each employee. The average staff bonus would be £8,000, but since many staff have worked there for 30 or more years, some will receive much more.

Julian Richer is the sort of entrepreneur and capitalist we need a lot more of today. And as a long-standing if infrequent customer of his shops, I have nothing but praise for the customer experience he and his people provide. If I have a retail hero, Julian Richer is it.

The way he treats his staff shows in surveys which report that 95% of them love working for him. His approach translates into tangible results: In 2012, his 53 stores produced profits of £6.9m from sales of £144.3m. No mean feat in an economy full of high street retail failure and depressed consumer spending.

Over four decades he has championed providing secure, well-paid jobs because he believes a happy workforce is key to business success. At a time when zero-hours contracts are blighting the labour market, he has been rewarded with loyalty from staff who worship him.

Just like Kyle, Richer’s career is a product of who he is and what he believes in.

When he was 14, during the energy crisis, he bought a case of candles for £3 and sold it for £15. That was followed by second-hand hi-fi equipment – he would do up turntables and sell them. By the time he was 17, he had three people working for him.

At 19, he opened his first Richer Sounds shop at London Bridge. He is devoted to what he calls "the biz". His parents worked for Marks & Spencer – a firm which famously also treated its staff well.

Richer has many parallel and philanthropic interests. He was the first patron of The Big Issue Foundation and an early director of the Prince of Wales's Duchy Originals. He's the founder of Acts 435, a charity launched by Archbishop John Sentamu to help those in need, and ASB Help, a charity to help the victims of antisocial behaviour.

"The biz" is his life's work and he sees it as only natural that those who have contributed to his company's success, the staff, should inherit it.

I don't think we should make the contrast between Jeremy Kyle and Julian Richer a binary one. Kyle is not an inherently bad person. He just made some bad judgements and probably lost sight that the net benevolence of his work was at best neutral and at worst negative. He possibly genuinely believed that he was doing good work, and chose not to reflect too hard on the basic morality of his business model.

Technology is inherently neither good nor bad. It's morally neutral, therefore, it demands that we provide the moral compass for it. Sound human judgement is needed to provide this.

Creators and users and their motives are what really matter. Perhaps we should care a little less about technological progress and a lot more about moral progress.

Wonga is not the sort of fintech we want thank you

By Neil Patrick

Does technology have a moral compass? I guess most would say it’s morally neutral. It is the people creating it who must carry that responsibility. But technology and big data is the great power of our age. And with great power comes great responsibility.

When someone tells you big data is the answer, it’s smart to look beyond the data

This week Wonga.com went into administration. It’s a business I’ve watched with interest since its foundation in 2006. But not with admiration, rather a growing unease that its business model wasn’t just unethical, it was fatally flawed. It was bound to have a messy ending.

Wonga was the UK’s biggest payday lender. Payday loans in the USA remain illegal in 14 states yet created several multi-millionaires there in a few short years. And as is usually the case, when that happens, the idea travelled across the Atlantic very quickly to the UK.

Not very long ago, Wonga was a posterboy for the fintech sector. They invested in lavish TV commercials. They sponsored Newcastle United Football Club for £8 million a year. And they were once courted by investors eager to share in their profits.

Papiss Cisse of Newcastle United.
 Photo credit: Dudek1337

And Wonga's founders would be the first to admit that they trusted data and algorithms more than people. Couple big data with a fast and simple internet-based application process and Wonga were sure they would be the next big thing in money lending. They would take a proven business model from the US and turn it into a data-driven internet giant in lending. Tech is so much cheaper and more reliable than people after all. Or is it?

It all went horribly wrong for reasons which are not the same as the ones talked about in the mainstream media. They give you the headline facts. I’m more interested in what created those facts…

A short history of payday loans in the United States

Banking deregulation in the United States in the late 1980s caused many small community banks to go out of business. This created a void in the supply of short-term microcredit, which was not supplied by mainstream banks due to their unprofitability. That unprofitability was easy to explain – banking regulations wouldn’t permit the ultra-high interest rates needed to cover the high default levels that such loans inevitably create.

The payday loan industry sprang up to capitalise on this void and to supply small short-term loans to the working class at very high interest rates. But how was it that they were able to make these loans when banks could not?

W. Allan Jones, the 'father of payday loans'

In 1993, Check Into Cash was founded by Allan Jones in Cleveland, Tennessee, and became the largest payday loan company in the United States. He’s known as ‘the father of payday loans’ - I am unsure if this is a tribute or an indictment - and his business was made possible only after he donated to the campaigns of legislators in multiple states, convincing them to legalize loans with such high interest rates.

And thus a massive new industry was born…

Subsequently, the industry grew from fewer than 500 storefronts to over 22,000 and a total size of $46 billion. By 2008, payday loan stores in the United States outnumbered Starbucks shops and McDonald's fast food restaurants.

And this was the point at which two entrepreneurs named Errol Damelin and Jonty Hurwitz envisioned an internet-based payday loans business in the UK. Both had previous internet start-up experience; but critically neither had any experience of retail banking. I could see exactly how Wonga would make money. I had no doubt about that. What I could also see was that the business model was completely unsustainable.

What exactly are you disrupting?

Wonga claimed and possibly believed they were disrupting big banks. They were not. They were actually disrupting doorstep money lenders and loan sharks; some of the most odious and exploitative businesses you will find.

And guess which other online sector is also in trouble today? Online ticket sellers. They claim they are making event tickets more easily available. But they are actually using all sorts of devious online trickery, enabling inflated prices not to mention a raft of fees and charges which are added to the bill. If they are disrupting anyone, they are disrupting ticket touts and making a killing in the process.

And just like the payday loans sector who became the target for heavy intervention by the Financial Conduct Authority, so too are the secondary ticketing websites, including Viagogo, StubHub, GETMEIN! and Seatwave. All are now under similar legal and regulatory threat by the Competition and Markets Authority.

So when new businesses say they are disruptive, that’s not automatically a good thing. What matters is that the disruptors are challenging an expensive or exploitative sector, remedying the fundamental failures of that sector, not amplifying them through mere digital deployment.

Investors loved this business – at first

In 2008, when Wonga was still an early stage start up, I was doing the rounds of venture capital firms in London, capital raising for another fintech startup. I distinctly recall one venture capitalist telling me that what he really wanted was another Wonga.

Wonga had already raised £3.7m to fund its initial platform development. In July 2009 Wonga raised a further £13.9m of funding through other VC firms (including the one I talked to). These investments enabled Wonga to complete their first platform and begin lending money.

The point here is that investors are looking for a quick return on their investment. Usually a sell out or exit after 3 - 5 years. They want a deal they can buy into cheap, and sell fast with a big return. This rapid rate of buying in and selling out enables them to avoid possible regulatory trouble because:

Regulators are far too slow to intervene to remedy exploitative practices

As I was watching the growth of Wonga and other payday lenders, I was also watching what regulators were doing. One of the first to take any notice was the Office of Fair Trading. Yet in their initial reviews they claimed that they had too few complaints to merit any sort of intervention. Instead they opted to merely keep an eye on things. It wasn’t until 2012 amidst explosive growth of payday lending and mounting criticism, that the Financial Conduct Authority decided to intervene.

The Financial Crash of 2008 was great news for payday lenders

Although when Wonga was founded, the financial crash of 2008 was still ahead, when it came, this event was to ensure that payday lenders were to benefit. Banks and other mainstream lenders stopped lending to virtually everyone. But people’s need to borrow didn’t diminish, which left Wonga with suddenly much less competition from more traditional lenders. Moreover, the economic doldrums which ensued in the Great Recession created new customers in their droves.

Screenshot from Wonga.com showing the cost of borrowing £100 for 30 days as at 17 Nov 2013

In 2012, a typical loan from Wonga had an annual percentage rate of 4,214 per cent. This equates to a charge of £42.96 for borrowing £100 for just 36 days. The debate still rages about this. Payday loans are by definition very short-term. And small. But most traditional loans are bigger and long term, so historically, the annual percentage rate of interest (APR) was a convenient and appropriate way to measure the cost of a loan. Not so much when the loan is for just a few days. My view was and remains that APR is not relevant when assessing the cost of ultra-short-term loans.

No-body wanted to buy Wonga because other predators were eating it…

In September 2012, Wonga reported profits of £45.8m for 2011 from revenue of £185m. But the threats and cracks were already showing. Not least of these was the Financial Conduct Authority’s new rules and ongoing investigation into the whole payday loans sector.

Already anticipating a new financial compensation opportunity, legal claims management firms saw that payday lenders would become their next carcasses to feast upon. And they were right – payday loan regulation created a whole new raft of claims opportunities. Coupled with the capping of the fees that had originally made Wonga so profitable, these claims grew and grew until the business became unsustainable.

Last week in a desperate last hour bid to save the Wonga from collapse, the shareholders stumped up a further £10m. But it was not enough.

Never leave the techies in charge of the business

The mainstream media, politicians and even the Archbishop of Canterbury have complained endlessly that Wonga’s business was exploitative. I agree, but that’s not how the business made so much money. The key to business’s early profitability was NOT through its high interest rates, but the fees and charges it applied to every borrower that failed to meet their repayment terms faultlessly and the rolling over of these charges into new loans.

Before regulators stepped in to tackle this in 2012, if a customer failed to repay the loan in full on the due date, a default fee would be charged and interest would snowball the debt endlessly thereafter. The debt would then be ‘rolled over’ into a new and bigger loan. Such things would involve a lot of letters and phone calls of course. And every letter and phone call would also incur a large fee which was also added to the debt. In the matter of a few weeks, a smallish loan could be transformed into a debt many times larger. This was insanely profitable.

Regulation is inevitable but is always too late

On 28 November 2012, following concerns that small loans, intended to be short-term, could become prohibitively expensive, the government announced it would give the Financial Conduct Authority powers to prevent indefinite rolling over of loans and effectively limit charges.

By this point, Wonga had already made millions in profits. But from this point, their business model couldn’t work. It was just a matter of time until the whole thing crashed. The only thing that surprises me is that the business was able to limp on for another six years.

When the body falls, the vultures complete the kill

The coup de grâce that finally finished Wonga ironically wasn’t it’s business model. True, this had become fatally wounded by the imposition of regulations to prevent their loan roll overs and excessive fees for defaulters. What finished them was another group of predators – the claims management companies. In 2014, the firm introduced a new management team and wrote off £220m worth of debt belonging to 330,000 customers after admitting giving loans to people who could not afford to repay them. But even this was not enough to deflect the inevitable.

The endless cycle of financial ‘innovation’, profiteering, regulation and collapse

Wonga is more than just a tale of dubious morality. It is a perfect demonstration of how a purely technological vision, lacking depth of understanding of the industry sector and its unique characteristics, inevitably wrecks the lives of customers, investors and staff alike.

I am pleased that Wonga is no more. But I am not optimistic that we won’t see this cycle perpetuating again and again in other business sectors. It’s not entrepreneurial innovation or disruption, it’s a perfect storm of lack of morality, self-delusion, arrogance and greed, going unchallenged until long after the damage is done. And as usual the biggest victims are those least able to bear it.

Why people are a better brand investment than machines

Today, TSB's 'local bank for local people' claims are looking like a sham.
Photo credit: Gnesener1900

...especially if you are a bank.

A crisis is the one thing which is guaranteed to expose the reality of a brand versus the contrived and manicured fantasy which is used to promote it.

By Neil Patrick

TSB’s chief executive, Paul Pester admitted this week, ‘we are on our knees’, following a failed server migration of 1.3 billion customer records. This has gone disastrously wrong leaving hundreds of thousands of customers unable to pay their bills. Worse, some customers have been able to log into other customer's accounts, see their data and even make payments with other people's money.

The bank's employees have been working day and night to try and help customers solve the resulting problems like paying for their rent and utilities. But as the week came to a close, and despite a team of IBM 'experts' being parachuted in as an elite shock force to assist, the problems were still not completely solved.

Business customers have faced consequential losses such as non-payment of suppliers and non-delivery of goods. TSB staff have been so stressed and frustrated in their efforts to help customers that some have collapsed in tears, saying it's the worst experience of their working lives.

This situation is more than embarrassing and stressful for everyone involved. It demolishes the carefully constructed brand that TSB has been investing in, positioning the bank as one which places people at heart of everything it believes in:



TSB's regulator, the FCA, is now investigating the issue and the Information Commissioner says she wants to know more about potential data breaches. The Government has asked for assurances and wants answers to its questions to TSB. Even when the IT problems are solved, the pain will not be over for TSB.

This sorry tale will eventually become a footnote I am sure, but today, right now, it is fraying nerves and spreading havoc in TSB's customers’ lives. And it seems inevitable that many customers will leave the bank at their first opportunity after this crisis is resolved. For TSB, this disaster looks likely to cost them much more than the £100m of savings the migration originally promised.

Meanwhile in China, the world’s first robot-only bank branch has just opened. This is heralded as an exciting step towards a modern, tech enabled future; a homo-sapien free environment, cleansed of the inconsistencies and inefficiencies which are allegedly the hallmark of humans.

The irony here is that it is the people at TSB branches that are keeping the bank from sinking when faulty technology has dragged the whole edifice almost into ruin.

Banking and IT have an old and awkward relationship.  Banking IT systems are not like apps where glitches can be smoothed out over time. They demand 100% reliability and complete accuracy from the get go 100% of the time. Anything less is a big problem. Building or significantly changing any banking platform is a high risk and demanding challenge.

As we've seen with TSB, government and regulators are today emboldened, swift and merciless when it comes to punishing banks for errors and misdemeanors. After years of a light-touch attitude, post 2008, the climate has changed and banks are today probably the most closely regulated and scrutinized business sector in the UK.

Thirty years ago, banks were early adopters of what we now call data harvesting. This was decades before Facebook managed to finally wake the world to the importance of data security and privacy. Sure, we had Data Protection legislation and regulators. And banks were generally compliant with their data protection obligations. Regulatory enforcements were few and the public’s greatest annoyances were telephone sales calls and junk mail.

But this customer irritation at some of the earliest (ab)uses of technology by banks ought to have provided early warning that a very human-based relationship demanding and rewarding trust was unlikely to be entirely substitutable by anonymous automation. In fact, I’d argue that trust is the number one most essential requirement for a customer’s relationship with their bank.

Yet, this fundamental truth seems to have been ignored in the relentless drive for ever lower costs. The endless push for greater speed, and cheaper services seems to have trumped every other aspect. Especially trust.

In areas such as marketing and loan application processing, banks were some of the first businesses in the world to decide that IT could make faster, more accurate, more consistent and cheaper decisions than their human employees. This led to the steady removal of middle managers and the downgrading of staff until a bank branch was staffed by people who had little more skill than supermarket checkout operators (and similar pay and conditions too).

Now these last remaining humans in bank branches are facing imminent extinction as they too are replaced by robots which don’t go on holiday or demand pay increases (or any pay at all for that matter).

Meanwhile, banks (always some of the most unpopular and complained about businesses), are shutting branches, removing staff, and turning everything digital. This cost cutting is justified in the name of customer convenience and modernisation. And to cement the argument, every senior bank spokesperson will tell us that this is what most of their customers want.

But most is not all. And the duality where banks are simultaneously some of the least-loved businesses while moving ever closer to completely people-free service, is not a recipe to build any sort of customer love and affection.

There is and has been for decades, a space in the market for a bank which recognises that customer service delivered by people to people is an untapped and growing market. TSB recognised this and decided this was their opportunity to command a unique market position. Unfortunately, they forgot that occupying this position demands not just that you proclaim it, but also that you live by it.

Most people require relatively little from their bank. Strong security. Error free payment processing. Good and caring advice. Easy access. Fast and painless resolution of problems. It is hard to see how a combination of branch closures, increased automation and demoralised, low paid staff help deliver these things.

And 'adding value' (sic) by dubious marketing adds insult to injury. Hardly anyone really cares about an extra 0.1% of interest, or free travel insurance, or fancy TV advertising. They do care about being well looked after.

Banking for most people is service they cannot live without. And whilst I don’t think banks can or should be backwards looking, there is a stronger argument than ever for a bank which truly understands they are in a people business. And that investing in people might just be a safer bet than investing in their replacement by machines.

The trouble with tech is wealth destruction

By Neil Patrick

I love tech. But I hate what it is doing to jobs and wealth creation. Any voice of concern on this subject risks being shouted down as Luddite. But being branded a Luddite is not the worst thing that can happen; a whole society sleepwalking over a cliff is a far greater worry.

Robert Ludd: NOT my role model

There's a great deal of corporate and government spin about the impact of technology on jobs. If I didn’t default to the notion that cock-ups, not conspiracies, are man’s most common failing, I’d be signing up for the Loony Tunes’ New World Order Conspiracy news feeds.

At first, it was argued that technology would just enable higher quality and less costly goods. Then, when the first layoffs due to automation started happening, it was argued that only tedious and repetitive jobs would be displaced. As disruptive business models, artificial intelligence and robotics become increasingly advanced, both these defences have crumbled.

Then the really big changes started. Whole industries began to be disrupted by new tech-enabled business models. Travel agents are being disrupted by Trip Advisor and Airbnb. Cab drivers by Uber. Retailing by Amazon. Banking by PayPal. And worse, every successful disruptive business replaces a job heavy industry sector with a jobs-lite one.

The last remaining argument for tolerance of the jobs carnage created by the tech tsunami is that the Wikipedia version of history tells us technological progress is inevitable, and has only ever resulted in greater wealth and a better society. But this assertion doesn’t bear much scrutiny if you have even a basic knowledge of economic history.

The latest piece of expert group think I stumbled upon comes from none other than Deloitte. They published a paper in December 2014 entitled, ‘Technology and people: The great job-creating machine’ by Ian Stewart, Debapratim De and Alex Cole - all economists working at Deloitte; experts by most people’s definition.

An interesting footnote is that whilst the document is branded as Deloitte’s, it contains a disclaimer that the report is merely the personal views of its authors…do Deloitte’s legal team sense these views could be a bit controversial? Why would Deloitte wish to distance themselves in this way?

Anyway, the document makes the same old arguments that there is no historical situation which has shown that technology has done anything other than create more jobs and greater wealth. And by inference, anyone who argues that this time it’s different is a Luddite.

History can be an unreliable teacher. Is it really a good idea to place our faith in an argument, just because something has never happened before? That this ship is so vast and splendid it is unsinkable?

And just as a little reminder, the first industrial revolution in Britain didn’t actually create more jobs. It merely absorbed the millions of unemployed agricultural workers put out of work by Jethro Tull’s seed drill and other agricultural innovations.

When I looked at the evidence based on UK data presented by Deloitte, they helpfully show us how whilst some jobs are disappearing fast, others are growing rapidly. But looking at this data I also spotted a massively frightening detail. Here’s the table in question:

Notice anything about the nature of the jobs gained versus the ones lost?

It’s this. Almost all the new jobs are low pay and/or mostly in the public sector.

And most of the shrinking occupations are in the private sector.

By far the largest growth sector for jobs between 1992 and 2014 was nursing auxiliaries and assistants. The reason is simple and we all know that the aging population is driving this. Over this period, more than 270,000 new jobs materialised in this field. The second biggest growth sector added almost 420,000 extra jobs. Too bad then that these jobs were for educational assistants i.e. people who earn even less than teachers.

Low pay is bad enough, but public sector jobs pose an even bigger economic problem. They are paid for not by sales to domestic and overseas customers, but from taxes collected into the treasury. Public sector jobs support our society but are simply terrible as engines of economic growth. And growth is the one thing that economies worldwide are desperate to find these days.

Public sector jobs do not create economic growth and sustainable household wealth, they merely spend government (and our) money. Money taken from us and businesses in tax (unless you are Google or Amazon). It is then spent for us by the government on the things they decide we want and need. Sure some of this government spending trickles through to the private sector, but  there's a dreadfully expensive and inefficient pile of government bureaucracy acting as the middleman in this business model.

What is worse is that public sector jobs don’t make the nation richer. They are not exported. They are horribly complex to manage and operate not because the people are dumb, but because all large organisations struggle with efficiency. And more of them add to an already swollen and debt-burdened state which must borrow endlessly to sustain its spending.

You may well disagree with me. You may well trust that the experts in our governments and corporations have our best interests at heart. That the frequent cases of greed and exploitation by ruthless capitalist businesses are a more than adequate reason to reject my argument.

So in the interests of presenting a balanced view, here’s a quotation from the Deloitte report:

Change is the prerequisite for improving welfare. Until the eighteenth century the organisation of work was largely fixed and the material condition of the masses was miserable. It was the wrenching change of the industrial revolution, the application of steam power to production, urbanisation and the rise of manufacturing that brought improvements in material conditions and life expectancy for working people. Technology has transformed productivity and living standards, and, in the process, created new employment in new sectors. Machines will continue to reduce prices, democratising what was once the preserve of the affluent and furnishing the income for increased spending in new and existing areas.

Machines will take on more repetitive and laborious tasks, but seem no closer to eliminating the need for human labour than at any time in the last 150 years. It is not hard to think of pressing, unmet needs even in the rich world: the care of the elderly and the frail, lifetime education and retraining, health care, physical and mental well-being. The stock of work in the economy is not fixed; the last 200 years demonstrates that when a machine replaces a human, the result, paradoxically, is faster growth and, in time, rising employment. The work of the future is likely to be varied and have a bigger share of social interaction and empathy, thought, creativity and skill. We cannot forecast the jobs of the future, but we believe that jobs will continue to be created, enhanced and destroyed much as they have in the last 150 years.

The trouble with this opinion is that the first technological revolution merely transferred labour from the agricultural and subsistence existence of the rural poor, to the impoverished drudgery of urban manufacturing centres. The owners of capital flourished and became wealthy. Cities expanded and became wealthy. Central and local government expanded and became wealthy. Workers did not. Urban slums and squalor replaced rural shacks and poverty.

So the first industrial revolution, didn’t actually create more jobs or better standards of living for workers. However, the second industrial revolution did. This was when mass communication in the form of TV, radio and the telephone enabled the rise of truly global businesses. These businesses coupled mass production economies of scale with vast global markets.

They needed huge numbers of middle managers to support and supervise their activities. And these are today the vast global corporations that are slowly but surely being disrupted to death by thousands of niche start-ups and new business models. In the US and Europe in particular, this is why the middle class is becoming an endangered species.

The key difference between this historical perspective and the reality of today is that the monetary basis on which society is built is different. And the biggest and most critical difference is debt. The debt of businesses. The debt of citizens and governments.

A debt burdened society can only survive when it has a stable and growing income. Stable to ensure debt repayments cans always be met. And growing to help lessen the total burden of debt as a proportion of income. Just like when we take out a mortgage to buy a house, we are gambling that our future income will be stable and reliable enough to meet the repayments for the next 25 years.

But today’s incomes are less stable and secure than ever before. A cotton mill worker might have endured terrible working conditions and low pay, but at least their work was relatively secure and they were not crippled with debt. Today, the combination of housing undersupply (not helped by the debt burden of house builders) and prices inflated by overseas speculators keeps young people out of home ownership. Student loans mean young people are hobbled by debt before they even land a job.

This financial dimension is inextricably linked to the nature of the threat of technology. And it’s something that cannot be unknown to anyone with even a basic grasp of financial and economic matters. Let alone someone working at Deloitte.

Which begs the question, ‘Why might the experts want to persuade us otherwise?’

That’s a question I am not going to attempt to answer. You can call me a Luddite if you wish. That I can live with. But I really have no wish to be classed a conspiracy theorist. For now at least.

Could a robot do your job?

By Neil Patrick

The endless rise of tech is one of what I call the “six pillars of job destruction”. The others are globalization, demographics, monetary and fiscal policy, educational lag and digital communications.

These subjects have been central to this blog for the last three years. And at times, it felt like I was a voice in the wilderness.

So imagine my delight last night when none other than the BBC’s prestigious programme Panorama, broadcast a 30 minute prime time documentary titled “Could a Robot Do My Job?”

Better still, a couple of my primary research sources, Andrew McAfee and Erik Brynjolfsson of MIT and the authors of “The Second Machine Age” were the star guests.

The programme set out exactly how and why technology is killing jobs. It also illustrated how technology creates new jobs.

But here’s the rub. The jobs created by tech are totally different to the ones destroyed by it. Which means those who lose their jobs as a result of technology are largely unable to switch.

That’s not the most critical point though. That’s the fact that the pace of technological advance is endlessly accelerating. The programme explained quite clearly how the pace of technological advances in the last five years has astonished even those who work in technology. In case you want to know why, it’s because human learning is linear (1,2,3,4,5 etc), whereas computer tech advances exponentially (2, 4, 8, 16, 32 etc.)

If as individuals we are struggling to keep up, then pause for a moment to consider the pace at which our educational systems change. I know from my time in the academic world that our educational institutions evolve very slowly. The smallest time unit of educational schedule planning is a year. Courses are designed and implemented over 2-3 year time frames. Core texts are often over 5 years old.

Critically, this is why humans will lose the race. Worse, there are few feasible solutions available. There is a new breed of young tech entrepreneurs and specialists (mostly in their late teens and twenties) and these young people will likely ride these waves of disruption with ease. But for just about everyone else, the worst is yet to come…

For what it is worth, my take on this is that the critical career assets we can acquire are:

• Clear understanding of how technology is impacting our career field
• The rapid acquisition of skills which are in keeping with these developments
• The building of global personal professional networks
• Positioning ourselves ahead of the change
• And last but not least, career choices which are most likely to be most resilient to the threat of tech - these are jobs which involve large amounts of non-repetitive tasks, human interaction, creativity and manual dexterity.

None of these will provide complete protection, but they will give your career the best possible change of surviving the tech tsunami.

Is artificial intelligence the greatest threat to human existence?

By Neil Patrick

Here’s a clip from the Rubin Report in which Elon Musk states “AI is like summoning the demon”.

Interesting coming from someone who more than most people is at the forefront of understanding and developing high tech future businesses.

Does he know something we don’t?





The ensuing discussion in the clip seems to miss the point. Rubin’s mates have been watching too many dystopian movies and playing too many computer games in which robots go on killing sprees I suspect.

I wonder if the real reason Elon Musk is so cautionary about AI isn’t because we’re at risk of being slaughtered by evil robots, but because he can see that technological development is now outstripping the abilities of our current political, economic and social systems to keep up.

And that this situation means we have 21st century technology but 20th century political, education, economic, social and legal systems.

The outcome of this two speed society is that jobs will disappear faster than ever…and no jobs equals no money. And in our world, no money is effectively extinction…?

Is this what he’s really hinting at?