Biden goes to bat for the middle class

"Middle-class Joe" came to Davos and went to bat for the side.

In an impassioned speech, United States Vice-President Joe Biden told business leaders they should do more to protect workers, especially those in the middle class - a group he has long championed, thereby earning the nickname - from the impact of the wave of technological change sweeping the world.

Delivering a keynote address at the World Economic Forum's (WEF) annual meeting on Wednesday evening, he said the middle class risked being hollowed out as their jobs were decimated by new technologies, from robotics to 3D printing and artificial intelligence.

While driverless cars might mean gains for those running transport companies, drivers who lost their jobs would find it hard to cope, he noted, pointing out that many middle-class families were deeply worried about what lay ahead.

"The Fourth Industrial Revolution has the potential to further hollow out the middle class. It is our responsibility to bend these changes to the benefit of society - to make sure that the digital revolution creates more winners than losers," he said.

The idea that the world is undergoing a fourth industrial revolution, which is a fusion of technologies - after steam power, electricity, and electronics and information technology - has featured much in discussions here, following the publication of a new book by WEF founder and executive chairman Klaus Schwab on the subject.

"The speed of the current breakthroughs has no historical precedent," wrote Professor Schwab. "Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management and governance."

The result: mounting job insecurity, with some experts warning that millions of jobs could be lost, across manufacturing and the service sectors, even as new highly skilled computing jobs are created.

Rising economic inequality has also emerged as a concern after a report published this week by British charity group Oxfam which found that just 62 people owned as much wealth as half of humanity, down from 80 a year ago.

Even the Roman Catholic leader, Pope Francis, chimed in on the subject, in a message to Davos participants, which was read out for him. He urged business and political chiefs not to "forget the poor", adding that they had a duty to "create jobs, tackle inequality and help solve society's complex crisis".

Taking up these issues in his speech, Mr Biden recounted his meetings with workers and their families, as well as business leaders, who were grappling with the pace of rapid change.

He hit out at "short-termism" which dominated corporate thinking, and the trend of firms returning dollops of cash to shareholders through stock buybacks rather than investing in the future.

"My call to action here is simple - embrace your obligation to workers as well as your shareholders," he said.

He went on to propose five ways that businesses and governments could bolster the middle class - investing in education and training; strengthening social protection and obligations to workers; modernising infrastructure; having more progressive tax regimes, with everyone paying their fair share; and making capital more widely available.

Arguing that a thriving middle class was "good for business", he said keeping up the American middle class' sense of the "possibilities" of better lives for themselves and their children was "an economic imperative". "When the middle class does well, the wealthy do very well, and the poor have a ladder up."

This theme of widespread disruption and technological change, and its impact on workers, looks set to continue to feature in debates here over the next few days.

Yesterday, Deputy Prime Minister Tharman Shanmugaratnam joined a panel discussion on the "Future of Jobs".

warren@sph.com.sg

This article was first published on January 22, 2016.
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