Brexit: The Revenge of the Working Class

In the last few days we’ve been hearing all kinds of allegations about the Brexit voters. They’ve been accused of racism, of narrow mindedness, and stupidity in general. We’ve been assured that the Brexit voters are the radical right-wing nationalists. But now come the results of the surveys and demonstrate that the reasons behind Brexit are more complex. It turns out that the main force that turned the tables came from the working-class voters.

In other words, the decision was made by the people who are most frustrated about the new economy and their perceived and very real inability to influence it.

A few months ago I wrote in this blog that the UK is turning into a plutonomy: a nation in which the wealthy and the prosperous are driving the economy, while everybody else tags along. The term plutonomy first appeared in a memo sent by the global bank Citigroup to its wealthiest clients. As the writers of the memo report –

“There is no such thing as “The U.S. Consumer” or “UK Consumer”, but rich and poor consumers in these countries… The rich are getting richer; they dominate spending. Their trend of getting richer looks unlikely to end anytime soon.”

The data reveals that this analysis has much merit. As The Equality Trust reports, the top 10% of earners in the UK have an income over 27 times larger than that of the poorest 10%.

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Income distribution in the UK. Source: The Equality Trust

It also turns out that in terms of income distribution, the UK is one of the most unequal developed countries in the world.

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Income inequality in different countries in the developed world. Source: The Equality Trust

Of course the rich and the wealthy – residing mainly in London and in the South East – are largely satisfied with current affairs. In the 2014 State of the Nation poll inquiring about the level of trust citizens place in the UK political parties in general, those two regions were the most trusting of all. In the meantime, citizens from all other parts of the country gave devastatingly low grades (an average of 3.54 out of 10) to indicate their lack of trust in UK political parties.

Unsurprisingly, the wealthiest regions had the lowest percentage of Brexit voters.

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Percentage of Brexit voters by region. Source: BBC

 

The evidence, when taken together, means that the working class is dissatisfied and frustrated. The average worker in the UK knows he or she has no real power, and is feeling increasingly alienated from the political, economic and cultural elites in London. As Peter Mandler recently wrote –

“…the rest of the country has felt more and more excluded, not only from participation in the creativity and prosperity of London, but more crucially from power.”

So what happens when those citizens of a plutonomy, who realize they have no real power, are suddenly given the option to influence events? They eagerly grab at the rope they’ve been given, and yank on it – and damn the consequences. This is the real story behind Brexit: that of people who’ve been deprived of power for the last decade or two, suddenly being given the chance to make themselves heard. And they certainly did.

This analysis has implications for the future of other countries as well. The United Kingdom is not the most unequal nation in terms of income distribution. There are five other countries in the developed world with worse inequality: Mexico, Israel, Spain, Greece and the United States of America. These are all countries in which large parts of the electorate feel neglected and removed from power in the day-to-day happenings. But once every four years in America, the public gets the chance to choose who’ll sit in the White House – and Donald Trump campaign’s success shows just how much the public wants change and distrusts the current state of affairs.

 

Conclusions

Brexit is a demonstration of how the inherent tensions in plutonomies can explode, since the rich and wealthy may control the economy, but the current political system still gives some power to the public. This means that the rich still can’t allow themselves to ignore the general public, or the public will come back to bite them when they least expect it.

Right now, the general consensus among the wealthy and the celebrities of the UK is that the public is dumb. It’s not. It’s just frustrated and wants to make a point. If the people on top want to avoid such disastrous decision making in the future, they should stop blaming the public, and instead find ways to change the political environment so that the public will gain more power in the daily affairs of nations. Any other course of action would lead to tensions building up again and being released explosively at the next Spainexit, Greecexit, or – who knows – maybe even Trumpexit.

 

 

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Kitchen of the Future Coming to Your House Soon – Or Only to the Rich?

 

You’re watching MasterChef on TV. The contestants are making their very best dishes and bring them to the judges for tasting. As the judges’ eyes roll back with pleasure, you are left sitting on your couch with your mouth watering at the praises they heap upon the tasty treats.

Well, it doesn’t have to be that way anymore. Meet Moley, the first robotic cook that might actually reach yours household.

Moley is composed mostly of two highly versatile robotic arms that repeat human motions in the kitchen. The arms can basically do anything that a human being can, and in fact receive their ‘training’ by recording highly esteemed chefs at their work. According to the company behind Moley, the robot will come equipped with more than 2,000 digital recipes installed, and will be able to enact each and every one of them with ease.

I could go on describing Moley, but a picture is worth a thousand words, and a video clip is worth around thirty thousand words a second. So take a minute of your time to watch Moley in action. You won’t regret it.

 

 

Moley is projected to get to market in 2017, and should cost around $15,000.

What impact could it have for the future? Here are a few thoughts.

 

Impact on Professional Chefs

Moley is not a chef. It is incapable of thinking up of new dishes on its own. In fact, it is not much more than a ‘monkey’ replicating every movement of the original chef. This description, however, pretty much applies to 99 percent of kitchen workers in restaurants. They spend their work hours doing exactly as the chef tells them to. As a result, they produce dishes that should be close to identical to each other.

As Moley and similar robotic kitchen assistants come into use, we will see a reduced need for cooks and kitchen workers in many restaurants. This trend will be particularly noticeable in large junk food networks like McDonald’s that have the funds to install a similar system in every branch of the network, thereby cutting their costs. And the kitchen workers in those places? Most of them will not be needed anymore.

Professional chefs, though, stand to gain a lot from Moley. In a way, food design could become very similar to creating apps for smartphones. Apps are so hugely successful because everybody has an end device – the smartphone – and can download an app immediately for a small cost. Similarly, when many kitchens make use of Moley, professional chefs can make lots of money by selling new and innovative digital recipes for just one dollar each.

 

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Sushi for all? That is one app I can’t wait for.

 

Are We Becoming a Plutonomy?

In 2005, Citigroup sent a memo to its wealthiest clients, suggesting that the United States is rapidly turning into a plutonomy: a nation in which the wealthy and the prosperous are driving the economy, while everybody else pretty much tags along. In the words of the report –

“There is no such thing as “The U.S. Consumer” or “UK Consumer”, but rich and poor consumers in these countries… The rich are getting richer; they dominate spending. Their trend of getting richer looks unlikely to end anytime soon.”

There is much evidence to support Citigroup’s analysis, and Boston Consulting Group has reached similar conclusions when forecasting the increase in financial wealth of the super-rich in the near future. In short, it would seem that the rich keep getting richer, whereas the rest of us are not enjoying anywhere near the same pace of financial growth. It is therefore hardly surprising to find out that one of the top advices given by Citigroup in its Plutonomy Memo was basically to invest in companies and firms that provide services to the rich and the wealthy. After all, they’re the ones whose wealth keeps on increasing as time moves on. Why should companies cater to the poor and the downtrodden, when they can focus on huge gains from the top 10 percent of the population?

Moley could easily be a demonstration for a service that befits a plutonomy. At $15,000 per robot, Moley could find its place in every millionaire’s house. At the same time, it could kick out of employment many of the low-level, low-earning cooks in kitchens worldwide.

You might say, of course, that those low-level cooks would be able to compete in the new app market as well, and offer their own creations to the public. You would be correct, but consider that any digital market becomes a “winner takes all” market. There is simply no place for plenty of big winners in the app – or digital recipe – market.

Moley, then, is essentially another invention driving us closer to plutonomy.

 

And yet…

New technologies have always cost some people their livelihood, while helping many others. Matt Ridley, in his masterpiece The Rational Optimist, describes how the guilds fought relentlessly against the industrial revolution in England, even though that revolution led in a relatively short period of time to a betterment of the human condition in England. Some people lost their workplace as a result of the industrial revolution, but they found new jobs. In the meantime, everybody suddenly enjoyed from better and cheaper clothes, better products in the stores, and an overall improvement in the economy since England could export its surplus of products.

Moley and similar robots will almost certainly cost some people their workplaces, but in the meantime it has the potential to minimize the cost of food, minimize time spent on making food in the household (I’m spending 45-60 minutes every day making food for my family and me), and elevate the lifestyle quality of the general public – but only if the technology drops in price and can be deployed in many venues, including personal homes.

 

Conclusion

If it’s a forecast you want, then here it is. While we can’t know for sure whether Moley itself will conquer the market, or some other robotic company, it seems likely that as AI continues to develop and drop in prices, robots will become part of many households. I believe that the drop in prices would be significant over a period of twenty years so that almost everybody will enjoy the presence of kitchen robots in their homes.

That said, the pricing and services are not a matter of technological prowess alone, but also a social one: will the robotic companies focus on the wealthy and the rich, or will they find financial models with which to provide services for the poor as well?

This decision could shape our future as we know it, and define whether we’ll keep our headlong dive towards plutonomy.