Newsletter No 32/18 August 2023
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AI could go the way of the plough by enriching the few, economists warn
By Mark John
Picture: 123RF
The danger is that the touted benefits are enjoyed by a small elite, rather than the many, writers say
If medieval advances in the plough didn’t lift Europe’s peasants out of poverty, it was largely because their rulers took the wealth generated by the new gains in output and used it to build cathedrals instead.
Economists say something similar could happen with artificial intelligence (AI) if it enters our lives in such a way that the touted benefits are enjoyed by the few rather than the many.
“AI has got a lot of potential — but potential to go either way,” argues Simon Johnson, professor of global economics and management at MIT Sloan School of Management.
“We are at a fork in the road.”
Backers of AI predict a productivity leap that will generate wealth and improve living standards. Consultancy McKinsey in June estimated it could add $14-trillion to $22-trillion of value annually — the upper figure being about the current size of the US economy.
Some techno-optimists go further, suggesting that, with robots, AI is the technology that will finally free humanity from humdrum tasks and launch us into lives of more creativity and leisure. Yet worries abound about its impact on livelihoods, including its potential to destroy jobs in all kinds of sectors — witness the strike in July by Hollywood actors who fear being made redundant by their AI-generated doubles.
Such concerns are not unfounded. History shows the economic impact of technological advances is generally uncertain, unequal and sometimes outright malign.
Harsher conditions
A book published this year by Johnson and fellow MIT economist Daron Acemoglu surveyed a thousand years of technology — from the plough to automated self-checkout kiosks — in terms of their success in creating jobs and spreading wealth.
While the spinning jenny was key to 18th century automation of the textiles industry, they found it led to longer working hours in harsher conditions. Mechanical cotton gins facilitated the 19th century expansion of slavery in the American South.
The track record of the internet is complex: it has created many new job roles even as much of the wealth generated has gone to a handful of billionaires. The productivity gains it was once lauded for have slowed across many economies.
A June research note by French bank Natixis suggested that was because even a technology as pervasive as the internet left many sectors untouched, while many of the jobs it created were low-skilled — think of the delivery chain for online purchases.
“We should be cautious when estimating the effects of artificial intelligence on labour productivity,” Natixis warned.
In a globalised economy, there are other reasons to doubt whether the potential gains of AI will be felt evenly.
Right infrastructure
There is the risk of a “race to the bottom” as governments compete for AI investment with increasingly lax regulation. But the barriers to luring that investment might be so high as to leave many poorer countries behind.
“You have to have the right infrastructure — huge computing capacity,” said Stefano Scarpetta, director of employment, labour and social affairs at the Paris-based Organisation for Economic Co-operation and Development (OECD).
“We have the G7 Hiroshima Process, we need to go further to the G20 and UN,” he said, advocating the expansion of an accord at a May summit of Group of Seven (G7) powers to jointly seek to understand the opportunities and challenges of generative AI.
Innovation, it turns out, is the easy bit. Harder is making it work for everyone — which is where politics comes in.
For MIT’s Johnson, the arrival of railways in 19th century England during rapid democratic reform allowed those advances to be enjoyed by wider society, be it through faster transport of fresh food or a first taste of leisure travel.
Similar democratic gains elsewhere helped millions enjoy the fruits of technological advance well into the 20th century. But Johnson contends that this started changing with the aggressive shareholder capitalism that has marked the past four decades.
The automated self-checkout, he argues, is a case in point. Groceries do not become cheaper, shoppers’ lives are not transformed and no new task is created — just the profit gain from the reduction of labour costs.
Unions important
Worker groups, which have lost much of the clout they had before the 1980s, identify AI as a potential threat to workers’ rights as well as employment, for example if there is no human control on AI-steered hiring and firing decisions.
Mary Towers, employment rights policy officer at Britain’s Trades Union Congress, cited the importance of unions “having statutory consultation rights, having the ability to collectively bargain around technology at work”.
That is just one of several factors that will help determine how AI shapes our economic lives — from antitrust policies that ensure healthy competition among AI suppliers through to retraining of workforces.
An OECD survey of some 5,300 workers published in July suggested that AI could benefit job satisfaction, health and wages but was also seen posing privacy risks, reinforcing workplace biases and pushing people to overwork.
“The question is: will AI worsen existing inequalities or could it actually help us get back to something much fairer?” said Johnson.
Reuters
Woolworths’ eco mannequins in newly launched Wedit stores
Image supplied. Woolworths have invested in eco mannequins that are in the newly launched Wedit stories
Woolworths have invested in eco mannequins that are in the newly launched Wedit stores.
In addition a selection of eco ‘plus size’ mannequins have been introduced into 80 selected Woolworths stores across South Africa.
The investment aligns with Woolworths’ vision of achieving Zero packaging waste to landfill and its commitment to environmentally friendly practices.
Recent innovation in retail
Eco mannequins, also known as sustainable mannequins, are a recent innovation in the retail industry.
“They are gaining popularity internationally among environmentally conscious consumers and retailers alike,” says Tracey Lotter, Woolworths head of visual merchandising.
“We are delighted to be the first large retailer in South Africa to make such a significant investment in them and going forward we will continue to add more into our stores,” adds Lotter.
Made from used coffee bean sacks
“Our eco-mannequins are made from used coffee bean sacks that are recycled and mixed with a plant-based resin to bind the fibres, water-based paints are also used ensuring that they are 100% biodegradable and recyclable, as well as safer to make. They also weigh less than the traditional fibreglass mannequins making them easier to handle as well as reducing their carbon footprint,” explains Lotter.
Eco mannequins are also aesthetically pleasing and an innovative solution to the environmental challenges faced by the retail industry. By promoting sustainability and reducing waste, they are helping to create a more sustainable future for both retailers and consumers Bizcommunity
South Africa Textile Industry Report 2023: Competitive Advantages in Localized Production Driving Growth and Recovery
Source: Research and Markets
Dublin, July 14, 2023 (Globe Newswire) — The “The Textile Industry in South Africa in South Africa 2023” report has been added to ResearchAndMarkets.com’s offering.
This report covers the industrial activities relating to the preparation of wool and cotton fibres, the spinning of these into yarn and the weaving of yarns into fabrics for use in downstream clothing.
It includes comprehensive information on the state and size of the sector, production and sales data, volumes and capacity utilisation, key trends and notable players.
There are profiles of 22 companies including textile mills such as Standerton and Helm and manufacturers such as The Good Hope Textile Corporation (Da Gama Textiles), Samil Natural Fibres Gelvenor Africa, Ninian and Lester and Glodina Towelling.
The Textile Industry in South Africa
The clothing, textiles, footwear and leather manufacturing masterplan, implemented in 2019, has led to some recovery and improvement in the textile industry including a steady increase in employment and production and revenue growth.
Change is underpinned by strong wool production and revitalised cotton production. Stakeholders say the masterplan presents opportunities, but there is a long road ahead before substantial progress is evident in an industry which is a fraction of what it once was.
Localisation
Strong competition from international clothing companies has led retailers to try to build a competitive advantage based on a quick response, which requires greater localisation of production, including textile production for fabrics made up in South Africa. This has seen an increase in local clothing and textile manufacturing’s contribution to GDP, although it remains relatively small.
Growth Potential
The sector has been consistently identified by government as a strategic priority due to the labour intensity of manufacturing and its potential to support sustainable industrialisation, low- and semi-skilled employment, and export growth.
There is a large presence of small and micro-enterprises and many informal operations in the sector. Capital-intensive technologies remain very expensive, and textile and clothing production is a relatively low profit-margin business.
Factories lack specialisation and have not kept up with technological changes, which has led to lower efficiencies. Structural constraints and the poor economy, limit the growth potential of the industry.
HomeChoice interim results June 2023
Revenue for the interim period dipped by 0.3% to R1.753 billion (2022: R1.759 billion) whilst operating profit jumped 25% to R285 million (2022: R228 million). Profit and total comprehensive income for the period attributable to owners went up 0.7% to R154 million (2022: R153 million). Furthermore, headline earnings per share decreased by 0.8% to 143.7 cents per share (2022: 144.8 cents per share).
Dividend
Notice is hereby given that the board of directors has declared an interim gross cash dividend of 70.0 cents (56.0 cents net of dividend withholding tax) per ordinary share for the six months ended 30 June 2023. The dividend has been declared from income reserves.
Looking forward
We expect tough market and socio-economic conditions in South Africa to prevail. Customers will continue to face considerable financial constraints and market forces remain challenging, and appropriate risk strategies will be maintained.
The significant and fast-growing Weaver Fintech customer base and track record of profitability mean that the group is well poised to continue to deliver strong performance despite the tough climate. Hyper-personalisation and product innovation will continue to provide cross-sell opportunities. Digital innovation will support empowering customer experiences to drive customer retention and market share gains. Pursuing the diversification of our revenue base through fee generation will further increase profitability and cash generation, and in this way balance our capital requirements.
The Retail business is expected to take advantage of the new credit risk strategy and, combined with the restructured cost base, is well placed to return to improved levels of profitability in 2024.
What Americans consider “tuxedos” are called “dinner jackets” in Great Britain, as the word tuxedo itself refers to the white version of the suit jacket in British English
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