Insights & Resources

Industrial Revolution 2.0 and Globalization 2.0 Are Both Underway

The first round of industrial revolutions (coal, gas, nuclear, internet) saw the growing use of machines and
computers to enhance human productivity. The job markets rebalanced effectively as a result of training
and education moving humans up the food chain. We enjoyed decades of improved lifestyle due to
increased income and reduced number of hours worked.

The second round of industrial revolution has started with the introduction of high-speed computing,
giving robots a much more powerful “brain” and, as a result, they are more than a machine (hence 2.0).
These new generation robots come in different forms: data centres (robots with a brain, no eyes, no arms
and legs), drones (robots with a brain, eyes and wings), full self-driving (robots with a brain and eyes) and
humanoid robots (robots that look like humans with a brain, eyes, body, arms and legs). The common
attribute of these robots is they all have “brains” and do not just perform a task repetitively. The technology
is best described as “artificial intelligence”.

Artificial intelligence and biological intelligence (in humans) will likely complement and also compete with
each other. There is a case for growing artificial intelligence to offset the loss of human intelligence on
aggregate due to aging populations and low birth rates globally (see chart below for UN projection). Keep
in mind that robots, at least at this stage, learn from humans and we have had a track record of outgrowing
ourselves for decades. This means robots will need to continue catching up to humans’ intelligence.

However, like what humans went through in the Industrial Revolution 1.0, certain jobs will be completely replaced. For example, full self-driving technology will soon replace our roles in driving completely, creating more effective use of roads and improving safety. Most of us will soon not own cars and not drive. In real-world testing, Tesla’s full self-driving required 75 human interventions per 1000 miles. It is a gauge to evaluate full self-driving technology’s effectiveness, and the goal is to continue to lower interventions as robots learn. Tesla has also unveiled the Cybercab (driverless taxi) which will be on the roads pending approvals.

Robots also complement us. For example, they have assisted in searching for information. We used to go to
a library; books are stores of knowledge but they are also “hidden”. You only know you have not found the
right information after spending time searching. From the millennium, we moved to online searches
through Google where a large pile of information is at our fingertips. The latest development: ChatGPT and
Microsoft Copilot effectively replace both tools, enhancing speed and relevance as your “copilot” is bringing you the information you want. While robots have learned quickly, we also have become more effective.

Artificial intelligence is also driving Globalization 2.0. The first round of globalization was about labour
optimization by country. Labour should no longer only include humans. Robots will be doing some of our
jobs, and they are transportable. This means globalization will have different rules going forward.
Geography will no longer be defined by availability and types of human labour; we also have to include
technology in those considerations. In addition, climate and infrastructure will also play a role.

The new U.S. President, Donald Trump, has vowed to add tariffs to America’s trading partners with
the intention to move jobs back to the U.S. Some have called the initiative “de-globalization”, but we
disagree. As noted before, globalization is going through changes. Labour was optimized through moving some of the entry level manufacturing jobs from developed countries to developing countries while skilled labour in the developed countries focused on design and management. That worked well for a while. The goal of lowering labour costs will continue with Globalization 2.0 where jobs will move from countries that supply lower cost labour to countries that supply even lower labour (robot) costs. Humanoid robots as we know them today will be very effective in manufacturing lines and over time will expand to include other sophisticated roles. We expect President Trump will attempt to bring Globalization 2.0 forward as technology is America’s competitive advantage.

Industrial Revolution 2.0 and Globalization 2.0 are both underway. It’s a race that compels us to adapt,
innovate and grow—ultimately making us better. It’s inevitable, somewhat scary, but definitely interesting.

Disclaimer

This document is intended solely for information purposes. It is not a sales prospectus, nor should it be construed as an offer or an invitation to take part in an offer.The opinions expressed in the communication are solely those of the author(s) and are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed. This report may contain forward-looking statements about one or more pools, future performance, strategies or prospects, and possible future fund action. These statements reflect the portfolio managers’ current beliefs and are based on information currently available to them. Forward-looking statements are not guarantees of future performance. We caution you not to place undue reliance on these statements as a number of factors could cause actual events or results to differ materially from those expressed in any forward-looking statement, including economic, political and market changes and other developments. Every effort has been made to ensure that the material contained herein is accurate at the time of publication. Market conditions may change which may impact the information contained in this document and it is subject to change without notice. The author and/or a member of their immediate family may hold specific holdings/securities discussed in this document. Any opinion or information provided are solely those of the author and does not constitute investment advice or an endorsement or recommendation of any entity or security discussed or provided by CI Global Asset Management. We cannot guarantee its accuracy or completeness and we accept no responsibility for any loss arising from any use of or reliance on the information contained herein. The pools used in the CI Private Wealth portfolios are managed by CI Global Asset Management. Management fees and expenses may all be associated with investments in the CI Private Wealth portfolios and the use of other services. The pools used in the CI Private Wealth portfolios are not guaranteed, their values change frequently, and past performance may not be repeated. You should seek professional advice before acting on the basis of information herein. CI GAM | Multi-Asset Management is a division of CI Global Asset Management. CI Global Asset Management is a registered business name of CI Investments Inc. Certain names, words, titles, phrases, logos, icons, graphics, or designs in this document may constitute trade names, registered or unregistered trademarks or service marks of CI Investments Inc., its subsidiaries, or affiliates, used with permission. All other marks are the property of their respective owners and are used with permission. Certain statements contained
in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document. This report may not be reproduced, in whole or in part, in any manner whatsoever, without prior written permission of CI Private Wealth. ©2024 CI Private Wealth, a division of CI Private Counsel LP.