From AI to demographic shifts, big changes are in South Carolina's business future
By Dr. Daniel Ostergaard
This column is third and final column in a series on globalization and its impact on the Palmetto State
As discussed in previous columns, globalization has had a profound effect on South Carolina. But in this ever-changing and increasingly connected world, what exactly what lies ahead for our state?
One thing for certain is that the volume of international trade will continue to grow even as the world is on the precipice of paradigm-changing demographic shifts. All projections point to two phenomena on the horizon that may fundamentally change the way we do business for the remainder of this century.
On the one hand we see birth rates falling in countries that have traditionally been strong U.S. trading partners. Japan and Western Europe are all experiencing anemic growth rates at the same time as the developing world—”particularly Africa—”will see tremendous growth.
If you couple this shifting geographic demography with life expectancy-extension predictions in the triple digits, we may begin to see a very different customer base emerging over the next several decades. The impact of increasing numbers of people over 100+ years old will undoubtedly change the need for services and medicine. These types of life expectancy changes will also put pressure on social norms for a wide range of familiar prospects, from the retirement age to insurance policies.
South Carolina's population has grown by 10% in the last 10 years, from 5 million to 5.5 million people. As industry and business continue to boom in the Palmetto State—a result in some ways of our climatological predilection for mild, sunny winters—we can expect to see our state remaining attractive for Rust Belt refugees leaving northern climes for other employment opportunities. This population growth is a net positive for the state as businesses thrive. This migration will also bring changes to both property values and politics in the Palmetto State.
At the same time as South Carolina witnesses these global demographic shifts, another fast-approaching issue requiring our attention is artificial intelligence. Depending on which pundit you listen to, AI will either open a wide range of new opportunities—freeing humans from repetitive and even dangerous forms of labor—or artificial intelligence will bring about the destruction of society.
While I think the latter should be left to fans of science fiction, we cannot deny that AI will continue to change life as we know it. Automated transportation systems (e.g., cars, trucks, trains and ships), the replacement of some forms of both white- and blue-collar labor, and more free time will fundamentally change consumer behavior.
In 2005, I had an opportunity to join a U.S. delegation that traveled throughout South Korea after the free trade agreement was signed. During that visit, we were shown a "smart house." An integrated computer managed the food inventory and automatically placed—and received—grocery deliveries from the local supermarket. Recent advances in both interconnectivity and drone usage means that that future vision is now upon us.
How much time would the average South Carolinian save if routine tasks like grocery shopping and even meal preparation were performed by machines? Some predict that 100% of automobiles could be self-driven in the next 10 years. It's also worth mentioning that Singapore is currently experimenting with drone-like airborne taxis.
Think about the fundamental business changes that are headed our way in the shape of cheaper communications, quantum computing and for bedrock industries like insurance. If self-driven cars eventually learn how to avoid 99% of accidents, do we really need the same type of liability and collision coverage on our automobiles? Imagine an insurance industry with little need for auto insurance.
We may recall back in the 1990s, some were predicting the end of brick-and-mortar stores with the advent of internet shopping. We may also recall the dire predictions for South Carolina's economy as textile mill after textile mill announced they were closing. Yet, here we are in 2019 where we see the urban renewal of our small towns' main streets. We are also witnessing the growth of high-tech industry, car and aircraft manufacturing, and a real sense that South Carolina is becoming a hub for international manufacturing and design.
There are indeed massive market forces at work that will fundamentally change the business of business. Yet, not all these changes will be bleak—like the recent headlines concerning U.S. firms falling on themselves to avoid offending Beijing. Most of these changes point to a brighter future and indicate that the Palmetto State's best days are yet to come.