Technology: Innovation and Disruption 1. Agriculture 11. Lodging 2. AI / jobs 12. Manufacturing 3. Distribution 13. Media 4. Education 14. Medical research 5. Energy 15. Philanthropy 6. Environment 16. Power transmission 7. Finance 17. Retail 8. Food 18. Security 9. Government 19. Sports 10. Health care 20. Transportation If Africa, Latin America and Asia achieve the agricultural productivity of Europe and North America, as many as 500 million workers may be unemployed. 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 1
Vertical Farming Vertical Farming AeroFarms in Newark, New AeroFarms in Newark, New Jersey, turns out up to two Jersey, turns out up to two million pounds of harvest per million pounds of harvest per year. The crops – mostly salad year. The crops – mostly salad greens – are grown in 12 greens – are grown in 12 vertical layers in a 70,000 vertical layers in a 70,000 square-foot former warehouse. square-foot former warehouse. Skilled and Unskilled Jobs in the U.S. Today 1950 70% 60% 20% 20% 18% 12% Unskilled Semi-skilled Skilled Unskilled Semi-skilled Skilled Sources: Bureau of Labor Statistics, O*NET, Social Security Administration (2014). 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 2
Likelihood U.S. Jobs Will Be Automated Probability of Automation by Hourly Wage 83% 31% 4% > $40/hour < $20/hour $20 - $40/hour Source: U.S. Bureau of Labor Statistics; Frey and Osborne (2013); CEA calculations U.S. Jobs with Highly Automatable Skills By Education Level 44% 19% 8% 6% 1% 0% No HS HS Degree Trade School AA Bachelor’s Graduate degree Degree Degree Degree Source: Arntz, Gregory, and Zierahn (2016) calculations based on the PIAAC 2012. 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 3
How 15-Year-Olds Score in School Math Science Singapore 564 Singapore 493 Japan 532 Japan 538 Canada 527 Canada 528 Korea 517 Korea 516 Russia 494 United Kingdom 509 United Kingdom 492 United States 496 OECD Average 490 OECD Average 493 United States 470 Russia 487 Israel 470 UAE 437 UAE 427 Israel 467 Qatar 402 Qatar 418 Jordan 380 Jordan 409 Tunisia 367 Tunisia 386 Source: OECD Programme for International Student Assessment 2015 Consumer Spending U.S. Asia 33% Housing 23% Food 17% Transportation 15% Supplemental Education 13% Food 10% Housing 11% Insurance/pensions 8% Clothing 6% Healthcare 8% Other 5% Entertainment 6% Transportation 3% Apparel and services 5% Healthcare 5% Communication 2% Supplemental Education Source: U.S. Bureau of Labor Statistics/CLSA 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 4
Blockbuster vs. Netflix – 2002 Market Value 40 Netflix = 1 Blockbuster 40 Netflix = 1 Blockbuster $4.5 Billion $0.16 Billion NETFLIX BLOCKBUSTER Blockbuster vs. Netflix – 2018 Market Value $142 Billion $0 NETFLIX BLOCKBUSTER Source: Yahoo Finance 8/16/18 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 5
Technology Game Changer Traditional Drilling Modern Techniques Spindletop (Beaumont, TX), 1901 Z-44 Chayvo Well - Russia Drilling Depth: 1,139 feet Drilling Depth: 40,502 feet Renewable Energy Renewable Energy Solar energy is already cheaper than coal in the U.S. and Germany. It will soon be cheaper in China, India, Mexico, UK, Brazil and other countries. 72% of new investment in power generation worldwide will be in wind and solar plants through 2040. Cost of onshore wind energy generation will fall 47% by 2040; costs of offshore wind energy will drop 71%. This doesn’t factor in environmental benefits. Source: New Energy Outlook 2017 , Bloomberg New Energy Finance 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 6
Austria’s Voestalpine Steel Plant Austria’s Voestalpine Steel Plant 1960s: 1,000 employees needed to produce 500,000 tons of steel wire annually 2017: 14 employees to match that production Source: New Energy Outlook 2017 , Bloomberg New Energy Finance Sources of Electricity Generation United States California Texas Natural gas 34% 50% 39.6% 1. Coal 30% 0.2% 32.2% 2. Nuclear 20% 10% 9.7% 3. Renewable 15% 28% 18.4% 4. Petroleum/oil 1% 0.2% 0.02% 5. Unspecified Sources -- 11.6% -- 6. Note: Unspecified sources includes all purchase with unclear original source. Source: California Energy Commission; U.S. Energy Information Administration 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 7
Most-Effective Actions to Reverse Global Warning Most-Effective Actions to Reverse Global Warning CO2 Reduction (gigatons) Refrigerant management 89.7 1. Wind turbines (onshore) 84.6 2. Reduced food waste 70.5 3. Plant-rich diet 66.1 4. Tropical forests 61.2 5. Educating girls 59.6 6. Family planning 59.6 7. Solar farms 36.9 8. Silvopasture 31.2 9. 10. Rooftop solar 24.6 Source: Drawdown (edited by Paul Hawken, 2017) Leading Solutions for Food Security Leading Solutions for Food Security Reduced food waste Improved rice cultivation 1. 9. Plant-rich diet 10. Multistrata agroforestry 2. Silvopasture 11. System of rice intensification 3. Regenerative agriculture 12. Composting 4. Tropical staple trees 13. Nutrient management 5. Conservation agriculture 14. Farmland irrigation 6. Clean cookstoves 15. Biochar 7. Farmland restoration 8. Source: Drawdown (edited by Paul Hawken, 2017) 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 8
What a Waste! What a Waste! Methane from food in landfills is 21 times more damaging than CO 2 . The carbon footprint of food waste accounts for about one-third of annual emissions from fossil fuels. Source: “Fixing Food,” report by the Barilla Center for Food & Nutrition and The Economist Intelligence Unit A $165 Billion Waste A $165 Billion Waste In the United States, 40% of all food is wasted – an estimated $165 billion. In the United Kingdom, each family discards, on average, 700 pounds, or $1,170 worth of food each year; that equals $US 31.7 billion. Sources: Natural Resources Defense Council; New York Times , “The Economic and Environmental Costs of Wasted Foods”, April 24, 2014 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 9
Water: Agriculture Drives Demand Water: Agriculture Drives Demand How Fresh Water Is Used Industrial Agricultural Domestic 13% 15% 32% 39% 48% 52% North America Europe Sources: FAO Water: Agriculture Drives Demand Water: Agriculture Drives Demand How Fresh Water Is Used Industrial Agricultural Domestic 9% 7% 5% 7% 19% 7% 11% 10% 71% 84% 88% 81% Sub-Saharan Latin America MENA E/SE Asia Africa Sources: FAO 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 10
Water Distribution Processing and distributing water around the globe is an expensive and often inefficient process. Aging infrastructure and deteriorating pipes and valves can lead to a loss of up to 50% of total volume. Source: Drawdown (Paul Hawken) 2017 20 th Century Banking 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 11
21 st Century Banking 21 st Century Banking Harvard Endowment to Lay Off Half Its Staff “The endowment will shut down its internal hedge funds and let go traders by the middle of the year … “Some alumni and faculty have criticized Harvard for paying its traders too much for returns that have lagged Ivy League peers’. ” - The Wall Street Journal January 25, 2017 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 12
Are ETFs Making Stock Brokers Obsolete? The ETF With the 0.00% Fee Actively Managed Mutual Funds Are Obsolete Source: Yahoo! Finance, Jan. 9, 2013; WSJ.com, Oct. 7, 2016; Forbes, March 26, 2010 Net Flows to Active and Passive Funds Passively managed US$ Billions 300 200 100 0 -100 -200 Actively managed -300 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: Estimated net flows to U.S. open-end funds. Sources: Morningstar (1/30/2018). 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 13
U.S. Meat Production Billion pounds 100 Beef and Pork Poultry 90 80 70 60 50 40 30 20 10 0 1970 1980 1990 2000 2010 Source: USDA. Animal-Based vs. Lab-Grown Meat Animal-Based vs. Lab-Grown Meat Cost per pound of meat; usage and emissions Source: CBInsights; Water Footprint Network; Business Insider; Forbes; Food Climate Research Network; Quartz 2018 Milken Institute Hamptons Dialogues How Technological Disruption is Reshaping the World 14
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