Becoming a 'digital landlord' can give UK a place in fast-changing world: David Richards
I am writing this in the lobby of the Taj Palace hotel in New Delhi, where the North’s mayors have brought nearly 200 of us on the Great North trade mission, and Rishi Sunak has just walked past.
The former prime minister, still a Yorkshire MP, is speaking at the Bloomberg New Economy Forum; he advises Microsoft and Anthropic now, and his father-in-law co- founded Infosys.
Four years ago in Palo Alto, Elon Musk boiled economics down to a line of arithmetic: an economy is productive entities times their productivity, and once there is no limit on the entities, “it’s not clear what an economy even means at that point”. It becomes quasi-infinite.
Every economy in history has been bounded by biology, by how many people there are and how many hours they can work, and humanoid robots and AI agents, he says, take the bound away. Build ten billion and prices fall towards the cost of electricity and ore. Nobody has to work. He told The Economist in July that by 2036 money will not matter.
On the old arithmetic, India has the least to fear. It has 1.46 billion people, 68 per cent of working age and only seven per cent over 65, says the UN population fund, while nearly a fifth of Britons are over 65 and fertility in England and Wales fell to 1.39 last year, the lowest on record. On paper they have the workers and we have the pensioners.
But look at what India sells. Much of it is labour arbitrage: human effort, physical and intellectual, sold to the West at a price it cannot match at home. The technology industry billed about $316bn in the year to March, three-quarters of it abroad, and employs around six million people, Nasscom reckons.
The core product is the billable hour, in Leeds and Los Angeles alike. Offshoring to Bengaluru cut the client’s bill by a third or more; an agent running in the client’s own cloud has no wage to cut. If an hour costs nothing, a discount on it is worth nothing.
You do not need to believe Musk to see the danger to a business built on selling hours: long before the price reaches zero, the client buys fewer of them.
It has started. Revenue grew six per cent in that year and headcount three, and Nasscom’s own president says AI has snapped the old straight line between the two, with campus hiring still weak. Nobody needs to be sacked for this to bite.
The jobs simply fail to turn up, in a country whose own Economic Survey said two years ago that it must find nearly eight million new non-farm jobs a year to 2030. A dependency ratio counts bodies. A billion of them are a dividend only while someone buys their hours. Stop buying and they become a bill.
So who wins? Whoever owns the machines, and the energy to run them, and the models that drive them, which has nothing to do with how many people you have.
Britain’s problem is the mirror of India’s: too few workers, and a health service whose costs compound as the rest of us age. Synthetic labour answers our question, not theirs, provided we own what it makes. Build the power stations and the data halls, rent them to American hyperscalers, and we become a digital landlord, spending scarce grid capacity on them while the margin flies home to Seattle.
The dividend comes when British firms and British hospitals use that compute, at Stocksbridge or anywhere else, to build things they then own.
Sunak has gone into the ballroom. He married into the billable hour and now advises its replacement. The hour is losing its price. Britain had better be selling something else before it hits zero.
David Richards MBE is managing partner of Yorkshire AI Labs