We have been cautioned and I am not sure if we are paying attention.When the chief executive of one of the world’s most innovative and valued companies says the right skills, at the right place and in sufficient numbers are the reasons why his company is in love with China — and not because it can produce a gazillion iPhones at unbeatable cost — we better pay attention. The rules of the game have changed.We are in the early stages of the Fourth Industrial Revolution where digital, physical and biological systems are coming together and fundamentally changing the way we live.People ‘droning’ over Mumbai to beat traffic blues, and a 3D-printed human heart are just around the corner. And yet we think we can afford to win big global deals on the basis of cheap labour.When Apple CEO Tim Cook says that the two million app developers and enough tooling engineers to fill several football fields are some of China’s strengths today, we know that the Post-Arbitrage Moment has arrived.India should have seen this coming. Bangladesh overtook us in apparel exports some 15 years ago. So did Vietnam around seven years ago. By the close of this fiscal, we’ll be lucky to report 1-2% growth. Software, India’s other big-dollar earner, is increasingly finding it difficult to justify itself as a country of low-cost code writers. Our arbitrage story isn’t selling any more.The irony is, despite these warning signs, our attitude isn’t changing. Certainly not fast enough. We continue to mindlessly push our children into engineering colleges, though with lesser enthusiasm of late, to become future what? Code writers? Arecent study suggested 94% of our engineers are not fit to do that either.There is nothing wrong with apparel made in India or the software we write. For a little over three decades, they have served us well. Even today, textile and software together employ around 50 million, and have a majority share of our exports. But they are also examples of ideas that worked in the past, but not any more.What is at stake is the future, a future very different from what we imagined.We are entering an age where old methods for progress just won’t work because how we live has changed quite fundamentally. Ride apps on smartphones are giving automotive giants a run for their money. Utilities deploying IoT are smartening up our homes. A whole new generation is growing up without ever stepping into a bank branch. And my personal favourite — kabaddi is a terribly popular club sport now.Today, a hardworking Uber driver is earning more than a fresh engineering graduate in a software giant. A former tech worker is finding his pot of gold in the humble idli batter.The question is, how are we preparing to face this new Brave New World. Two currencies will count most in this world: skills, and an ability to laugh in the face of risks. Fortunately, both fall outside the remit of nature and squarely on nurture. As teachers, parents and leaders with any influence, it is about time we asked ourselves some hard questions.Did the young idli batter tycoon had to spend long hours in some history class while in school? What is so bad about working 12 hours a day, driving people around and earning more than a code writer in a software company? Are we are investing in creating a generation of tech-savvy farmers?When we hear Cook talking about the mushrooming of mobile app entrepreneurs in China, we should be paying a little more attention. From getting the right skills to a life of an entrepreneur is separated by just one hop.As a nation, we are on the cusp of a big shift in terms of the demographic dividend. By some estimates, by 2026, India will not only be the most populated country, but will also become the youngest. The challenges and opportunities faced by these teeming millions in the post-arbitrage world are very different. There are a few things we can do to prepare for this. This Fourth Industrial Revolution is going to throw up new kind of jobs.Just like the telecom revolution created a huge demand for mobile repair services, the percolation of artificial intelligence (AI) to everyday life would need a very different set of tech support skills. That means we must be prepared to rethink our education system.Safe-career templates like engineers in IT will not be available for too long. But the same well-skilled engineer can aspire for bigger things as an entrepreneur. That means our collective risk aversion has to come down at least a few notches, including our definition of role models.The Post-Arbitrage Moment is here. Unprepared and unattended, the demographic dividend could turn into a demographic disaster.