Digital technologies are undergoing something of a heyday. Big news about happening in the Tech world are in the headlines almost daily. Today, no CEO can afford to give an interview without mentioning digital agenda of his company. Major part of our lives got shifted to the digital arena. We buy, communicate, learn and interact with world through our smartphones, tablets and computers. A smartphone has become our controller for the world. It is commonly accepted that technological progress is good. Not all would agree.
Many thinkers, journalists and writers worry about the loss of jobs that the digital era could bring about. Indeed they have a valid argument for why the thousands mid-skill jobs that underpinned 20-th century middle-class life may get displaced. When a computer algorithm can be used to evaluate a borrower based on his personal information available on the internet, and when that same borrower prefers to do all his banking through internet because it is more convenient, the job of a bank clerk becomes redundant. There are thousands of other low-skill service jobs, which are just as threatened. Automation replaces human work. Elsewhere, due to the rise of 3-D printing, it will be possible to produce increasingly complex products in small specialised factories. Manufacturing is returning from the third world back to the rich West, since the cost of labour is no longer problem. as far fewer jobs are required to produce things. Designer can now easily create final product from the design scheme to physical object just using his laptop connected to a 3-D printer. Even more phantasmagoric, yet still probable is the idea that drones and other robots will displace millions of jobs in logistics, agriculture, manufacturing and many other industries. In fact, this process has already started. Erik Brynjolfsson, a professor at the MIT Sloan School of Management, has been arguing for some time now that impressive advances in computer technology—from improved industrial robotics to automated translation services—are largely behind the sluggish employment growth of the last 10 to 15 years.
New Jobs in the “Apps” Industry
But one-sided arguments tend to be flawed. There is always an opposing view, which could be just as plausible. Technological progress should not have a negative economic impact in the long-term. This would, in fact, turn the theory of economics on its head, since it is based on the idea that economic growth occurs because individuals have either more resources at their disposal, or become more effective in turning resources into outputs. And to turn resources into outputs more effectively, one needs technological progress. It is without a question that as economies are transforming to become digital, many will lose their job. The theory of creative destruction formulated by Joseph Schumpeter, the prominent Austrian economist, springs to mind. When new technologies and production methods disrupt the old form of industrial organization, established companies are condemned to fail and many lose their job because they become irrelevant and worthless.
Economic progress may be painful, but it should lead to improvement eventually. The need for human work will not go away. Instead, it will simply take on another form. Already, an unsatiable thirst for software developers is emerging in the world, as so much of what we do is being shifted onto the internet. According to Financial Times roughly 1 million direct and indirect jobs have been created in European countries thanks to the growing “apps” industry. Software is becoming a critical layer of our lives. Computer programming should become part of basic school learning. In future, not knowing the computer language will be just as challenging as being illiterate is today. The discipline will create millions of new jobs.
Not everyone can be a software developer though. The growing app industry is only part of the whole story. When economies change under the pressure of technological progress, new business models emerge. Discontinued production of wooden wheel, typewriter or photographic film are only few examples of how new technologies bury old large companies and give birth to new businesses. New businesses will emerge to meet new needs in the changed world. Some of them we can anticipate already.
Personal Information is The New Currency
Thanks to the internet, we now do not need to own so many things, or pay for work of others as many services become automated. Intelligent internet sites like Lendingclub connect individual borrowers with savers that would like to invest and offer both better rates than a bank would. Other websites translate entire documents into any foreign language, allow us to listen to music and video, or call people on the other side of the planet for free. And yet, nothing is for free.
Everyone has a digital presence now; a footprint created by his actions on the internet. The trace that we leave on the internet – our personal data – is becoming very valuable. The currency for the new economy is our personal information. Lendingclub can evaluate our creditworthiness by observing our digital identity – what we usually buy on the internet, who we talk to on Facebook, or how likely it is that we get promoted based on our profile on LinkedIn. An online store with access to a record of our past purchases and our Facebook profile can use an automated algorithm to make assumptions about our music and film taste. It can manipulate us by showing us products that we like with recommendations and feedback comments left by people from our social circle. Companies like Lendingclub run on our personal information – it is their fuel and catalyst. We give it up and in return get numbers and codes – digital content for free.
This is a dangerous trade. We lose the control over our reputation. The computer may not always make the right judgment from the masses of data that it has about us. It is, however, certain that it will make “a judgement”. We could buy too many sweets, never use our gym membership or leave our TV on for all day every day and yet this does not mean that we do not lead a healthy life. The time when we will be turned down for a job, because some computer algorithm assigns us high risk health assessment, might not be that far off.
Solutions to solve this problem are emerging already. They will give birth to many new successful businesses. Platforms like OpenPDS or Reputation.com should be mentioned in this respect. OpenPDS gives the ability to control personal information. It stores data from all your digital devices in a single location, such as encrypted server in the cloud. Any app, online service, or big-data research team that would like to use your personal information has to request it from OpenPDS. In effect, the system reverses the process. Until now, when you installed an app, it asked for permission and started collecting much more data about you than it really needed to work properly. OpenPDS gives you the control back. Focused on the same issue, Reputation.com is a much more direct service. In exchange for a fee, team of people actively manage person’s virtual presence – updating his profile on social sites and cleaning unwanted and untrue information about him. The myriad of websites that store and even create content about us all over the internet create a burning need for such service. Reputation management companies will create many new interesting jobs. This is just one of thousands of new business solutions that will emerge in future.
The economies are transforming under the pressure of technological development. Like so many times before, our challenge is not to find the need for human work, but rather to anticipate new needs in the new world. New needs will drive new businesses and with them, a new generation of successful capitalists will emerge.