Published on the 11/04/2014 | Written by Paul Budde

The much hailed positives of smarter technology and the digital economy could be disguising a wider problem says Paul Budde…

The explosion in the use of smart technologies means that we can increase our productivity and, in general, that the work can be carried out by fewer people, especially in the well-developed economies. At the same time people in other parts of the world can now also participate in the more developed economies through the use of technology, and they can do so from a significantly lower cost base. The problem is that the productivity gains that are achieved from this are basically benefitting a relatively small group of people – the shareholders, the financials institutions and the management teams of the organisations that tap into these new developments and achieve increased productivity and efficiency.

Under our current economic models this is perfectly acceptable, and, from a traditional economic point of view, even commendable. However at the same time it is giving rise to a growing gap between that group and the rest of society.

Strong political leadership is needed
At the same time these tools can also assist us in addressing the challenges that we are presently facing – with a population marching foreseeably towards nine billion and significant pressure on our environment, natural resources, energy, climate and our lifestyle in general. But if we are to reap the benefits technology can offer us we need to act globally rather than nationally. And this is where our political systems are failing us.

We, the people, are not willing to make the personal changes needed to deal with the global problems we are facing, which might compromise our current lifestyle or future. Politicians know that if they were to act in the best national/international interest they might suffer a backlash in the polls. We really need brave politicians who are willing to take a leadership position and accept the risk that they might not be re-elected.

How smart tools can help
Smart tools like the current ICT developments, based on utilities infrastructure such as broadband, smart grids, M2M, cloud computing and data centres, are going to be critical in this process, and they will affect every part of our society and our economy. These need to be developed in the most efficient and effective way so that everybody can use them to enhance their own lifestyle, both in private and in relation to work or business. Thus ICT infrastructure is crucial and it needs to be developed and managed in the national interest.

Economic and social transformation
The only real solution to address the negative economic consequences lies in economic and social transformation. The processes creating the current economic changes are taking place much faster than the transformational processes that are being discussed by governments and industries – let alone being speedily implemented by them. Under our current political system and our current level of leadership they attract a significant amount of opposition from vested interests, certain ideologies and partisan politicians.

We must reorganise the economy so that there is no longer such a direct link between the performance of the economy and the wages earned by employees. Do I have a solution? No, but I can’t see an easy shift back to the old economic models that are still being used. Not with a population of over seven billion of which many are well-educated and have internet connection, equipping them to join the world’s digital economies. For the next 25 years these new entrants will not only have an effect on the digital economy, they will also further reduce the value of human labour in developed economies by operating from low-cost economies using the smart and inexpensive tools we are producing.

To maintain an acceptable lifestyle in a globalised economy with smart tools and cheap labour we need to make structural changes.

ABOUT PAUL BUDDE//
Paul Budde is the CEO of BuddeComm, an independent research and consultancy company, focusing on the telco market. Its research encompasses 190 countries, 500 companies and 200 discrete technologies and applications. Paul is also the special advisor to the UN Broadband Commission for Digital Development.