The digital revolution can be credited with many benefits to society—but also more than a few drawbacks. Its effects on, for instance, the music industry have been profound, and as the revolution marches forward, changes await a growing number of business sectors. Some market observers have even predicted that the expanse of digital technology, unlike the industrial revolution, is such a threat to jobs that it may eventually lead to social unrest. As the economy increasingly relies on digital devices and their supporting infrastructure, such as data centers, and as control of that infrastructure concentrates in the hands of fewer individuals and corporations, the result could be a wealthy, powerful oligarchy and a large base of society that is unemployed or tasked with insignificant jobs. But the digital revolution may be running into trends that will temper, rather than intensify, its effects.
The Digital Revolution: Tradeoffs
Whoever said that death and taxes are the only certainties in life should add tradeoffs to the list. No technology is an unadulterated blessing: as that technology is adopted, behavior patterns change in a way that benefits some individuals and customs at the cost of others. The music industry has been a prime example: the advent of MP3 compression and the Internet enabled widespread sharing of music without the middle man of record companies. The benefits? Artists are increasingly able to take their music directly to consumers, and consumers are less bound to albums (particularly those that attach 35 minutes of garbage to 5 minutes of a catchy single). The downsides? Artists see no income from much of the music sharing that takes place. Those who lose money or employment from the deal likely see this change as horrible; those who gain freedom, greater access to markets and new opportunities likely see it as wonderful.
Moving to the frontiers of technology, driverless automobiles are receiving greater attention. Ignoring the insurance and regulatory issues that might arise, such a technology could eliminate numerous professional driving jobs ranging from taxis to tractor trailers. On the other hand, those who have been tailgated one too many times by tractor trailers might see driverless technology as worth a few jobs. The question is, how much of life can this technological revolution digitize, automate or otherwise simplify at the cost of jobs?
In the past—for instance, during the industrial revolution—automation and other technologies increased productivity and destroyed jobs. But they also reduced the cost of goods and raised the standard of living. Furthermore, automation of certain industries enabled the birth of new industries, so the entire process was not a zero-sum game with regard to employment. Will the digital revolution differ by automating certain tasks while enabling no new industries? The answer depends in part on how several emerging trends affect society and the economy.
End of Moore’s Law
Lest we forget, Moore’s Law—for traditional semiconductor technology at least—will end, and the end may be in sight. As the limits of silicon approach, the constant “need it or not” growth in computing power will slow, and therefore the incremental costs of adding more processing capabilities will increase. Apart from a breakthrough in a more exotic field like quantum computing, the result could easily be a drastic reduction in expectations regarding what tasks—physical and “intellectual”—computers can accomplish. For instance, a self-driving automobile might still materialize, but your doctor probably wouldn’t be replaced by a Watson-type machine. The digital revolution, at this point, might simply run out of steam.
If the coming end of Moore’s Law represents the technological side of limits to the digital revolution, thenprivacy concerns may well represent the societal side. The ongoing NSA spying scandal has brought privacy to the fore as citizens, companies and governments try to decide what, if anything, should be kept from prying eyes.
The digital revolution embodied in devices, the Internet and data centers has enabled constant surveillance that might have shocked even George Orwell; presently, only a shift in public sentiment can place limits on what companies and governments can find out about citizens and each other.
Machines, digital and otherwise, need energy to run, and as the cost of energy rises—whether owing to inflation, increasing demand, scarcity or government regulations—the cost of automation likewise increases. At home, you might quickly trade the cost of running your washing machine and dryer to gain the time to pursue a hobby or some other leisure activity. But as the cost of running those machines increases, eventually it bumps up against the value of your labor at work. At some point, washing clothes by hand really is a better deal than running a machine. The digital revolution currently runs mostly on coal power, with nuclear, hydroelectric and a smattering of alternative sources providing the balance. The interaction of these energy supplies, automation and other factors is complex, but the washing machine analogy (on a larger scale) is what society faces. The costs of the digital revolution may simply outweigh the benefits before society is plunged into any unrest.
According to Network World, Tom Seitzberg, Genomic Health’s director of international IT operations, said, “Ultimately, every society lives from the backbone from a strong middle class. If you get just a top level, a small amount of very rich people and a very large piece of very poor people, it leads to social unrest.” The current trend in IT, embodied particularly in cloud computing, is a move toward centralization of computing power. This trend contrasts with previous decades, as the PC distributed processing capability to consumers at decreasing costs. Mobile mania and a “rental society” has driven cloud computing and pay-as-you-go services from large providers, creating numerous threats such as the potential for cascading failures as well as vast repositories of private data that create high-value targets for hackers. In part,centralization and decentralization are cyclical trends, so projection of centralization to the point of creating social unrest may be unwarranted. On the other hand, the declining economic status of the middle and lower classes in the west relative to the upper class shows no signs of abating.
Enabling Job Creation on the Back of the Digital Revolution
Moore’s Law, the cost of energy and growing privacy concerns may dampen the digital revolution before it creates a dystopian nightmare. Whether the digital revolution is truly different from the industrial revolution with regard to job destruction/creation is open to debate. Either way, however, new policies could prevent a net loss in jobs by enabling entrepreneurs to create products and services that build on technology. The following are some options:
Reduce taxes and regulations. The adage “if you want less of something, tax it” implies that by reducing taxes (and regulations, which effectively increase costs) on entrepreneurs (and consumers), business will grow. Given the dire fiscal straights of governments and their never-ending drive to grow, however, this policy change is unlikely.
Reform intellectual property (IP) laws. Given the dependence of the digital revolution on information and the constricting influence of IP protections, major reform (if not outright elimination) of IP laws could not only decentralize technology, but it could encourage lighter, more-agile companies that rely on a “first mover” advantage rather than a pack of lawyers to litigate competitors out of business.
Focus more on standard of living and less on economic growth. The current monetary policy of the U.S.and many other nations is to print money to stimulate growth, but the idea that a valueless activity creates value is ludicrous. The technology industry should know best that deflation is not necessarily bad: computer power has risen, but prices have fallen. Most other goods should follow a similar path, leading to a growing standard of living. The GDP may decline, but why is poorer living with good esoteric numbers superior to better living with a Federal Reserve that whines about deflation?
Last, but not least, the digital revolution can and should be put in its place by a thoughtful evaluation of the role of technology in society. Rather than simply letting innovation force society to conform, society should force innovation—or, at least, the role of the products created—to conform. Dealing with the digital revolution requires, perhaps ironically, looking up from our smartphones and tablets for a minute and doing some of our own thinking, instead of letting machines do it for us.