Digital Anxiety

The impact of technology on people, business and society is a constant source of anxiety.  Technology in general and the web in particular spawn predictions of doom and gloom.  From technology creating digital zombies, to constant social revolution, cyber terrorism and the like, technology has apparently created more harm than good.  Charles Kenny’s recent opening remarks in Bloomberg “What the web didn’tdeliver” is the latest round of digital anxiety.

Where are the flying economy or even my flying car?

Kenny’s assertion is that the web and technology in general have failed to deliver the economic boom predicted at the turn of the last century.  During the heyday of the first Internet, the world looked like an un-interrupted path to growth and prosperity with a keyboard in every pot and an internet connection for every person.  These were the days of the digital divide as an economic and social issue.  Kenny is right to point out that simply getting online did not necessarily mean getting into the fast lane.

The world according to Kenny is not entirely accurate.  Sure we stand a decade after the dot-com bust in a world of uncertain economic times, unemployment and challenge.  Over the last 10 years we have weathered several economic crisis in Asia, Russia, Asia again and the worst economic conditions since the great depression.   The problem with Kenny’s logic is that he associated current economic conditions with a failure of technology.  That would be a logical connection if technology were the source of economic failures, but far from it.  The crisis of the last decade have more to do with repeated boom-bust cycles fueled by capital flows and greed more than technology.

Technology applied to capital markets have contributed to the financial crisis as their information and automation made complex derivatives and other instruments possible.  Market volatility increases as technology enables 24/7/365 and program trading.  Technology has made these things possible, but its still people that take the possibilities to market.

The past decade’s financially driven crises are particularly pernicious as like it or not finance touches everything.  A financial crisis is unlike the demand driven crisis of the past where simple stimulus is the recipe for success.  Its one thing when consumers do not have enough money because they lost their job.  It’s another thing when there is no money in the system regardless of who has a job.

Blaming technology for not enabling us to grow past recessions makes sense in the context of demand driven situations.  It is weak logic at best when it comes to resolving and rooting out the causes of financially driven crisis.  Our current predicament is due to Wall Street and K Street more than it is to decisions made in Silicon Valley.

Technology distributes productivity gains differently than in the past

There is more to what is going on in the economy than just a failure of technology to deliver constant and escalating levels of growth.  Technology is changing the nature of productivity and the economic returns generated by productivity.  Eric Brynjolfsson and Andrew McAffee make the point that technology is shifting productivity returns away from people and towards capital, particularly in the case of digital technologies.   That observation provides part of the current situation where companies make record profits while economic and employment levels lag.

The issue here is not that the information revolution has not generated economic prosperity.  It has, but not for enough people and not in ways that were able to overcome or prevent the financial turbulence that put us in this mess in the first place.

Technology is a net contributor to the human experience, beyond the hackneyed arguments that we all waste time surfing the web at work.   It has given us new ways to understand the world, connect with each other, mobilize our common interested and innovate our shared and personal experiences.  Those values are ones that do not readily appear in GDP figures. 

More people have more technology than ever before and they are using that technology to improve their lives in ways that go well surfing the web.   Those are the facts that should be the focus of what the web and its related digital technologies delivered not inaccurately ascribing a technology effect for a financially created cause.

Kenny is right in his assertion that “if we’ve learned anything over the past 10 years, it’s that there are no simple Web-based solutions to an economy in the productivity doldrums.”  True, but that is like a chef blaming their utensils for a poor meal.  Feeding digital anxiety serves no one, other than to fill column inches in a magazine.