A Good Disruption by Stuchtey Martin;Enkvist Per-Anders;Zumwinkel Klaus;

Author:Stuchtey, Martin;Enkvist, Per-Anders;Zumwinkel, Klaus;
Language: eng
Format: epub
Tags: Redefining Growth in the Twenty-First Century
Publisher: Bloomsbury Publishing Plc
Published: 2016-08-15T00:00:00+00:00

Chapter 12

Disrupted – for better or for worse?

‘Would you tell me, please, which way I ought to go from here?’

‘That depends a good deal on where you want to get to,’ said the Cat.

‘I don’t much care where –’ said Alice.

‘Then it doesn’t matter which way you go,’ said the Cat.

Lewis Carroll, Alice’s Adventures in Wonderland

Let’s lift ourselves a few levels now and look at what overall impact the technology disruption could have on our economy and societies. Let’s review what impact it could have on economic growth, employment, income equality and resource demand. Each of these topics is the subject of endless dissertations, books and reports, so we’ll only provide an overview. But we believe this overview is already enough to lead to an important conclusion: that the technology disruption is a beast in need of taming.

12.1 Waiting for tailwind – technology for future growth

The impact of technology on economic growth is a hotly debated topic. On the face of it, history seems to be in favour of those who argue that the technology impact on growth will be no bigger than in the past. In the US for instance, the average output per worker grew by 2.3 per cent per annum from 1891 to 1972, only to then slow down to 1.4 per cent per annum from 1972 to 1996. For eight years until 2004 it then jumped up to 2.5 per cent per annum, only to again slow to 1.3 per cent per annum from 2004 to 2012.1 So a slowing trend, in spite of ever more accumulated knowledge, ever more university graduates and ever more investments into research and development. This would suggest that today’s innovations are actually less impactful than yesterday’s.

Technology optimists have several explanations for why these numbers don’t reflect reality. First, GDP statistics do not account well for the huge value created by free services such as digital entertainment and information, nor do they capture well the huge consumer surplus2 of new technologies, which have become more important over recent decades. For instance, consumers might have been willing to pay as much or more for email as for physical mail, but since email services are often provided for free, their value does not get captured in GDP. The same is true for much of the services of Google, Facebook, Skype, Spotify, Instagram and many others. And there are of course also many new services that are paid, but where the real willingness to pay might have been much higher (new medical treatments for instance). Second, optimists claim there is a time lag: while the technologies themselves develop at breakneck speed, companies, industries and consumers need time to integrate them. Once consumers and companies get used to the novelties, we will see a compound positive effect.

On the other side of this debate, there is a group of technology sceptics. They argue that the innovations of today, impressive as they are, have much less importance for our everyday lives and our economy than the innovations of the 1900s.

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