The statistics say we’re holding our own, but somehow our economy feels gravely ill. We’re experiencing a collective, palpable fear of our economic future, but we can’t agree why.
Blame is laid on “villains” of all stripes — this president, that president, this union, those bankers, this housing bubble, that housing speculator. But those are just the symptoms of the malady.
I see increasing evidence that the root cause of this profound turbulence is a rapid top-to-bottom reshaping of our economy by the massive flood of information now coursing through every segment of industry and society. The pace is so furious that it’s begun to feel like terrifying destruction rather than foundation-building for a brighter future.
The truth is, it’s both. As technology commentator Clay Shirky has noted, in revolutions, “the old stuff gets broken faster than the new stuff is put in place.” When that “stuff” is your career, your 401(k) or your aspirations for your kids, economic revolution can start to feel like economic calamity.
We can’t go back to some tidy 1950s industrial America. But we can understand the forces we face and work to figure out where they’re taking us. The good news is that efficiency and productivity are never a bad thing for the economy — taken as a whole, and in the long run.
The bad news is we all live in the short run.
Four technology forces helping wreak havoc on our economy:
THE DEATH OF DISTANCE
British economist Frances Cairncross’ 1997 book first identified this phenomenon. Our fundamental organizing principle as human beings has been proximity, but in a search-driven world, it’s now shifting to specialization and affinity.
We originally hunted in packs, shared food as a tribe, grew crops around our homes, governed ourselves by geography, educated ourselves together in classrooms and achieved work outcomes by gathering in a factory or office. But when buyers, sellers, employers — everyone — can find exactly what they want or need across oceans as easily as across town, different rules start to apply.
Competition in business or for jobs used to exist within a 30-mile radius; now whatever we need is findable, sortable, rankable and one click away from a transaction.
FRICTIONLESS COLLABORATION
In his 1938 paper called “The Theory of the Firm,” Nobel Prize-winning economist Ronald Coase wrote that firms would grow larger and hire more people as long as doing so remained less expensive than contracting with outside subcontractors or individuals. He concluded that companies exist in the first place as an alternative to organizing transactions in an open market.
But that’s changed radically. We can all do information- based work for clients or with co-workers located anywhere; we don’t need to be in the same office or on the same side of the international date line anymore. Technology has made it easier, cheaper and less risky to collaborate with outside firms and individuals than it is to hire employees.
BIG DATA
IBM’s website says the world creates 2.5 quintillion bytes of data each day, from keyboards, cameras, sensors, scanners, RFID chips, etc. The vivid picture of reality we get from that massive data stream is making our companies more and more efficient and lets us as consumers get more satisfaction with less time and money.
“Big Data” is giving us a nimbler, faster, more responsive economy — but more efficiency often equals less jobs in the short run.
THE RISE OF TOOLS AND COMPONENTS
The widespread knowledge of stone and metal tools arose during the 5,000-year Neolithic Age (9500-4500 B.C.). As these “technologies” became widely known and understood, the best minds of the age became focused not on (literally) re-inventing the wheel, but instead on creative, productive uses of the tools (like agriculture, for instance, which developed during the same era).
So it is today. What was the province of experts and accessible only to deep-pocketed companies is increasingly available in simplified, “by the sip” building blocks. This democratization of technology is creating changes as powerful as occurred in ancient times — or during the Industrial Revolution.
This revolution, it turns out, has just begun.
Dave Maney, an entrepreneur and former journalist, is launching . Reach him at davemaney@ .
