WhatsApp And The New Economy
At Civinomics, we believe that 21st century technologies offer new and effective ways to broaden civic participation at all levels of government. As we like to say, if thousands of people can share and “like” silly cat pictures over the internet, surely they can also share and vote on ideas towards solving problems in their community. So we are genuinely excited about advancements in technology, both with regards to improving our business, and as observers of the effects innovation has all across society.
At the same time, however, advancements in technology have brought about less benevolent realities, such as accelerating inequality. This was highlighted recently when, in late February, Facebook acquired the mobile messaging startup WhatsApp, a company of just 55 people, for $19 billion.
Clearly we are entering an age in which the rules of the economy are being re-written. As the sale of WhatsApp illustrates, advancing technology has allowed skilled workers and high powered business owners to create fabulous amounts of wealth without necessarily employing large numbers of people. This has meant that an increasing share of workers are facing either stagnating wages or the threat job loss altogether. Think bank tellers, typists, bridge toll collectors, travel agents…And this might just be the beginning. A recent study out of Oxford University suggests that 47% of today’s jobs could be performed by computers within the next twenty years.
That said, this isn’t the first time technological advancements have massively shifted the economic landscape. The Industrial Revolution was devastating to jobs at first, so much so that the original Luddites went to destroying the mechanical looms that had taken their place. Yet over time, the economy as a whole transformed and new breeds of jobs emerged, successfully employing millions of people with higher wages.
Much of the rebound in workers’ fortunes came as a result of concerted efforts by governments to improve education systems, and this is again where governments should focus their energy in combating inequality. And, just as it has revolutionized the world of work, technology stands poised to lend a helping hand in the educational realm, as well. Some schools, for example, are adopting reading and math software that lead students through games in which the questions adjust based on the answers the student gives – automatic differentiation – and right answers reward students with points that they can exchange for items in the game. Then there’s “flipped learning,” a hot new trend where, instead of lecturing in class and assigning problems for homework, students will watch an educational video at home that introduces a new concept – such as a selection from Khan Academy – and then work on problems in class where they can get help from the teacher and their peers. Computers allow educators to easily track each student’s progress and make data driven decisions to customize instruction. In all, teachers are gaining more time to teach higher level skills rather than having to run through repetitive drills.
Plus, it so happens that there is a lot of money behind these efforts – The Economist reports that investment in educational technology was $1.1 billion in 2012, and that a host of educational companies, both old (Pearson, Kaplan) and new (Quizlet, Noodle, and Chegg, to name a few), have been working feverishly to create new products that schools will adopt. President Obama himself recently touted a $750 million endeavor to improve student access to technology.
So while advancing technology and the WhatsApp’s of the world seem to be fueling inequality, the same forces are also aligning to equip millions like never before with the skills to deal with the new jobs environment. And, with the latest jobs report showing some promising figures, it seems there is no need to form a neo-Luddite movement just yet.