Posts about davos

Efficiency over growth (and jobs)

The hook to every song sung at Davos is “jobs, jobs, jobs.” The chorus of machers on stages here operate under an article of faith that growth can come back, that they can stimulate it, that that will create jobs, and then that all will be eventually well.

What if that’s not the case? I am coming to believe, more and more, that technology is leading to efficiency over growth. I’ve written about that here.This notion is obviously true in some sectors of society: see news and media, retail, travel sales, and other arenas. But how many more sectors will this rule strike: universities? government? banking? delivery? even manufacturing?

As I write this, I’m watching a WEF panel moderated by Reuters’ editor, Steve Adler, with Larry Summers and government and business leaders. They’re discussing growth strategies and so far we’re hearing the same notions we hear elsewhere in Davos, the complete trick bag: spend money on infrastructure, be nice to business, regulate less, reform taxes, reform immigration. OK and OK.

“The problems of job creation are more complicated than that. They are more complicated than wealth creation,” says one of the panelists (operating under Chatham House Rule, so I won’t attribute*). “This is a group that understands wealth creation better than job creation.” He says “there are inherent limits” to the number of people employed in various sectors.

I haven’t heard any strategy yet that reverses the trends underway in the transition from the industrial economy to the digital economy. What will offset the shrinking of vast industries? New industries? Well, we have new, digital industries, but they are even more efficient than restructured old industries. Compare Google’s staff size to GM’s, even now. Facebook serves almost a billion people with the staff the size of a large newspaper. Amazon employes far fewer people than the bookstores it put out of business did. So those new industries will bring growth, profit, and wealth, but not many jobs.

“There are fewer jobs for regular people because those innovations happened than there would have been if those innovations hadn’t happened,” the panelist says. It would be “a delusion” to think that encouraging this innovation will increase jobs.

So what if the key business strategy of the near-term future becomes efficiency over growth? Productivity will improve. Companies will be more profitable. Wealth will be created. But employment will suffer.

I’m hearing no strategies focused on this larger transition in a gathering about the transition. I think that’s because the institutions’ trick bags are empty. They ran an industrial society. That’s over. And the entrepreneurs who will create new companies but also new efficiency aren’t yet in power to solve the problem they create.

I ask the panel whether all this talk of jobs, jobs, jobs is so much empty rhetoric. I ask whether there are other tricks in the bag.

The panelist I’ve been quoting says that there are two sets of economic issues: In the short term, for the next five years, we are dealing with demand and macroeconomic policy. “Employment today has nothing to do with the Kindle,” he says. “It has everything to do with the financial system, deleveraging, and macroeconomic policy.”

It’s in the long term that the issues I’m addressing here come to bear. “For the longer term, we don’t have nearly as good answers as we would like to,” he says. “We are going to have to embrace the idea that we are going to have growing numbers of people involved in the provision of fundamental services to other people, services like health care and education. We’re going to need to make that work for society.”

That is to say, health and education don’t directly create wealth; they are services funded in great measure by taxes of one sort or another. Employing people in those sectors amounts to a redistribution of wealth with the fringe benefit of providing helpful services. Is a service-sector economy the secret to growth? Who pays for that when fewer people have jobs in the productive economy? I still don’t see an answer. This is not an economic policy so much as it is a social policy.

Another panelist says that we will have fewer people and we will need to retrain people throughout their lives for new jobs. I agree. But that doesn’t create jobs (except in schools); it just helps fill the ones we have.

One more panelist, from Europe, suggests that nations here will end up making stuff for the growing economies and consuming middle classes of China, India, Brazil, etc. In a globalized world with maximum price competition, I’m not so sure that’s a strategy for growth, only survival. I’d hate to place my strategic bets on continuing — or returning to — the industrial economy. And at some point, that strategy bumps up against the question of sustainability: is there enough stuff to go around?

Indeed, in a globalized society, we need to look at total jobs, the sum of work and productivity and demand, not country-by-country. The question is: Will jobs on the whole increase in this digital economy?

If instead efficiency increases — and with it, again, productivity and profit — then great wealth can be created: see Google, and the technology economy. But that means the disparity of income and capital will only widen yet more. And it’s just wide enough today to cause unrest around the world. That’s much of what #Occupy_WEF et al is about. That’s what is causing such tsuris and uncertainty on the stages of the world (Economic Forum). That’s what is causing the institutions represented here to fear, resist, and regulate technology in the hopes of forestalling the change it is bringing. There is the root of the disruption we’re witnessing now even in Davos.

* I saw Summers later and he gave me permission to quote him by name. He is the quotable panelist.

Studying the web

At the end of this video from this year’s Davos (at 2:30), Sir Tim Berners-Lee proposes the need to create an academic discipline — cutting across technology, psychology, anthropology, and other fields — to study and understand the web:

Now Rensellaer Polytechnic announces that it is creating the first undergraduate degree in web science. (I found out about through an email to my son, who was accepted there and is now deciding among the University of Rochester, NYU, George Washington University, and Boston University, plus Case Western, Drexel, and Northwestern…. if any of you have any advice and experience, let me know). RPI says its students will “investigate issues on the Web related to security, trust, privacy, content value, and the development of the Web of the future.”

Sir Tim himself praised the RPI program in its press release. He has also helped start the Web Science Trust.

Of course, there are many good minds studying the web today, from danah boyd to Clay Shirky to Jay Rosen to Jonathan Zittrain. But I agree that it is time to pull together study and thinking and questions under a discipline that treats the web as the enormous social force it is. Says the Web Science site:

Nothing like the Web has ever happened in all of human history. The scale of its impact and the rate of its adoption are unparalleled. This is a great opportunity as well as an obligation. If we are to ensure the Web benefits the human race we must first do our best to understand it.

The Web is the largest human information construct in history. The Web is transforming society. In order to understand what the Web is, engineer its future and ensure its social benefit we need a new interdisciplinary field that we call Web Science.

The Flip dance

At the Google party at Davos, I was enticed into doing the Flip dance with none less than Sir Tim Berners-Lee:

Another Sir Tim video from a session on social media. The first half of this 3:44 is him talking about the need for authority signals i social networks. In the middle, he takes pains to correct people who say that he invented the internet or created the web (no, he invented the web). The last half is his intriguing call for academic study of the web:

And, yes, it was a thrill to meet the man. I was wonderful seeing people come across him, spy his name tag, and gasp with glee and gratitude.

The disrupted of Davos

The theme of this year’s World Economic Forum meeting at Davos was “rethink, redesign, rebuild.” When a friend recited that list for me, I responded that given the institutions there, the more appropriate slogan is “replace.”

Last year when I arrived at Davos, I wondered whether we were among the problem or the solution. This year, I wondered whether we were among the future or the past. Well, actually, I don’t wonder.

We were among the disrupted. The only distinction among them is that some know it, some don’t. At Davos, I fear, most don’t.

I ran a session with international organizations about transparency and new ways they can govern themselves. I didn’t get far. “Oh, yes, we understand Twitter and all that,’ they said. “We have people who do that for us.” Don’t you want to read what your constituents and the world are saying about you? “We don’t have time.” Oy. I invited a young disrupter into the room who talked about his ability to organize efforts to help people quickly — not so much breaking rules but discovering new ones — but he didn’t get far either.

I sat in a session about the future of journalism that was set in the past. No fault of the moderator, the panel pretty much issued the same old saws: The internet is filled with trivia, sniffed one: “The stuff that goes on the web is just suffocating.” The free market will not support a free press, declared another. (How do we know that already?) Thus their conclusion: The only hope for journalism is state and foundation support, said a few. Oy again.

At the end of the week, I sat in on a session trying to brainstorm under WEF’s theme of the three re’s. They said the point of the exercise was to get soundbites (as they used to be known; tweets as they are now known) and that’s what they got: PowerPoint (actually, Tumblr) platitudes. There were good points: We need to change what we measure, said one table, for now we get what we measure (true from media to economies). But there was also insipidness: “We are what we allow to happen.” And: “Ecology means caring. Equity means sharing.” Put that on your T-shirt and wash it.

Then a 17-year-old from Iraq scolded the entire room, telling them that these were just sayings. Where’s the action, he asked? Where are the specifics? That moment gave me hope: another disrupter, this one from the future.

The World Economic Forum actually does an admirable job trying to push its members into that future. I got involved — and got my ticket into Davos — because I helped them venture into blogging to show institutions by example how to benefit from social media; that effort continues in video (YouTube is there) and Twitter (so is Ev Williams)

But one must wonder whether they can go fast enough — given this crowd’s resistance to change — and thus whether they are helping the right people. That’s why I didn’t blog during this meeting (my fourth): I simply didn’t hear much new. WEF does try to bring in new voices: its young global leaders and tech pioneers, but they are viewed by the entrenched powers as curiosities — sideshows — when they should be seen as the new bosses.

After one SOS (same old…) session, I told a WEF person that I dreamed of a new organization and event, a stepchild: the World Entrepreneurs Forum. Let’s bring together only the disrupters, only the people building the future rather than trying (desperately) to protect the past. Just as the old WEF forces its members to at least ask questions about their impact — on environment, values, trust, foresight — so should this new WEF push its participants to make sure they use their power of change responsibly, strategically, openly.

I have said of journalism that its future is entrepreneurial (not institutional). At this Davos, I come to sese the same is true of much of our world. The shift from the industrial economy to whatever follows is well underway, only the leaders of the old order are largely blind to it and in that willful ignorance, there is great risk.

Entire industries are in various stages of disruption and destruction: news, media, entertainment, advertising, automotive, manufacturing, retail, real estate, telecommunications, transportation, health care…. The same will come to institutions, including government, nongovernmental and international organizations, and the academy. One university president fretted at Davos: “Just think what the world would be like if we left what universities to the free market.” Well, yes, many companies are doing more than thinking about just that; they are building, a new and needed future for education.

The disruption is everywhere. What makes technology a model is that it is in a state of constant disruption; it disrupts and deflates and rethinks and rebuilds itself constantly. But that 1000-r.p.m. Great Mandala is now buzz-sawing through the rest of society. Only the rest of society isn’t built for change. Neither is WEF — though it tries — because the change is too profound and too fast.

There’s a clear dividing line here: Do you fear and resist this change (WEF I) or do you create and enable it (WEF II… and note that I didn’t use “2.0″!)? That’s why I think there’s a need for a new WEF. I wouldn’t suggest transforming the first into the second. I’ve learned from a decade and a half of trying — naively, I now see — to do that with newspapers that it’s rarely if ever going to succeed and for understandable reasons (the cost — in money, pain, and culture — is just too great). It is easier to build up than tear down.

We are seeing parallel worlds emerge: the disrupted and the disrupters and they are not meant to share a fondue pot. So let’s pull together the disrupters and challenge them — as WEF has its institutions — to more fully understand the impact of their work, to use their power of change to solve problems, to collaborate (as is their reflex already). Let’s encourage them to look forward, not back, and let’s support their needs (in education, governance, infrastructure). Let’s rethink our priorities around those needs (in media, for example, let’s stop defaulting to government subsidies of dying institutions and instead encourage government to provide ubiquitous broadband to enable a new future; let’s start with the market).

Is WEF the organization to bring this together? Is there a need for an organization at all? When I pulled together a conference (call) of people planning to teach entrepreneurial journalism from around the world, one participant suggested creating a body but Sree Sreenivasan of Columbia protested: “We have enough organizations.” Right. So what structure would support the disrupters? If it’s a meeting, don’t hold it in the high mountains of Switzerland or the low valley of Silicon. Hold it in a place awaiting progress. Or just hold it online. Make it open. As Dave Winer says, the people who should be there are there.

I see the value in Davos: smart people with the power to get things done (well, once upon a time) able to mix and meet and sometimes learn and even act. I see similar benefit for the people are indeed are rethinking, redesigning, and rebuilding by replacing.

Next year in India or Africa or Brazil or at an IP address to be named…