Paul Budde discusses the financial benefits of recent technological developments and their effect on global inequality.
REFERRING to our recent report: Smart Cities - How cities can contribute to social stability and security, I agree that technological and economic developments over the last few decades have led to an increase in inequality.
The financial benefits of technological developments and globalisation have – in the western economies – largely been delivered to the top layers of society.
And slowly but surely there is a political understanding that this is an undesirable national outcome that needs to be addressed — otherwise those most negatively affected by it will "revolt".
There is nothing unusual about this. Human history over the last thouand years has been littered with populist revolts taking place in the aftermath of similar undesirable social, economic and political outcomes. Trump, Le Pen, Hanson and Brexit are modern-day examples.
Globally we now live in a more equal society
However, at the same time, it is worthwhile to look at the effects of – among other elements – technology and globalisation in a broader context. Thanks to these, billions of people in other parts of the world have been able to raise their standard of living because they are now much more woven into the global ecosystems.
Globally, extreme poverty in numerical terms is lower than it was 50 years ago and this achievement is even more remarkable if one takes into account the fact that the global population has more than doubled during that period. Also, despite the horrible TV scenes that appear on the news every day, the worst form of revolt – warfare – is also now lower than ever before.
Yes, there are still many problems and many disaster stories in the developing economies, but the long-term financial gains and improvements here are undeniable. There is certainly still a very long way to go but globally we are seeing increased equality.
That same technology is also breathing new life into many of the old industrial rust belts. A large number of cities that have seen a near or total collapse of their old industries have used technologies to revive their local economies; old buildings are often changed into living labs or innovation hubs and entrepreneurs develop new businesses using the latest technologies to create start-ups, innovations and new products and services.
New housing developments that are built on these old industrial estates and are often close to the centre of town and/or with good transport facilities, are being connected to fibre-to-the-home networks. Central venues are fully Wi-Fi connected and smart city strategies are deployed in these refurbished precincts, incorporating the latest energy, building and mobility innovations into their developments.
These new initiatives are further stimulated by a slowdown in global trade (four of the 15 large shipping container companies are now having financial problems). As wages and working conditions improve in other parts of the world, local production becomes once again economically viable, especially when it is based on smart manufacturing, robots, 3D printing and so on. Often these new (or transformed) companies are being developed from those innovation hubs and are supported by collaboration between organisations sharing those facilities.
These new levels of synergy are producing excellent results around the western world and are going to form the basis for the new digital, sharing and interconnected economy of the future.
While the global trade cycle will bounce back, the current downturn occurs at a time when – rightly or wrongly – more countries are looking inward rather than outward. Investors also are more willing to look at local opportunities rather than international ones and this allows breathing space for new companies to establish themselves and flourish locally.
Inequality cannot just be measured in a direct financial sense
Another issue that is often not discussed but should also be taken into account is that, while lower and middle incomes have been rather stagnant over the last few decades, and certainly have not risen in line with the higher and super-high incomes, there are also significant benefits from technology and globalisation at those lower levels — through cheaper prices for many products, greater choice in services, more transparency in competition, more efficiencies in products and services in relation to their daily life, increased opportunities for communication and entertainment, low-cost or free healthcare and education applications, community-based sharing economies, and so on.
The same technologies also provide significant benefits to disadvantage groups, either directly or through the networks of carers and specialists who are looking after them.
Furthermore, these positive developments will continue to happen, especially in the healthcare, education, social and cultural sectors and, as mentioned in our report, much greater effort needs to be made by the authorities in charge of these sectors to ensure that these benefits are being realised.
None of this solves the local inequality issues but in a balanced assessment, these positive global and individual benefits do need to be taken into account.
With the right political will, the benefits of new technologies and the financial gains from increased efficiency and productivity derived from globalisation, can be far more equally distributed. This should not just be measured in individual financial gains — it should also take into account all the other social and economic benefits that can be achieved in delivering better health, education, social, cultural and entertainment outcomes.
Furthermore, we live in a global ecosystem and the notion of looking at inequality only in the context of the individual rich western economies is no longer tenable. Increasingly we need to look at inequality from a global perspective. Our current technology and globalisation systems are lifting large numbers of people out of poverty; they will become better educated and will raise their voices at an international level to point out the inequality between them and us.
Of course, this doesn’t mean that inequality issues do not need to be addressed within each country. However, in order to do this this properly it will need to take place within the broader context of the global benefits to developing economies and the non-monetary social and economic benefits for individual people.
Paul Budde is managing director of Paul Budde Communication Pty Limited, trading as BuddeComm (budde.com.au), an independent telecommunications research and consultancy organisation. You can also follow Paul on Twitter @paulbudde.
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