Digital Economy

In the latter term of the Clinton years 1996 to 2000, America enjoyed the highest per capita employment in its history.  Then George W. Bush encountered a slow economic decline until The Great Recession appeared in 2008.  Theory and debate abound as to why this pattern occurred.  Did President Bush fall short in his attempts to spur the economy?  Did the familiar GOP solution of tax cuts and de-regulation fail miserably?  Did the attacks of 9/11 permanently injure the US economy?  Perhaps the correct answer is NO to all of the above.  There was one other unprecedented and game changing event that also occurred during the late Clinton years that many of us do not recognize.  It was the proliferation of computers, internet, and digital media.

Undetected by most of us, the computer era has changed the world economy as we once knew it.  Digital media has eliminated jobs and has wiped out entire industries.  Once a child is able to read, he or she can find all of the entertainment and learning they need inside of a laptop.  With computers, entire families have less need for toys, board games, puzzles, books, newspapers, mail, stationary, calculators, art supplies, and game consoles.  Digital music has eliminated the purchase of hi-fi stereos, cassettes, recording devices, CD’s and speaker systems.  With computers, every consumer is a smart consumer.  Search engines allow us to research our own information and advice for just about anything, including real estate, law, health, vacations and travel, and contact information for anyone, thus eliminating the need for consultants, agents, doctors, guides, maps, directories, and books.  Digital photography killed Kodak while E-mail and online bill pay slowly kill the Postal Service.  Perhaps most noticeably, digital music has made record stores obsolete. 

Over time, the digital industry may continue to eliminate more jobs than it creates.  Any work that requires predictability and repetitive motion can be done with robotics.  A recent study indicates that research laboratories will be shrink as robots prepare samples, run them through standard tests, and document the results more effectively than humans while eliminating errors and reducing risk of contamination.  Family doctors may also be eliminated by comprehensive websites that provide interview questions for the patient, thus allowing the inquisitive patient to diagnose himself.  Once he has confirmed his illness he can get an
online referral to the appropriate specialist.

Of course, new building construction will also be in lower demand as E-commerce reduces the need for stores, offices, and boutiques.  Shopping centers exist on the principal that people enjoy browsing through merchandise until they find an impulse buy.  In the computer age we can do all of that with a laptop or a pad.  Anything with a shelf life can be marketed digitally.  The only buildings we will need in the long run are those that house people, services, wares, or fresh food.

In the 1950’s and 60’s, futurists dreamed of a day when we could do far more in less time by using computers and robots to handle all of our most mundane tasks.  What these futurists failed to predict is the loss of jobs for the least educated and least specialized people in the work force.  Most future jobs will require imagination, independent judgment, and creative thought – the higher thinking skills that make us uniquely human.  This is the challenge that faces our educators, strategists, futurists, and economists.  In the meantime, politicians will not solve the riddle of growing the economy and creating jobs unless they first recognize the changes of a digital economy.

Tony F.  2013