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Wednesday, Jan. 4, 2012

The jobless digital revolution

Special to The Japan Times

HONG KONG — Almost everyone is going digital, and the Great News is that the digital revolution will prove as momentous as the Industrial Revolution in changing the face of work, life and society. Not so great news — this new economic revolution will lead to a reduction in jobs and challenge already hard-pressed governments how to distribute the increasing prosperity.

Professor Brian Arthur argues that the digital revolution is producing a "second economy" that will in 20 years be as big as the physical economy. Arthur, a researcher with the Intelligent System Lab at the Palo Alto Research Center, is an economist and technology thinker and a pioneer in the science of complexity.

In an article in McKinsey Quarterly, he cites two examples of the spreading digital tentacles. One involves a passenger checking in at an airport, the other the supply chain management of freight going through Rotterdam to the center of Europe. Twenty years ago the passenger and the freight would have encountered a small regiment of people working to send them on their way. Today at the airport, the passenger puts in frequent-flier card or credit card and in seconds gets a boarding pass. In similar manner, freight shipments, which used to be checked via paper manifests and phone conversations, go through a radio frequency identification portal, where they are scanned, digitally captured and dispatched.

"What interests me," writes Arthur, "is what happens in those three or four seconds" when you put in your identification and get a boarding card.

"The moment the card goes in, you are starting a huge conversation conducted entirely among machines. Once your name is recognized, computers are checking your flight status with the airlines, your past travel history, your name with the Transportation Security Administration (and possibly also with the National Security Agency). They are checking your seat choice, your frequent-flier status, and your access to lounges. This unseen, underground conversation is happening among multiple servers, talking to other servers, talking to satellites that are talking to computers (possibly in London, where you're going) and checking with passport control, with foreign immigration, with ongoing connecting flights."

He notes that in the burgeoning digital economy there is a "constant conversation among multiple servers and multiple semi-intelligent nodes that are updating things, querying things, checking things off, readjusting things, and eventually connecting back with processes and humans in the physical economy."

The extent of the digital economy is growing all the time, helping architects to design buildings, tracking sales and inventory, transporting goods, executing trades and banking operations, controlling manufacturing equipment, making design calculations, billing clients, navigating aircraft, helping diagnose patients and guiding laparoscopic surgeries.

He calls this "a second economy ... vast, silent, connected, unseen, and autonomous (meaning that human beings may design it but are not directly involved in running it). It is remotely executing and global, always on and endlessly configurable. It is concurrent — a great computer expression — which means that everything happens in parallel. It is self-configuring, meaning it constantly reconfigures itself on the fly, and increasingly it is also self-organizing, self-architecting, and self-healing."

According to Arthur, the economy developed muscles with the Industrial Revolution, and now it is developing a neural system through the digital revolution, which may be more important, "a deep qualitative change that is bringing intelligent, automatic response to the economy. There's no upper limit to this, no place where it has to end," he writes, though he says he is not talking science fiction or singularity or about cyborgs.

He predicts that barring war or pestilence the story of the rest of the century will be the growth of the second economy, "an unseen underground economy that is basically giving us intelligent reactions to what we do above the ground" and creating a different world. He forecasts that in 15 years time driving in Los Angeles, "likely it'll be in a driverless car in a flow of traffic where my car's in conversation with cars around it that are in conversation with general traffic and my car."

But hold it there. The world is not quite as advanced as Arthur thinks. Just to take his airport experience, every time that I travel to or from the United States, the check-in machines demand that I report to a human to check my passport. And of course, while some check-in staff have been got rid of, passengers have to face an army of insecurity staff, who seem determined to prove that they are more incompetent than machines. The latest absurd event recently in the U.S. involved TSA agents confiscating a cupcake from a teacher claiming that its icing might be explosive.

Arthur does not consider some of the awkward potential problems of the digital economy. What happens if the systems suffer from a glitch, or power failure? And what about the potential not just for gremlins but for evil humans to take over the system and distort or pervert it?

What about the interface or encounters between the digital world of developed countries, and of course fast-growing Asia, which Arthur omits to mention — how blind Americans are — and those still living in a muscle-powered economy? Even assuming he is right and we can trust the power supplies, the intelligence and the good will of the humans dealing with the intelligent underground economy, and can spread the benefits of the digital revolution throughout the planet, there is still a major challenge, one that Arthur admits.

He notes that large numbers of jobs, from paralegals, draftsmen, telephone operators, typists to bookkeepers, are disappearing. For the moment, muscle is still required to lug bags onto the aircraft, and jobs requiring judgment and management and human interaction, and security, are still needed. "But the primary cause of all the downsizing we've had since the mid-1990s is that a lot of human jobs are disappearing into the second economy. Not to reappear."

When farms jobs disappeared, new opportunities came from manufacturing; when manufacturing began to shrink, there was the service sector, but, says Arthur, "With this digital transformation, this last repository of jobs is shrinking and we face a problem. ... The main challenge of the economy is shifting from producing prosperity to distributing prosperity."

This is easier said than done, not least because it means confronting the Big Myth that is becoming the Great Lie of the right, that rich people are the most important to the economy because they produce jobs.

Kevin Rafferty is editor in chief of PlainWords Media

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