The age of adap­ta­tion

Financial Mirror (Cyprus) - - FRONT PAGE -

The world needs to stop look­ing back­ward. Since the 2008 fi­nan­cial cri­sis, we have wasted far too much en­ergy try­ing to re­turn to the days of rapid eco­nomic ex­pan­sion. The flawed as­sump­tion that the post-cri­sis world’s chal­lenges were only tem­po­rary has un­der­pinned poli­cies that have yielded only lack­lus­ter re­cov­er­ies, while fail­ing to ad­dress key prob­lems like high un­em­ploy­ment and ris­ing in­equal­ity.

The post-cri­sis era is over, and the “post-post-cri­sis world” is upon us. It is time to adopt a new frame­work of re­al­is­tic so­lu­tions that pro­mote shared pros­per­ity within the global econ­omy of to­day and to­mor­row.

In this new era, eco­nomic growth will oc­cur more slowly – but po­ten­tially more sus­tain­ably – than it did be­fore the cri­sis. And tech­no­log­i­cal change will be its driv­ing force. In­deed, just as the Industrial Revo­lu­tion trans­formed the pro­duc­tive po­ten­tial of so­ci­eties in the nine­teenth and twen­ti­eth cen­turies, a new wave of tech­no­log­i­cal break­throughs is re­shap­ing eco­nomic and even so­cial dy­nam­ics to­day. The dif­fer­ence is that this revo­lu­tion’s im­pact will be even greater.

One out­stand­ing fea­ture of this revo­lu­tion is the scope and scale of its dis­rup­tive­ness. The Industrial Revo­lu­tion oc­curred rel­a­tively slowly, like long waves in the ocean; though it be­gan in the 1780s, its im­pact was not re­ally felt un­til the 1830s and 1840s. The cur­rent tech­no­log­i­cal revo­lu­tion, by con­trast, hits economies like a tsunami, with lit­tle warn­ing and in­ex­orable force.

The pace of change has been ac­cel­er­ated by the in­ter­con­nected na­ture of to­day’s world. Tech­no­log­i­cal progress is oc­cur­ring within a com­plex and deeply in­te­grated ecosys­tem, mean­ing that it si­mul­ta­ne­ously af­fects eco­nomic struc­tures, gov­ern­ments, se­cu­rity ar­range­ments, and peo­ple’s daily lives.

In or­der to pre­pare a coun­try to reap the benefits of rapid, far-reach­ing change, pol­i­cy­mak­ers must ac­count for the en­tirety of the ecosys­tem in which it is tak­ing place, en­sur­ing that gov­ern­ment, busi­ness, and so­ci­ety all ad­just to ev­ery shift. In other words, com­pet­ing in the twenty-first cen­tury econ­omy will re­quire re­lent­less adap­ta­tion.

Noth­ing is off lim­its. Ev­ery prac­tice and stan­dard will have to be rethought. Ev­ery in­dus­try will be at risk of be­ing turned on its head. The car-shar­ing ser­vice Uber, for ex­am­ple, has not only changed how peo­ple get around; it also ap­pears to be lead­ing a re­tail revo­lu­tion in which goods and ser­vices are “Uberised” – cus­tomers pay to use them, not own them.

The man­u­fac­tur­ing in­dus­try, mean­while, will be sim­i­larly trans­formed by 3D print­ing tech­nol­ogy. Sup­ply chains will be elim­i­nated or re­shaped – an ex­pec­ta­tion that the CEO of a ma­jor alu­minum man­u­fac­turer re­cently de­scribed. He knows that, in or­der to suc­ceed, firms will have to an­tic­i­pate and re­spond to such trends. Gone are the days of big fish eat­ing small fish. In the post-post-cri­sis world, fast fish will dom­i­nate – and slow fish will die.

But the cur­rent tech­no­log­i­cal revo­lu­tion is not just re­shap­ing what we pro­duce and how we pro­duce it; it is fun­da­men­tally re­shap­ing who we are – our habits, in­ter­ests, and world­views. Con­sider the vast dif­fer­ence be­tween the way young peo­ple and older gen­er­a­tions in­ter­pret pri­vacy in the In­ter­net age. It is also ex­tend­ing our life­spans, with one in two ba­bies born to­day in Switzer­land ex­pected to live more than 100 years.

On bal­ance, the im­pact of tech­no­log­i­cal progress will be pos­i­tive. But that does not negate the mas­sive chal­lenge it will pose.

For ex­am­ple, job au­to­ma­tion will ul­ti­mately pro­pel more peo­ple to­ward higher-pay­ing, more pro­duc­tive em­ploy­ment that is bet­ter suited to the new era of “tal­en­tism,” when hu­man imag­i­na­tion and in­no­va­tion, not cap­i­tal or nat­u­ral re­sources, drive eco­nomic growth. But, if work­ers fail to ac­quire the skills to fill th­ese new po­si­tions, they will be left be­hind.

Gov­ern­ment, more than any other sec­tor, can shape the im­pact of tech­no­log­i­cal change, en­sur­ing that chal­lenges are ad­dressed and op­por­tu­ni­ties are seized. In­deed, it should be at the fore­front of such change, by cre­at­ing an en­vi­ron­ment that en­cour­ages pri­vate-sec­tor in­no­va­tion and cre­ativ­ity, while en­sur­ing that cit­i­zens are equipped to com­pete.

Of course, gov­ern­ments can­not al­ways be ahead of the curve. They will also have to re­act and re­spond to new needs and de­mands, such as the ex­pec­ta­tion that public ser­vices meet the same level of high-tech ef­fi­ciency and con­ve­nience that pri­vate com­pa­nies of­fer.

Change may be fright­en­ing, but it is in­evitable. And, in fact, it is an im­por­tant source of op­por­tu­nity to im­prove our sys­tems, our strate­gies, and our­selves. The lat­est wave of tech­no­log­i­cal change is far from crest­ing. We should be ex­cited – and filled with hope – by where it could take us.

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