‘Scis­sors econ­omy’

Mid­dle­men rapidly dis­ap­pear­ing across board

The Korea Times - - FRONT PAGE - By Yoon Sung-won yoonsw@ktimes.com

AI could force mid­dle­men to dis­ap­pear across board

Not many in­dus­tries started fir­ing em­ploy­ees. But it can only be a mat­ter of time for them to be re­placed by AI.

The in­tro­duc­tion of tech­nolo­gies from the in­ter­net to ar­ti­fi­cial in­tel­li­gence (AI) is ac­cel­er­at­ing changes to the roles of mid­dle­men and even their ex­is­tence, ac­cord­ing to in­dus­try sources, Sun­day.

As renowned U.S. econ­o­mist Todd Buch­holz first de­scribed in his 1999 book ti­tled “Mar­ket Shock” through a con­cept he called “scis­sors econ­omy,” mid­dle­men have al­ready been los­ing ground in in­dus­tries and are re­placed by tech­nol­ogy.

In the 1990s, the in­ter­net was rapidly pen­e­trat­ing not just into busi­nesses but also into all as­pects of life. On­line tech­nolo­gies trig­gered and boosted e-com­merce, en­abling man­u­fac­tur­ers and providers of ser­vices and prod­ucts to reach end-users di­rectly.

“Tech­nol­ogy has per­mit­ted Amer­i­cans to cut out the mid­dle­man from many pur­chases. Who needs a stock­bro­ker or an in­sur­ance agent if the in­ter­net al­lows peo­ple to com­par­i­son shop? You can buy sock­eye salmon di­rect from Alaska within sec­onds or an air­plane ticket to Tim­buktu,” the econ­o­mist wrote in his 2007 book, “New Ideas from Dead Econ­o­mists: An In­tro­duc­tion to Mod­ern Eco­nomic Thought.”

“Con­sumers have more con­trol than they have ever had be­fore. Even the old mo­nop­o­lis­tic util­i­ties have bro­ken down, as cable, satel­lites, fiber op­tic and wire­less tech­nolo­gies com­pete for your tele­vi­sion, tele­phone and com­puter busi­ness.”

As Buch­holz stated, stock­bro­kers at se­cu­ri­ties firms were among those af­fected most by the ar­rival of the scis­sors econ­omy.

In the past when there was no in­ter­net, peo­ple usu­ally called stock­bro­kers or di­rectly vis­ited se­cu­ri­ties com­pa­nies to trade stocks.

But now they can ac­cess home trad­ing sys­tems pro­vided by se­cu­ri­ties firms to sell or buy stocks, sav­ing on pay­ing com­mis­sions.

Sim­i­larly, the role of the mid­dle­man has re­treated rapidly in di­verse ar­eas such as in­sur­ance prod­uct sales and travel sales as well as the pub- lish­ing in­dus­try.

“Al­most all trans­ac­tions can be done on on­line plat­forms. First it was the in­ter­net and more re­cently e-com­merce is all about mo­bile,” an in­dus­try source said.

“In the process, en­ter­prises don’t need hu­man mid­dle­men to sell their prod­ucts and ser­vices to cus­tomers. In­stead, they need en­gi­neers, net­work tech­nol­ogy ex­perts and on­line mar­ket­ing strate­gists to run their con­nected mar­ket­places.”

Ex­pec­ta­tions are that the phe­nom- enon of the scis­sors econ­omy will gain more strength as in­dus­tries ex­pe­dite in­tro­duc­ing AI tech­nolo­gies in ac­tual busi­nesses.

For in­stance, fi­nan­cial in­sti­tu­tions such as banks, bro­ker­age houses and in­sur­ance com­pa­nies have started to use AI-based tech­nolo­gies not just to rec­om­mend op­ti­mal fi­nan­cial prod­ucts to their clients but also to make de­ci­sions such as whom to grant loans to and where to in­vest.

In the process, less and less hu­man in­ter­ven­tion is needed.

On­line shop­ping malls are also rush­ing to adopt new types of ser­vices, also based on AI tech­nolo­gies. Upon the cus­tomers’ agree­ment, on­line shop­ping plat­form op­er­a­tors col­lect in­for­ma­tion about their pref­er­ences to rec­om­mend prod­ucts for cus­tomers to pur­chase.

In­ter­net and gam­ing ser­vice providers also use AI tech­nolo­gies to an­a­lyze their users to un­der­stand their con­sump­tion pat­terns.

Ad­vanced med­i­cal in­sti­tu­tions such as can­cer cen­ters are also tap­ping into AI tech­nolo­gies.

In Korea, mul­ti­ple hos­pi­tals in­clud­ing Ga­chon Univer­sity Gil Med­i­cal Cen­ter have in­tro­duced IBM’s Wat­son AI sys­tem to as­sist with med­i­cal ad­vice.

“Not many in­dus­tries have started fir­ing em­ploy­ees to re­place them with AI sys­tems yet. But it can only be a mat­ter of time as it did with the in­tro­duc­tion of ro­bots in man­u­fac­tur­ing in­dus­tries,” an in­dus­try source said.

Graphic de­sign by Cho Sang-won

The in­tro­duc­tion of tech­nolo­gies from the in­ter­net to ar­ti­fi­cial in­tel­li­gence is ac­cel­er­at­ing changes to the roles of mid­dle­men and even their ex­is­tence.

Newspapers in English

Newspapers from Korea, Republic

© PressReader. All rights reserved.