During 2009 I frequently heard people ask “What will be the impact of the NBN on the digital economy?” In 2007 when the ALP first launched their bold Broadband strategy they were focused on lowering the telecommunications costs for small business and reversing the decline in economic productivity.
Now as we enter 2010 it is becoming rather meaningless to continue to specify the ‘digital’ economy as being separate or distinctive from the economy as a whole. Whilst it was sensible to label Internet mail as email in the 70’s the time for labelling things digital or ‘e’ this or that has now past.
The economy is the labour, capital and land resources, and the economic agents that socially participate in the production, exchange, distribution, and consumption of goods and services and in 2010 all of that is driven by electronic and digital technology.
Or as the 1992 campaign slogan hung in Bill Clinton’s campaign headquarters “It’s the economy, stupid” must keep us all on message to direct our efforts to where it really counts – the economy.
Following the tumultuous adjustments in all economies after the collapse of Lehman Brothers in 2008 the GFC illustrated just how little we understand about how our economies really work. Writers such as Eric Beinhocker and Robert Shiller have questioned traditional assumptions and examined the extent human behaviour is taken into account in economic models. This has highlighted for me the importance of trust and its role in creating economic value. See my earlier post discussing the relationship between trust and GDP.
Therefore if the NBN is to provide a major fillip to the Australian economy, then those that govern NBN Co must understand how applications will drive substantial value creation in the real economy. In my contribution to the book Melbourne Global Smart City published by Fast Th!nking I was asked to describe how technology had contributed to what makes Melbourne special. In this essay I argued that Melbourne is a city of knowledge and ideas and that our openness in all our endeavours creates a special personality of place that makes Melbourne a wonderful place to live. Technology has magnified our capacity to create value by enabling us to create better ways of working, learning and living. The NBN has the potential to accelerate this innovation and make Australia an even better place to live.
It is not that difficult to imagine a truly connected world; houses, offices, people, automobiles, roads, rail, retail, distribution, manufacturing, resources and the environment. Analysing collected data to utilise past trends with real time events to optimise decisions. What is the optimal route to work at 7:30am Monday morning? What is the lowest cost or carbon footprint, shortest distance or least time? There has been a crash on the freeway with real-time traffic data which route should you now take? If vehicles communicate with other vehicles in close proximity safety can be improved. Connections between shoppers, retail outlets, distribution channels and factories will optimise choice, cost and profits. By monitoring soil moisture content, weather conditions and forecasts ensure agricultural production will be maximised and water usage reduced. With every person or connection providing information about a place, an event, an action or condition effort can be captured and shared. Augmented reality can provide an overlay of information about a place, the building in the place or the service operating out of the building. Information can come from anyone; government, owners, customers or tourists.
All this data provides the means to gain enormous insight into what engages, motivates and influences human behaviour. If such insight is the purview of a select few or used by the majority to dictate to the minorities then the foundations of our democratic society will be threatened. However the very power of ubiquitous connections and an open internet should provide the means to enhance our democracy and not be the seeds of its destruction.
The powers I speak of are the ability for individual to contribute and participate and for the individual to control who accesses and assesses their contributions and participations. In this way people must be able to protect their privacy, property and safety. An improved political economy will need to:
- Establish and enhance trust; trust in data, applications and people. If people have little trust in these things then the potential for any investment in a national broadband network to improve the way we work, learn and live will be severely limited.
- Establish and maintain a reliable means of exchange for value. Such a system must provide an economic, efficient, safe and secure way for making all payments both large and small. Just look at the iTunes App Store for the iPhone. With small payments like $1.99 for applications it changes buying behaviour and people buy millions of dollars of games and applications. Apple has just announced that revenue from their Apps Store is 28 times the revenue this Christmas compared to last Christmas. Australia should set the policy framework so that Banks (or others) can provide efficient payments for information, applications and services in a safe and equitable commercial setting.
- Establish an equitable globally system of taxation and funding for public services and the operation of nation states and international trade. This is going to be difficult as smart operators move their capital, resources and means of production to the lowest cost economies whilst servicing the highest cost economies where their margins are maximised. This complex, global, political system must be resolved in a fair and equitable manner.
- Enhance the systems that protect property especially intellectual property and copyright to ensure equity in order to encourage investment in property. When people have little confidence in the probability that they will be rewarded for their investment they do not invest. Without investment innovation stops and the economy collapses. When a $1,000,000 invested in physical property (house) can remain in the family for generations and a similar investment in creating and marketing music that relies on copyright will disappear 70 years after creator’s death. When so much of our economy is based on knowledge and intellectual property a much more consistent property system must emerge.
The future prospects for our planet threatened by climate change (man-made or otherwise) and the complexity of our globalised economy make any future projections foolhardy. Whether the seeds of our destruction have already been sown or if the combined genius of the world can overcome any obstacles to create a better place to work, learn and live we shall just have to wait and see.