What is Technology? Accelerator, Enabler, or Displacer?

What is Technology? Accelerator, Enabler, or Displacer?

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Welcome, to inet, life, this is the future of work series. Today's conversation. Will be dedicated, to examining, the role and impact of technology. On the economy. In the past, present, and the future. My name is kaita klinova. I lead labor and economy, research programs, at the partnership, on ai. I'm joined today, by a fantastic. Panel. On it, are. Long chan. Director, of the luhan, academy. Anton kornick, associate, professor, of economics, at the university, of virginia. Darden school of business. And john van rienen. Professor, in management, and economics. At the mit, sloan, school of management. At the end of the discussion. We're going to make time, for a q a for an audience. Please submit, questions. By clicking on a q a button, at any time, during the discussion. I would like to start, by posing to our panel, a question from the very title, of the panel, is the technology. An enabler. An accelerator. Or a displacer. But before i turn it over, the virtual microphone, to our panelists. I'd like to take a moment to acknowledge. What an interesting, a unique question it is and what a unique time it is to be asking this question, this is the kind of time, when on a random tuesday, you may open a newspaper. Or maybe you'll join an online, event. And you'll see, very respectable, people. Making very compelling, arguments. For each three of these options. So it seems like we've as society. Shifted, from, seeing technology. As. A force that lifts all boats. To now. Seemingly, being unsure about its role. In society. And in the economy. What happened. I'd like to, for our panelists, to reflect, on this meta question, what happened. In, why did this happen is it the, technology. That changed, and now it no longer lifts all boats, or is it that our understanding. Of the role of technology, in the, economy. That changed, and became more nuanced. John, let's start with you where do you stand on this. Well thank you very much for giving me the chance to, share a few thoughts on these uh very important, questions, of course, as a typical economist, i'm going to say all three of those things are what technology, does, uh we'll make three quick points just to get the conversation. Rolling so. Fundamentally. Technology, is an enabler, if you look at human history and human progress. What's lifted. Humans, out to dominate, the planet, has been technology, and our use of knowledge. And really a, key moment, of that came you know. During the industrial, revolution, you know in the late 18th century. When we have what you know economists call this hockey stick or this kind of takeoff. Of productivity. A take-off of human population. To escape the trap of uh the malthusian, trap that when population, took up within the past. You know we, you know eventually, humans would get pushed into poverty after the industrial revolution. Through the use of knowledge. We managed to lift, now billions of people out of poverty, improving health and improving well-being, so really that's the number one fact and lg has been an enabler has been a great, um you know it's what what's made humans humans, so successful. The second thing is that um. Although there is a part of that which can't be predicted, and is random, and exogenous. Um, part of the speed of that technological, progress. Is you know this horrible word economists like to use endogenous. Uh growth. In the sense that, we can influence, the speed of that technology. And we can influence that in many ways one is through how we organize, ourselves. Through for example, in the market-based. Economy, to allow, new ideas to flourish, and create and oh you know, old, industries, to die and decline. Um other ways are through. Investments. In research and development. Um you know bigger investments, that government make makes an rnd of a way of increasing, uh, increasing speed of technology, through the intellectual, property system through another, other ways. The third thing is that we can influence, not just the speed of technology. But also the direction, it goes in whether it is more likely, to. As i hope it will do, to uh. End skill people, give people opportunities. Um or whether it actually goes in the other way, and actually, destroys, and does other things take one example take climate change as a leading example of today. We can influence. The way we deal with climate change by making. Investments. In clean technologies. In the same way we made a moonshot to put men on the moon we can make investments, in order to deal with the problem of climate change, but we can also affect climate change to things like tax policy. So carbon, taxes, reduce, people's, use. Of consumption, of fossil fuels, but they also give incentives. To the private sector, to make investments. And clean technologies, of the future lots of evidence that you know when you do that you can actually shift the way that, private companies, invest, in things because they can see where the direction, of the market's going.

But Finally this is my last point we can do this at a very micro level, so when new technologies, are adopted, all around us, in our businesses, in our hospitals, and our schools, we can influence, the way that technology, is introduced. Through our institutions. Through our negotiation. Through whether we bring, people with us for workers, in order to just help design and implement that processes, or whether we don't, so that at the very micro level as well there's a way we can influence the direction of that technology. So i'll end it there and hand over to my other my other panelists. Thank you, anton, how about. You. So let me first start, by saying thank you for organizing. This fantastic. Panel. Um, and i very much agree with the points that john raised, but i want to add also another perspective. Let's all, take a step, back and i want to. Ask you to follow me on a thought experiment. Imagine, an observer. Who approaches. Planet, earth. And who is trying to figure out, what's going on, on this strange, planet. And who sees that there's, lots of entities. That are called humans, that are interacting, with each other, but there's also lots of entities. That they call machines. That interact, with the humans. And that interact, with each other. And, for that observer. It's. More and more difficult. To figure out who is actually, in charge. Who is in control. Are the humans. In charge of the machines. Are the machines, in charge of the humans. Or do they both have. Certain. Degrees, of control, over each other. And. Honestly, if we ask ourselves. To answer that question objectively. We probably, have to say, that in today's, world. Our machines. Have taken on. Agency. Of their own. And, we are no longer, in full control. Our technologies. Are themselves. Agents, and are very much influencing. What's happening. In our human realm. So from that perspective. Technology. Is all three. But i think we also need to, recognize. That um. Technology. Is increasingly. A force on its own. And. As uh, john, put it so eloquently, at the end of his opening, statement. We, need to, really think carefully. About how can we steer, technology. While we still have some influence, on it, to work in a direction. That we can. Coexist. And mutually, benefit, from each other, for hopefully, as long as possible. So biologists. Use the term, symbiosis. When there is two types of beings. Who are existing, with each other and mutually, benefiting, from each other. I think, we are increasingly. Living in an area, where, technology. And humans, live in symbiosis. And. I think our job, at this juncture in history. Is to make sure, that the symbiosis. Continues, to be, mutually beneficial. Thank you challenge yes no less. Long. What's your take on this question. Okay so. Um uh. Especially, thank you very much for giving me the chance to. Uh to share my, my thoughts. And i think it's important. And. That. I want to remind all of us that our views are shaped by what we observe. And. So i'm going to add to this uh. Discussion. By, uh. By presenting, a bunch of facts. What we observe, in china. And uh. And some logic behind it. Now so. I'm going to, say that i'm, going to focus on digital technology, and what's its impact on china, thus far so i'm going to. Say that. It's obviously, technology. It's. Its impacts, of all the three roles, but this time i think it's particularly. Interesting. Uh in terms of the direction. And the its. Impact, on the inclusion. Let me give you some concrete. Numbers. Cases, so, uh if we think about, because, what i observe, is that in the united states it's actually quite different i couldn't think about it, so it's it's. We have ebay, but it's not. Probably, that big it's a company. And uh. Amazon, is it buy stuff and sell so it's really a company, and so.

Uh So ebay's product i'm sorry ebay's platform is not that big but in china. If you think about e-commerce. Now 10 years ago economist. Was, online consumption, was about. Actually, one percent, of the, china's, retail, sales. Uh it was below the average, of many, below, uh that of the many of the advanced, countries, but now. Uh by now it's accounts for about 25. Of the, retail, sales in in china so it has become a macro phenomenon. So. And if you only look at alibaba. As example. On the bus taobao.com. So every month we have more than. 700, million. Active, users. Shopping. Every day online. And, on the other side, it will have more than 10 million. Smes, and startups. Serving, all those, users. And for those startups, half of the entrepreneurs. Are women. And for those uh, and all so that's. I'm talking about, the scope, of the inclusion. We're talking about, here so i'm about trying to. Connect them to each other, and for those entrepreneurs. More than 10 minutes as entrepreneurs. So, we have the. If we talk about micro lending. So in the past several years the mybank. Has provided. Uh has provided a micro lending, for more than. Uh. For more than, 20 million, smes. And so, and we start a penny of classroom, because in the words of the, professor, homestrong. Information, is the new platform. Now, so and if you look at. Some more uh uh. Inclusion, patterns, if we look at the less developed regimes. Consumers. They actually. They, spend, proportionally. No less. Online, than, the more advanced, regions, than us but they buy. Much more varieties. Because. They don't have, big supermarkets. Go to and the growth rate is also faster. And, so. Uh so the most active, people, using, the e-commerce. Or the. Or the mobile payment, mobile. Payment right now in china is like the, hundreds times of that of united states i think we have, more than a billion, active. Mobile payment users, but uh, so that has become very inclusive, so that's the, that's my first point is that is, the role is obviously, of also but from china's point of view, it's quite different, from the what we observed, from united states that's what i the first point i want to share i think it's particularly. Probably. It's possible to be, inclusive, this time, my second point is that. I want to bring up a different view. Sometimes we talk about the, the superstar. Firms. But, which is, true obviously in the digital, age but uh there's another angle is the size of the model.

So Because, right now. What is, what this technology. Really does is to. Break the traditional, boundary, of the market, so that, so, now the small, papaya and mama stores can serve. The average, distance between. Buying sellers, is about. A thousand kilometers. So. Because of that i think it's the. It's the size of, market, has never been so big. Now so, that's. In the case of alibaba, it's operator, of the market, so then market becomes so big, that's why, with that they grow. Simultaneously. So, my point here is that. And as i'm anchoring what john talked about earlier, that is that, when we think about the role of technology. It. The directional, technology, could be a superstar, firm, uh it could also be a slice of the market there's a couple of angles. To look at it, but the last uh. Last, uh. Uh, example i want to bring up because you guys talk about the climate, change but let me, talk about uh. One good example. Uh which, is, actually a product, i. Uh we, we created, in my office like four years ago, so. Back in 2016. We tried to do something for climate change. So we want to. Uh so, beyond, inclusion, what can we do for the, brain, to make that. People to be more aware of their green behavior, so we, started, to. Come, to come up with this ideas called, uh armed forest. So essentially, we use the big data. And. The tracking technology, to. Track, the users. Upon the approval. Track their. Their uh. Carbon footage. So let's say john, you decided, that today, you you won't. Drive to work you decide, to take a subway, that will lead to a reduction, of the problem usage. And that will show up in alipay. Now people there's a little green ball. People can play the screen balls, or they collect from friends, that's that's that's leads to a healthy. Competition, but anyway that's fun. So when doing that a little tree in holiday, will grow, a virtual, tree, but when that, tree. Grows into a full tree. Then, uh, real tree will be planted, in the. Deserted, areas. Where the, the, the plantation, is needed, so that was a little. Uh, again. Uh a little gain in the, in in in aleppo, but, that has become, one of the most. Successful. Uh applications, on alipay. We've seen, one year. We have right now we have more than, 500, million, users. Subscribed, to it, and so not what that really means, and we have planted, more than, 100 million trees. And so what this really says is that every day, uh more than three four percent, of the population, on earth, they're watching their green behavior, and they are actually, planting trees every day, it's not just the their own, action, in the carbon reduction, but also, in the meantime, they are actually planting trees every day, so i'm trying to, use those. Use this example, to say that, it is possible. For the digital technology, to be very inclusive. To to have the good meaningful, purposes. But last point is that i think. That. Sometimes, we worry about, the replacement. Uh. Displacement. And so i just want to remind, us that is. Globally, we don't observe. More digitized, countries, have higher. Unemployment. Rate. So i think that, but there's obviously, a lot of the. Displacement. Going on because, the digital age is known for its, innovation. So. It's, also a huge task, trying to minimize, its uh its jobs. Uh but, uh so, my, my point here is that from our, actual, experience, in china. Uh, i surely believe technology, is enabler, in the long run but i think particularly. It's it's more. Hopeful. At this time even in the short run, let me stop here. Thank you very much, so i i'd like to expand, and spend some more time on this last point that you are bringing up which i think is very important, indeed, we haven't seen huge spikes, in technological. Unemployment. Around the world. And. Hearing these numbers from china is just really impressive. At the same time, i am right now, in the united, states and there is a lot of conversation, in both academic, circles.

And, In the media, about. The so-called, hauling, out of the middle class, and middle-paying, jobs. And polarization. In the labor market, and a lot of people attribute, that to technological. Change. And, um. The technological. Change being skill biased, and, creating, more opportunities. For people with certain kinds of, elite, degrees. But diminishing, economic, opportunities. And access to them, for everyone, else. So, how do we think about that is it indeed. Something related, to technological. Change and if automation. Is not a new phenomenon. At all, uh why is it that we we've only been seeing this hollowing out of the middle paying jobs in the last few decades. And not before. And then would you like to start. Um. With this. Uh yeah very happy to, so uh first let me see it's really interesting. To listen too long. Because, i think it, is true that the perspective. Of uh what china has experienced, in the past two decades. Is really quite different, from, what uh, most of the western, world. Especially, the us have experienced. And, the way i want to put it, is, that technological. Displacement. Does not show up, in unemployment. But it shows up in wages. The reason for that, is that, economists. Put it. By saying that labor supply. Is fairly inelastic. Intuitively. What it means is, people, want jobs. No matter what, so if there is technological. Displacement. It puts downward, pressure on wages. It doesn't really, create, a lot of unemployment. And what we have seen in the u.s. As katya has mentioned. Is, that there has really been, a lot of downward, pressure. On the wages. Of. Lesser-skilled. Workers. And. I think that has really led, to a significant. Problem. When it comes to inequality. But. More broadly, speaking. Also to significant. Societal. Problems. Like. Deaths of despair. As a case indeed, have described. And even political, problems. Because it has led to so much discontent. So i think, this uh technological. Displacement. It is happening. In certain, parts. Of. The world. And it is having, very real and very destructive. Impacts. Thank you cardio. Yeah can i, just, fulfilled, on that. Um. Yeah so i mean mike you know i've. Worked you know most of my life on these issues and, you know my colleague david alter as well uh has, as you know has really been a pioneer, in this and i think the white, you know, i i'm totally on board with what anton is saying i mean i think, in the popular. Discussion, it's all about you know robots, destroying. Jobs. And causing unemployment. And i think that's the wrong way to think about it we should be focusing. More on the quality of jobs and the quantity, of jobs i mean again the history teaches us there's. Lots of different technological, advances, that hasn't led to ever growing. What it has led to is the change in the way that we work. And also the kind of inequalities. That uh that, anton has mentioned, and i think the way to think about this is that if you think about what automation, and digitization. Does, it, it makes, um. First of all in the first generation, it made routine, tasks. Uh a lot easier to automate, so if you think about the 1920s. Working on the production, line. Uh, those type of jobs were the first ones which went from being you know production line jobs and making cars to robots, making those lines, and that was the unskilled, manual, workers. Suffering. But then as as it went on, routine, jobs if you thought about it my mother, worked as a bank clerk and her job when she was in the bank, was you know people would come in and she'd give them money and she'd like you know they'd write checks and she'd give them money, but it was a very routine job so it's kind of clerical, jobs, was the next kind of wave, of, displacements. So she was like you know a middle-class, worker, but you know now her job is done by an atm machine.

So, That, started. Reducing, the demand for jobs routine, jobs in the middle of the middle of the skill distribution. And this is the kind of hollowing out and polarization. That you've seen, and you know now, now of course, as you know, i'm sure we'll talk about this, the worry is that even more, types of jobs even the less routine, jobs may actually be automated, you know driving a car we thought was a very non-routine, type of job, but maybe that is something which can now be taken over as we've seen by driverless, cars, so maybe that that's the next generation, of where we we've seen displacement. But i do think the way we should frame this debate. Is really thinking about. How we deal with, improving, the quality of jobs and you know dealing with that kind of displacement, so i think we really have to think about, how we support, people's, wages. How we think about the kind of labor standards. Of people who are working, in different types of jobs especially now that jobs have become more fragmented. Than with the, economy. And you know we have to think about how we can, in the implementation. Of that, those new technologies. We can create opportunities, for job ladders, so i mean as anton says the the the real failing in the united states, has been the stagnation. Of wages, of of less skilled workers. And we really need to think about ways we we provide, paths. That those less skilled workers can get more skills. And also can have pathways, to kind of decent, and sustainable, jobs and i take you know in addition to that in fact, particularly over the last. Period since the global financial crisis. We've also seen stagnation, of general average wages you know not just in the us but also in many other countries. And in my view as that's actually related, you know we talked, we had the sense of this amazing, technological, progress. But if you look at the productivity. Numbers, the productivity, numbers are actually pretty disappointing, productivity, that growth has actually slowed down. Since the global financial, crisis so i think there's a real question over, you know. If that's true that has you know wage growth depends on productivity, growth and we're not getting productivity, growth we're not getting a wage growth we're not getting wage growth we get huge social and political problems of the sort that we've seen in europe and and the united states over the last 10 years. So yeah i'll leave it i'll leave it with that. Thank you, long would you like to add anything, it would be really great to hear from you if you think. This is, not happening, in china because. Fundamentally. There is something that you figured out that you know the rest of the world needs to learn, or maybe this is just a question of time before this starts, happening. As well. Well let me emphasize, again that we should uh. Be careful, and i think we should really look at facts, and be careful about how to interpret, the facts. So the first fact i want to talk about that china's, labor share. Of income is rising. Uh. In contrast, to, the united states or, europe. So that's one fact. Uh then. But that is, then so i think this will be a little bit different from emerging, markets. Emerging markets, are going through the, industrialization. And the digitization, at the same time, so, and the industrializer. Itself, in the polarization. Itself, will actually, disrupt, a lot of the, informal, sectors. But in that meantime, they, now they have the digital. Technology. It goes to the online, they can do a lot of things so what this is the i think for, emerging markets, including, china, so that might be a little bit different. Uh so that's the the first, fact i want talking about. But uh. Second point i think that, and i agree with, uh uh i think it's anton, uh talk about it so it's the, i think it's the, uh, it's this is happening, in certain, areas, and that's the key, that is the, the reason, i think. The the. The thing is, this, this stagnation. Is more complicated. Than probably. We thought. Because that. It's not immediately, clear that it's the. It's the technology, that's causing this definition, of the middle class in the united states. And so if you look at the. Uh. Picadilly, talk about and, some other. People talk about maybe it's the global trade. Or other things, uh these the capital market. But uh, there are many, uh possible reasons technology, might. Be one it's a hypothesis. But i think. Uh. Stagnation, is a fact but, how to interpret, this it's probably more.

Complicated. And finally, the. Productivity. Productivity, itself, i think that's another, interesting, thing and. Uh. I think the gdp. Related, to that. And the productivity. As a measure. Is going. Becoming, more and more, outdated, there's a rise of intangible, economy. And that is actually, measurable. If we look at the more digitized. Industries. Actually. The market, price. Versus, the book value. The gaps become bigger and bigger and less much less the digitizers, become much, less so. And so there's a lot of consumer, slippers. A lot of free goods. That are not captured, by the, gdp, or the, traditional, productive, matters, so. Again. I think the. We are facing, the a lot of the. The the measurement, issues, and also the, the the facts are kind of different, in different kind of regions. And, the also interpolation. Is, complicated. Thank you, fascinating. To be looking at it from, both sides of the world. I'd like to, return, to something that was also mentioned. Mentioned by yulong. The superstar, firms. And their role in driving. Technological. Progress and innovation, and again, there are, quite opposing, views, here, you know one can argue, that. Having superstar, firms, is extremely, beneficial, there is a reason they're called superstars. And their performance, indeed has been. Really impressive, and they've brought, opportunity, to many people, to expand, the market reach that they have uh you know to be local entrepreneurs, with global reach for example, but there are also people who argue well, there are very few of them and they're, increasingly. Dominating. The markets, in which they're acting. And they might be stifling. Innovation, quite a bit, so how should we think about this where where is the truth, uh in this debate. Anyone, who'd like to start. I mean i. This is this is this is the kind of area which. I'm very passionate, about because i've been well you know it is the area i've been working on uh a lot, recently. So yeah i i like long's fat so let's start with the fact so i think. In the us. It's pretty clear as you say catcher. The, one of the really striking, things is the growth of these superstar, firms that you see the you know i in the digital space especially, the uh they go by different names but the gaffers, are like the in gathering, english, in english english means like boss. So the gaffers, the googles the amazon, the facebooks, the uh, the uh the, apples and the microsoft's, they you know they've they've got you know the, enormous, firms they've got a lot bigger. It but even if you look at the fraction of employment, so if you take the fraction of employment, and firms with more than 5000, employees. That's, increased them like 26. To 33. Since the mid-80s, in the us and if you look at the sales, footprints, of these firms it's even larger. And indeed if you look across a wide range of u.s markets concentration. Has risen, so you know it really does seem to be that markets are increasingly, uh, dominated, by these this small number of firms. But you know. There's different explanations, so i think long gave one explanation, which is to do with globalization. That markets, are just bigger. And you know as as the markets become bigger. Then, there is increasingly. A winner takes all type of nature to those markets if you've got a better product you're going to be able to dominate a bigger market much more, efficiently, than you than if you're a smaller firm so part of this could be a force of globalization. And increased competition. Part of it could be network effects, you know if you if you know. Google search engines the more people search the more data you get the bigger you get so it could be that kind of network effect. It could be the intangible, economy, so in fact you see this phenomenon not just in digital space so you see this in like retail, and wholesale. And i think part of this is this intangible, economy i call it the walmart, effect.

You Know if walmart's, built up its strength. Because it's been able to make these enormous, investments. In having, logistic, logistics. Software. Which enables it to move its goods around, much you know the mob. A mom and pop or a small chain cannot make the kind of hundreds of millions of dollars investors. So those are all the kind of you know, technological. Positive, you know positive stories, at least neutral stories, the more worrying, stories, i think is that and i think this you know i think. In some markets, i would say that the, technology, and globalization. The dominant, reasons for this but in some markets, and i'm thinking of things like at us hospital markets, or parts of the airline, industry, or u.s telecommunications. You also see, prices. You know markups, going up and prices, going up, so i think that in some markets. It is. Firms. Exploiting, the market power i think it's not the dominant, story why these superstars, have become superstars. But i think it has happened in some markets. And i also think that when we look forward, i mean we should always look forward, competition policy looks backwards too much, you know and what we should do when we think about, mergers and acquisitions, is to look forward. And the risk is that many of these, very powerful, firms. Will be able to abuse their market power because they're so large. You know an example, would be of a you know dominant digital platform, which buys up a promising, startup. And then once it's brought that startup. You know either absorbs, its technology, or even kills its technology, off as examples, in the pharmaceutical, industry. Of big pharma firms, buying up promising startups, and actually killing their technologies, off the so-called, killer acquisitions. So i think that we have to really reimagine. The whole way we do anti-trust, policy. In order to really prevent. Um you know some of these, very dominant, firms. You know becoming, too powerful, so i think it's. The reason that they become powerful is to do with technology, and and globalization. Primarily. But i think now as we look forward, we have to think you know in all countries. How we prevent them building up walls and moats. To prevent, other startups, from displacing, them i think that's one of the big big you know, big challenges that we face, across many countries at this point of time. Thank you. Let me add, to john's, points, uh which i very much agree with, and i will start with a semantic. Point, and then uh some more substance. So the semantic. Point is that, superstars. Makes this sound really great. They are separate, astronauts. Uh, perhaps, we should call them super monopolists. So uh from my perspective. Technology. Is indeed. The major, driver behind this phenomenon. And in fact, digital, goods, in our world is more and more, digitally, dominated. Are by their very nature. Non-rivalrous. So that means, the provision, of digital, goods. Is a natural monopoly. That means, um. We. We, cannot really get around the fact. That these, providers, of digital, goods, will have some monopoly, power that's the only way to provide, these goods. Because the marginal, cost. Is zero so it means we cannot have a competitive. Market, providing, them, but what we really need, as john has emphasized. Is we need proper regulation. Because. That's what we do in all other areas where we have natural monopolies. When it comes to, let's see, electricity. Networks. Border lines, and so on, and we really need to view the digital, economy. Through the same prism. Of natural monopolies. And then maybe, uh the last point to connecting. To connected, to the broader, issue of agency.

Is That some of these, superstar, monopolies. Have accumulated. So much power, that they are arguably. More influential, for the world. Than, most nation states. If you're a small country, somewhere around the world. Uh. Chances, are, that google, and facebook. And so on are more powerful. Than you. And. They are also. More powerful. Than most individual, citizens. And that just highlights, again. How we really need to. Be very careful. In thinking. How many rights we assign to these entities. And how strictly. We want to regulate, them, to make sure. That. The technology. Does become an enabler, for humanity. And not a displacer. Thank you katya. Thank you how long would you like to jump in as well. Yeah so i will continue, to. Uh. Uh. To take a slightly, different view and i think i was, stick to the facts. Um. So, and i think i as i mentioned, in the beginning. Uh, because, what we observe from united, states, is actually quite different, because when i think about the united states it's possible, that. The superstar, firms are talking about the actual firms. So, and that's the. That's one fact. But, as i mentioned, uh. In china. So there are two angles look at this one is look at this as a firm. Another, is as the operator, of the market. Uh and that's. If it's operator, of the market. The size, actually represents, the scope, of the coordination. I already gave. Very. Concrete, numbers, to see, if you connect. Hundreds of millions of people together, and intense, meanings of the star loss smes, somebody has to do it. If the market had come so big, and so that's the, a different, angle, so my point i'm not trying to defend, for order this, so-called, big tech. Superstar, firms i'm just trying to remind, there's different angles look at this like different species, of those uh tech firms they're differently, different roles. Now, and the second point is this dominance, the competition, policy will kind of. Worry about, but then. That's again it's a little bit different. In different regions. In china. In the summer of the most advanced. Regions, uh the acceptors, for example, in e-commerce. Alibaba, was of course was was a starter, of the, e-commerce, in china. Its market, share has been steadily, going down. Even though, uh china's. Online consumption, is growing, uh as a percentage, going up and up, and so e-commerce, becomes much more diversified. This company called the pindordo. It actually. In the past three, four years it, uh, is starting from the startup, now it has more than, probably 400 million, users. And going up very quickly within several years. And that's for the e-commerce, payment it's not an example, so i, uh. In. We have already paid is, initially, was like. A leader. Uh for the mobile payment, but, now you have the other payment and mobile payments. And the other page uh, market shares going down uh uh. Quickly in a healthy way, now it's growing, but the, share is going down uh, a lot. Another example is advertisement. Now by, baidu. Used to be that, it's the search companies, the google in china, so, so that used to be the big data company, down and it becomes it will actually have. Much, much bigger. Market cap than, alibaba, attends and other companies, but now become much smaller, and let's think about the, tick tock the the hot topic, nowadays we'll talk about. Now tick tock has, uh and. Its parent company. Took over. By do as, to to as the advertisement. Revenue. My point here is that i i think, it's very hard for companies, to sleep. And it's, there's fierce competition. For sure, in. Most of the industries, i'm looking at, so i'm trying to remind. My colleagues, and the audience, here that is different, perspective. And. Finally, i think we when we think about issues, we probably. We should not forget about the meaning of competition, policy what's the point of talking about this, uh is it getting more or less competitive. Is it, promoting. Competition. Or is, blocking competition. Or are we bringing more consumer, supports. Uh to the market, so those are the things we have to respect. Think about in the meantime. When we think about the. The so-called, superstar, firms. Uh again, it's kind of the.

Complicated. Uh, it's, different, in different regions, different industries. Globally. We have different angles. I'll stop here so can i can i can i i mean let's just following up with exactly, this point i mean i'm, you know i'm often involved in these, conversations. Um. Arguing, against people, who are saying you know this is a, all of this is terrible, and these these. Mega firms that's called the, superstar, firms are you know a wicked monopolist, exploiting, their market power and and for all that i think we're kind of in agreement. That's too naive. Approach if you look at the. Sectors which have become more, concentrated and dominated they are the ones that long and anton will be talking about they're the ones with a lot of innovation. A lot of activity, they're not the ones where prices are going up. However. I do think that we know. We have to take we have to we can't we we have to be careful, because. You know. It is the case that there are a lot of forces, anton gave you know one example, of, the way that in many of these network, industries. They are, almost like natural monopolies. Once you, get an advantage. It is harder, for a new entrance, to come in and get the scale that, you have because you have these, network effects supporting, you. And. There are you know i think there are, um. The way that you know we often think about some. Competition. Policy, in the way it's done in practice, is that at least in, in america, and europe, is that we say well here's one firm taking over another firm, this other firm has like one percent market share so the fact you know, it's being taken over it doesn't really matter it's too small to make a difference, but if that tiny, firm. Could have become, the new platform, threat to google, or facebook. Then it's a potential, competitor, of the future, and under the normal anti-trust, rules. Those, mergers, those acquisitions, would be waved through. But you know we think about say the facebook, whatsapp, takeover. Or the uh, or the facebook instagram, takeover. I'm very concerned, that you know when those takeovers, happen. Those innovations, which, could have become the new platform, threats. Don't become the new platform threats. And i think that we need to kind of shift the at the moment the version of proof was all on the on the government or the regulators, to say, you know why we think this might be a threat it's very hard because you have much you know we don't have many facts because these are all future markets. But unless we actually, do, engage, in that um, you know that, prospective, competition.

Perspective. Then i think that's going to give the, the very large firms, even stronger power to remain dominant. Now china of course you know you know, i'm no expert on china but my, my impression of china, is that, you know there are a lot of very big firms which are very strong. And. Um. You know there's a lot of connections, between the states, and these and and these and these firms. So i wouldn't be too relaxed, that everything is completely, fierce competition, i think there are risks. Of competition, being undermined, whenever you get very you know very very large firms. And you know there's a connection between this and what happens in labor market so one of the features of these very big firms, is that, they typically have high profits, and low shares of labor. So one of the reasons, for the fall of the labor share in the united states is that more and more of the economy. Has become dominated, by these mega firms and superstar, firms and that's been a force for, as you know as david also and i have shown our work for pushing down the overall share of labor, so i think you know there are, there are lots of reasons that we uh, we we shouldn't be we can't be too relaxed, about. Allowing the market to take care of itself. You know in order to. Have, dynamic, markets. The state has to be dynamic, the state also has to be involved. With creating, the uh the competitive. Landscape, and framework, to, allow fierce competition, to take place. Can come back on this. Yeah absolutely, i'll i'll actually would like for us to stay a little bit on this topic of superstar, firms. But be with it a little bit to talk about the responsibilities. Of mega firms or superstar, firms, but before i do that i'd like to remind our audience that we're approaching, a moment when we're gonna turn to their questions, we've been receiving some really terrific, questions and please keep them coming, we're gonna turn to that in just a moment, so, thinking about the responsibilities. Of. Of the mega firms, and this is the question that i'll confess, i grapple, with every single day, in relation to my work on the shared. Uh prosperity, initiative, with the partnership. On ai, so these are the firms that really. Can, direct. Technological. Progress. This notion, that that john was mentioning in the beginning. So they, do have a power, to be creating the kind of economy, that is more, inclusive, and more just, and.

Provides, Access, to. Um. To. Different people not only people with certain kinds of education, and can be more inclusive. You know the point that long was making. So if you could, direct, technological. Change if you were that decision, maker. Where would you, direct, it how would you, be making, the technological. Choices, and what is the responsibility. Of, the firms. To do that if any. So long maybe we'll start with you on this and you can also expand on the point that um, you wanted to mention, thank you. Right so. I'm, not trying to defend, for all the. Tech firms, i just think that uh. And i know understand, that, a lot of people feel uncertain, and some of people feel terrible. And i understand that i'm just trying to think that. Uh, we we need a different, views, about the way we coordinate. In the digital, age. And so beyond, just firm versus, market there's something, some other species, now, because. That, for example, again. Think about alibaba. Is, alibaba, is company but on, the platform, there's more than 10 million. Sms, startups. And 100, million of consumers. So this is a market. So, it's not just for the firms but anyway, they need to be regulated. I agree, but with just different, needs a different, uh. Take. In the digital age that's my point, and also because, of the digital technology. Actually, change the relation, between the consumer, producers. And, producers, do not need to. Make money on every piece of product anymore there's a lot of free products, and also. On the platforms. It's actually, to the platform's. Uh incentive. To promote, a lot of the innovations. So that, that's how make the platform market, prosper. And also. Uh we as i already, give you example, to see that the even in china in many of those platforms, there's a lot of competitions. It's very hard, for, to, sleep. And the, and so i already mentioned that i don't think the share of the labors, is going down, if you think this as a market, rather, as a firm. And finally and but, let me come back to your point i agree, with you that. Responsibility. Is a key issue because inevitably. When the scope of the coordination. Are going up then. If you have those platforms.

They Have to show them more responsibility. And so and, the governance. And so that is also, something a little bit different, so. Uh for alibaba. Maybe it's just because of jack moss. Where he came from he failed many times when he has a startup, and so. The whole. Uh. The mission of alabama, is to make the business easy, anywhere. Uh so that's how it has been. The same for the past 20 years but i'm the other bunch of rewinds, them i'm not trying to talk about this as a company, it's just i think that many ways. And i, the point here is that tech, firms. They have, they have a bigger responsibility. And have bigger power, and we have, that's for sure, and we can shaping. Them in the right direction. And also, but we also need to have a different view to think about them they need to be governed, regulated, but probably, it's not exactly the same in the industrial. Age. Thank you john anton, any words on on the responsibility. Of the mega firms. Technological. Change, yes. Let me start with a shout out to katya. Because she's doing. Really, interesting. And exciting, work on this topic. At the partnership, on the eye with the shared prosperity. Initiative. Where they are working, on a framework. That basically. Lays out. How firms, can, consciously. Steer, the development, of technologies. To be more labor using. Now i want to. Focus on two aspects. That the presence, of these superstar. Firms in this sector. Implies. For this effort of steering technological. Progress. First it really raises the stake. Since, the superstar. Firms are such important, actors, in the space. What, an individual, form of that caliber, does. Really has repercussions. Around our economy, around our world. And that's why it is really important. That the superstar, firms, are conscious, of what's going on, conscious, how their. Choice of technologies. And their decisions. On how to innovate. Will affect. Us not only. In the, product sphere but also. In the labor market. And how they will impact. Whether. Labor is being more displaced. Or more complemented. In the marketplace. Now the second, point, which, is actually very, positive. Is, that. Since they are natural, monopolies. They are. Drawing, a significant. Source of profits. Which allows to, them to invest. In moonshot, projects, and a lot of them do. And. If they consciously. Steered, those moonshot. Projects. In directions. That actually. Help society. By, enabling, and empowering. Labor. Rather than just displacing, labor. Then i think. A lot of good. Can be done. Thank you katya. So so very quickly building on those points i mean i it's, it's absolutely, correct to say that you know these because these companies are so large they have a lot of responsibility. To. Try and you know do things which are for the good of society. Um, and i think economists, are you know somewhat to blame for the idea that shareholder, value was the only thing which actually matters whereas i think in reality. There are a number of stakeholders. And it's actually often in the company's own interest, to take, those into account, rather than just trying to maximize, shareholder, value so trying to think about involving workers, on the board or other aspects i think is very important, having said that i think it would be naive. To, expect. Firms. To do all the things which are in the good of society. We know that that will not be the case, you know, so i think we, governments, have important, responsibilities. To try. And, uh maintain. Um, what's in the. Good of the social, good, which needs, you know curbing the power of some of these firms and maintaining, competition. And i think the problem is that we face today. Is that you know. States are small relative to many of these companies. So in order to. Counter balance the power you need coordination. Across, many countries, of course the direction of travel is the opposite, now with, increasingly, countries, putting on walls and in fact what we need. Is greater cooperation. To deal with making, companies pay their fair share of tax. Making sure that they are obeying competition, rules trying to do some kind of regulation, which has to be transnational. Not in one single country. Can i come back a little bit. 30 seconds. Yes quickly, and then we'll switch to audience q a thank you. So. I. You see i agree with john and uh. And, the boss of anton, and so i guess my point here is that, we, i i'm.

Emphasizing. Again that we shouldn't be simplistic. Because, when i'm listening, to this. I'm hoping to hear voice that we're, taking, we're going to come back to the nature, of those. So-called, superstar, firms, exactly. What are they serving. Is that the right direction, because i think that direction, is inevitable. Inevitable. We're going to have a lot of coordination. Somebody has to do it, it's just what's the right way probably we should stick more, uh rather than just think we're going to do something, so, that's my my point but. Make, you again that's. I'm, another side, facts. When alibaba, went public. It says clearly, that its mission, is the, a customer, first. Uh employee, second, and shareholders. Serve. It, it says in its ipo. Statement. And if you don't like it you don't need to buy it as a shareholder, so, and, autobahn's. Mission is to, make business. Easy, anywhere. So. My point here, is that it is possible. Uh for tech firms, to, to sense that and i don't think and agree with you you shouldn't. Just trust the companies do that but i do think, it is the age because, of the opportunity, of coordination. It is aged to be much more inclusive. It's also it's. Good for society. It's also good for the business. And but i also agree with you that we need to have the, uh society, uh governance. From, policies. And we all join, uh, work together, firms. Uh consumers. And governments, to, make sure, we're going in the right direction, but we just need to have a more, uh, integrated, approach to think about these issues. Thank you so much i'm really enjoying this very passionate, debate and i would keep going and going but i also would like to get, to the audience questions because we've been receiving, a few of them and they're, terrific. So let's try to answer them briefly if we can so we can get through as many. As possible. So the first one we've been talking a lot about the us, and china, and the first question, i'd like to pose from the audience, is. What is your take on the impact of ai. In on solving the, unemployment. Problem in the global south, especially, in sub-saharan. Africa. Do you all see that there are opportunities. To also be helping to create inclusive, economy. In sub-saharan. In sub-saharan. Africa given the, um. The mega firm global, influence. So this is actually a question that i'm really concerned, about. Because. The comparative. Advantage. Of. The least developed, countries. In the world economy. Is, unskilled, labor. And, unskilled, labor is precisely. What we are automating, away. And that means, as we are automating, more and more. Uh the least developed, countries, are experiencing.

Really Significant. Terms of trade losses. And, life. In. Their countries, is becoming harder and harder. So i think. When we spoke before, about the responsibility. Of, big tech companies, and also of governments. In, advanced, countries. To steer, progress, in the right direction. This, is probably, one of the areas, where it is most relevant, for welfare. And at the same time where it's going to be the. Hardest. Thank you anyone else wants to add anything to this. Yeah i mean well i was i was working with a couple of companies, which were using. Um. Ai. To. Do various, parts of outsourcing, of their i.t systems. And, there was an interesting, phenomena, that in the first, wave. You could actually outsource. To, areas. You know, um, with a lot of routine tasks which were which were in uh developing, countries, so, it's not as poor as sub-saharan, africa but like india for example. And, parts of parts of south, asia, but as, the ai becomes more sophisticated. It's you know i think as anton was saying that, you know you you may not even need to use people. Less skilled workers in in the in the global south and actually, a lot of those uh jobs and activities, will actually be reshured. To um, to to the kind of a richer richer country so i think it is it could be a challenge for, many poorer nations of the world. So let me add some facts here again. Up to now automation. Is not really. Leading to increase, of the, unemployment. Rate. And, from mike's. Our experience, in china and probably in other emerging, markets. I think there was this fear, actually. The digital technology. Because before in the industrial, age we actually. There's this industrialization. And people find jobs, but people worry about that digital, technology, can actually stop that process. Especially. That could have a. Severe, implication, for the emerging markets, that is not what we see, in china or other countries. And what we see in china, is that. As, as billions. People are involved, in this being digitized. Involved into this, there's a lot more jobs created. So but i i am aware of the. That the part the possibility, that ai, is different from automation. So i'm uh. I'm still watching this i don't know what's going to happen. Thus far, we are not seeing this, exactly happening, yet, but it's possible. Thank you. Next question is from terry white who is asking do we need a new theorem, of business, or of economics. For the digital, world. And if i made it. From myself like what is the clean technology. Or green technology. In for the digital. Um, technological. Choices. And. You know since we are at the institute, for new economic, thinking what is this new economic, thinking that we need. Around, the role, and responsibility. Of technological. Progress and technology, companies, in the economy. And maybe what is some old thinking, that we already should, leave behind, at this, point. I'd like this really interesting. Question. Um, and, in some ways i would argue yes we very much do need, a new, conceptual. Framework. To think about the digital, economy. And to think about. Uh the, dynamics. Of economies. In which ai. Is playing an increasing, role. So the funny thing is. The bare bones, of all of our economic, models. I think for example, arrow de bruy. Are rooted, in static. Exchange, economies. Where all goods are rivalrized. And in a digital, economy, that really does not apply anymore. So. The first. Implication, of that i already briefly. Alluded, to that earlier. Is that, it's very hard, to have a competitive. Economy. When you have non-rivalrous. Girls. And that means our very standard. For. An efficient, market, which is the arrow debris, model, of competitive. Markets. Simply, cannot, apply. And we do have of course lots and lots of models. To deal with that. But, we haven't really figured out yet, what should be, our new benchmark. And. We haven't figured out a way, how to deal, most efficiently, with that. I mean my my, view is that, in economics. We have a lot of different, models i mean i think when people think about economics. They're too obsessed with the perfectly competitive, model. And, most of the interesting, part of economics, has been on imperfect, competition.

Both In the product market, um through, you know as anton was saying because of, um, innovation. And you know, low marginal costs and high fixed costs and models of indulgence, growth those are all imperfect competition, models, but also in the labor market. I mean i think, one of the, ways that we need to really. Make greater advances, is to think of the way in which people get paid. A lot of that depends, on the firms that they work for. And the degree of, you know market power that. Those big companies have over paying, what workers wages, are, and, we don't really, although i think we have the tools, there. But we need to actually use those tools more in combination, with better data, to understand what's happening, in different industries. So i think the kind of tools are there, i don't you know my view is there won't be one single canonical, model so i don't think, i don't think that we're going to get like an arrow jabru, model, which is going to be true everywhere, i think we're going to have to think of. Lots of different degrees of imperfect, competitive, models. In different markets. Which are more applicable, to some industries, in some areas and others that i think is the way to go, and combined, with much much better data than we've ever had before i mean the most exciting, real, part of economics at the moment in my view, is the explosion. Of high quality micro data, which we can use to really. Um. Test. And, add and understand, whether you know the imperfect combination models that you know should be the workhorse models of the modern. Tool in the economist, ii toolbox. So in my view that. The nature of the business, or economy, has not changed. But how we do it is going through a fundamental, change. Digitization. Of the information, has left is leading to the digitization. Of connectivity. Decision, making and trust. And so that is changing how we coordinate. With each other, and that is fundamentally. Changing our business model, but, it's not exactly, clear, to me that the the error debut, the type of model exchange, economy, is exactly, changing because what i was seeing is that, there's a lot of the, integrated, market. What we observing, actual data, is actually price, are converging. For the similar, goods but there's much much more explosion, of the varieties. A new species. And also we see the rise of the big economy. So the the. People becomes, more free. And so, then the kind of, there's a lot of new species, coming up in between the market, versus the firm and something, that's another, thing is coming up so, there's a lot of things to do but i don't think the nature of the. Of the economics, or the the business, is uh, uh. Is changing. And finally. Uh that is the thing, local academy, is doing so i used to be a, a professor, like the giant anton, united, states but, what, now i'm so excited, about is actually. And, we're using the big data, and we're working with the best uh, economist, social scientists, to, to find the. Uh solutions. For that so, and i think this is also changing, how we, do research. You're breaking the traditional, boundary between a cigarette, practice.

And Between the and then schools, we actually. Uh, and we work with a lot of the good scientists. Anyway so so that's the thing i'm so excited, about. And agree with you we wish there's a lot of things, to work on, with the big data. We're at time i want to thank, all the panelists, for a fascinating. Discussion. So passionate, i really enjoyed it i hope that our audience, enjoyed it as well, there is of course. A lot more to talk about, and if you are in the mood to continue. Please, um. Please click on the young scholars, initiative, link at the bottom. And enjoying, the discussion. In an open forum where the young scholars, are going to dive deeper into some of these issues. Next tuesday, at noon, we will discuss. Is this time different, data artificial, intelligence, and robots. With, jed kolka. Shivani, nayar. And siddhar, suri. If you haven't already registered, you can find the link to the right on the inet website. Please follow inet, live, at inet economics. To hear about new episodes, and information. As we develop. The new series, on the future, work. Thank you all very much and see you next week.

2020-10-07 17:18

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