If we don’t invest in technology entrepreneurs, Ireland could become a theme park
|August 11, 2011||Posted by Elliot Davies under technology|
The technology industry has a curious influence on the world’s economy. It is perhaps one of the only industries that is both beneficial and destructive, and yet it is also one of the only industries whose march we cannot halt.
On the one hand, the technology business is great for us. In particular, more and more countries – including Britain – are looking to digital entrepreneurs to bolster the faltering economy, create jobs and generally save us all from financial ruin. This works because entrepreneurs launch so-called ‘start-ups’, small companies usually based around a single idea who often have a lot of initial funding in the form of venture capital.
If they’re lucky, these companies will be successful in their goals and will grow, creating jobs and bringing in revenue. If they’re really lucky, some of them will go on to create platforms for other companies, just as Facebook provides a platform for the multi-million dollar companies that make Facebook apps and games, such as Zynga.
Additionally, these companies then tend to spawn other start-ups. This could be because they lead by example, creating copycat companies or just inspiring people, or it could be that employees who do well leave and start their own companies, as many often do. Either way, start-ups are undeniably good for our economy; even the unlucky ones generally get bought out by bigger companies.
However, the other half of the technology industry is actually proving to be pretty bad for us, at least in the West. This is the heavyweight half, the half of Google, Microsoft and Apple, big businesses which turn even bigger profits.There are two problems with companies like these.
One is that they are, first and foremost, profit-driven. Unlike the more ideologically-driven start-ups, bigger companies are less focused on a single idea and more focused on simply selling products and services, particularly if they have shareholders to appease. This, as with many industries, leads to the outsourcing of labour to make for a cheaper workforce. Nothing new here; this is true of almost every company under the sun.
But the real problem with these giants is that they help to advance a state of affairs which is pretty unique to the technology industry – they lead to efficiency, but not to growth. Take Amazon for example. This huge retailer has probably led to the closure of thousands of independent stores (and some big ones too, thinking of Borders) by making the shopping experience more efficient. Now we sit at a computer, press some buttons and our requested item turns up as soon as the next day if we so choose. Much more efficient than commuting into town, browsing shops and finding they’re out of stock. It’s also usually cheaper due to the cut-throat nature of online pricing.
The thing is, however, that Amazon doesn’t grow in proportion to the number of shops it puts out of business. Those redundant workers aren’t being employed in Amazon’s warehouses and offices. Instead, their jobs have simply vanished. Efficiency over growth.
Now, I’m not just attacking Amazon here. The same argument could be applied to practically any technology-influenced industry, not just retail. Improvements in printing press technology are putting people in the news & publishing industry out of business. Perhaps eBay is putting auctioneers out of business. During the industrial revolution, weaving machines made women who hand-sewed cloth redundant. This erosion of jobs has been going on a while.
I’m not a Luddite. There is a need and a want for technology to keep marching ahead, and we couldn’t stop it if we wanted to. But this is why start-ups and entrepreneurship are so important, because we absolutely must replace the jobs we have otherwise destroyed.
If we don’t, and given the state the economy is already in, we might end up asking the big technology companies for help in the future. Apple, which earlier this week was crowned the world’s most valuable company after overtaking ExxonMobil, was at one point richer than the US government during the final days of the debt-ceiling crisis. Now that the governments have bailed out the banks, it could be the technology giants that bail out the governments when the world runs out of money again.
Ireland is one of the countries suffering most from the current climate. In 2009, its GDP was $227.2bn (and that can only have decreased since). Valuing countries as we would companies, 110% of that number values Ireland at about $250bn. When Apple became the world’s richest company, it was valued at $337bn. Ignoring certain social and legal issues, if Ireland needs further financial help it might be Apple who swoops in to ‘help’. A slight name change later and a country-sized iLand theme park will be sitting off Britain’s west coast.
Ultimately, technology will always accentuate efficiency over growth. Rather than end up with a jobless future, as some have called it, we must ensure that we invest sufficiently in entrepreneurs and start-ups to create new jobs at new companies, and thus save the economy – and ourselves – from technology’s inexorable march.