home digital dividends, reports The Emerging Risks of Our Digital Future – Part III

The Emerging Risks of Our Digital Future – Part III

Want to know what keeps me up at night? I will answer this in a bit.

Digital dividends are the returns on investments in digital technologies, in the form of growth, jobs and services that empower and support businesses, people and governments.

The World Bank’s 2016 flagship World Development Report entitled “Digital Dividends” revealed that the promise of digital dividends have fell short of its full potential. There are two reasons for this. First, 60% of the global population is still offline and second, the digital benefits are often offset by emerging risks of greater concentration, inequality and control of digital power.

To construct thefuture of work we want, all stakeholders, including ILO’s social partners (governments, employers, and workers), as well as technologists and ethicists must come together and transform the emerging risks of our digital future into digital dividends. This can be achieved by building or strengthening existing analog components (regulations, skills and institutions).

Concentration, Inequality and Control: The Emerging Risks

Building an equitable future of work will also require borrowing the collective action and approaches from the current global climate change framework, such as the Nobel Peace Prize winning IPCC the Intergovernmental Panel on Climate Change – like knowledge and science consortium on our digital future of work to gather the best evidence on how societies can “adapt” and “mitigate” the emerging risks in the incoming Fourth Industrial Revolution.

RELATED: Shaping the Future of Work in a Digital World – Why Should Development Organisation Care?: IDS

We must also create co-beneficial synergies rather than trade-offs (such as the false dilemma of choosing between economic growth and sustainable development) as we confront emerging risks of the concentration of digital power, inequality due to polarization of labour, and control caused by the unaccountable enclosure of the open Internet.

The emerging risks are the things that keep me up at night. How can we transform these emerging risks into digital dividends that maximize co-beneficial outcomes?

This post is the third part of our series on “A Closer Look at Technological Innovation’s Link to Widening Global Inequality”:

Concentration of Digital Power

Digital power is already concentrated in the hands of the few. Research on the economics of information technology by Hal Varian (2003) at UC Berkeley’s concluded the economics of the Internet favour the formation of natural monopolies. A number of digital platforms now dominate the market, such as Google, Facebook and their contemporaries in Europe and Asia. These monopolies or oligopolies heavily distort markets, also known as market failures. These new mega digital corporations enjoy such high profits that they can quickly capture new markets by buying out competitors or developing a rival service or stifling local start-ups and entrepreneurs.

(The Economics of the Internet | World Bank – World Development Report 2016 Team)

In 2015 Google captured over half (55% or USD$ 44.5 billion) of global digital advertising revenue. Its next closest competitor was China’s Baidu, at 8%. Facebook’s considerable presence online is a concern. One hundred and forty million Facebook users – or 10% of its total 1.4 billion users – have the misconception thatFacebook is the Internet. As Facebook acquires Instagram, WhatsApp and others, more and more digital services are moving from the open web (a global public good) to Facebook.

The concentration of market power on the Internet by a few online oligopolies widens inequality and stifles competition, thereby perpetuating existing socioeconomic advantages and positions, leading to greater economic and political influence and control. Therefore, digital dividends and outcomes are captured by elites and not evenly distributed among members of the society. The enforcement and creation of updated digital anti-trust policies and regulations are needed to protect brave Davids and Dahlias entering online markets so they can compete with – not just Goliaths – but the world’s digital Leviathans on more equal and human terms.

Today’s Rising Inequality

Neo-feudalism and rent-seeking economic behaviors have been documented in many part of the world (ReadPart I of this three-part article). The erosion of traditional employment relations and greater concentration of digital market power in the hands of a few mega digital corporations and the super-rich, we are seeing the emergence of a “winner-takes-all” economy.  In this, winner-takes-all economy, the “polarization of winners and underperformers is intensifying” while the top performers are capturing most of shareholders and economic value, according to McKinsey.

Globally, labour’s share of the national income – in terms of wages – has declined. In other words, increase in wages has stagnated while productivity increased. Wages are a factor of the demand and supply for your skills, as well as, the power and employment relations between groups. Both the World Bank and Thomas Piketty have raised concerns about the weakening role of labour as a re-distributional mechanism of income and the productivity gains (also known as growth – one of the digital dividends) from technological innovation. Acemoglu and Restrepo (2017) at NBER, World Development Report 2016 Team (2016), and Goos, Manning, and Salomons (2014) argue that technological innovation is a powerful driver of change in the labour market as it places downward pressure on the quantity and quality of jobs.

During the UN Global Dialogue on the Future of Work We Want, South Africa’s Imraan Valodia concisely summarized today’s polarized and unequal labour reality in this way: “we are moving from a proletariat to a precariat nature of work.” This structural change of the labour market is contributing to increasing inequality caused by job polarization as technological change hollows out the middle class (Read David Autor’s jobs polarization argument inPart II). The below chart offers early evidence of polarization, in terms of change in employment in developing countries. These trends are also reflected in developed countries.

(Early Data of Job Polarization in Many Developing Countries | World Bank 2016 Team, ILO KILM and National Bureau of Statistics of China)

In addition to social protection buffers, another way to build a more resilient future workforce is to change the classroom. The World Bank, along with the  ILO’s Irmgard Nübler, argue that to succeed in the next labour market demands us to change learning and the classroom by combining skills and competencies (Also readThe Bottlenecks of Automation) into new hybrid subjects and occupations, such as experimental knowledge translators, digital gender rights ombudsmen or big data visual stylists. At the same time, the rapid rate of automation will make newly acquired skills and competencies obsolete faster. This calls for more adaptability from individuals and institutions, as well aspolicies that promote lifelong learning by adopting a lifecycle approach to learning. To know about learning for the 21st century, go to ITC-ILO’s publication, The Future of Learning Alphabet.  

Control Without Accountability

The third emerging risk of our digital future stems from the evidence that states and corporations could use digital technologies to control citizens, not empower them. Today, about 1 in 3 Internet users do not have free Internet. The Internet has the potential to empower citizens, but governments are increasingly seeking to control the Internet, by limiting netizens rights of free expression and association, and their right to dissent. The Internet presents a “dictator’s dilemma” for autocracies. Controlling the Internet can hurt economic advancement, but an uncensored Internet can threaten the government by increasing citizens’ access to political information and facilitating mobilization that could lead to uprisings.

Moreover, increasingly there is a lack of trust by netizens of an Internet that was designed to be free and open. In support of the Global Commission on Internet Governance (GCIG), 24,000 internet users in 24 countries were asked about their perception of their trust, privacy and security, changing online behavior and e-commerce of the Internet in the 2017 Centre for International Governance Innovation – Ipsos Global Survey on Internet Security and Trust. The survey results revealed that among those worried about their privacy, the top sources of concern were cybercriminals (82%), Internet companies (74%) and one’s own government and foreign governments (65%).  The lack of trust in the Internet is also a concern of digital giants like Microsoft. Microsoft is an advocate for a global digital cyberwar rule of law framework, similar to the Geneva Conventions on the law of interstate warfare. It is calling for the establishment of the Digital Geneva Convention, which aims to commit governments (foreign and domestic) to protecting civilians from nation-state attacks in times of peace.

Powerpoint Deck of the 2017 CIGI-Ipsos Global Survey | CIGI, IPSOS, Internet Society, UNCTAD, and IDRC

(Download the full presentation here: https://www.cigionline.org/sites/default/files/documents/CIGI-Ipsos%20Global%20Survey.pptx)

Another reason why citizens are losing trust in the Internet is that it will only reinforce or amplify power relations in society and not disrupt existing accountability relationships. Being unconnected is negatively impacts one’s political participation and engagement. When the Brazilian state of Rio Grande do Sul experimented with online voting, it revealed that the result were biased toward more privileged groups, even though it did increase voter participation (Spada et al, 2015). As noted by Longo et al, 2017, when we think about our place in the digital realm, especially the big data we produce, those who are disadvantaged and living in conditions of poverty are often rendered digitally invisible, not counted. Therefore, we must invest in and improve existing institutions, so that governments, as well as the private sector responses and aims, are more responsive to their net/citizens.

To sum, how can we transform them into digital dividends that create co-beneficial outcomes? To realize the potential of technological innovation and address the digital emerging risk of concentration, inequality and control, states, netizens, and Internet companies need to strengthen our existing “analog components” or foundations in ourregulations, skills and institutionsgoverning our digital lives. These foundations must lead to the expansion of new regulatory measures to foster digital competition against the concentration of digital power, the promotion of lifelong learning and hybridization of skills to ensure we can all better address rising inequality, and make institutions more accountable and responsible.

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Kai Hsin Hung

Kai-Hsin Hung is an External Collaborator with the ITC-ILO. He develops and designs curriculum and prototypes new sustainable learning solutions. His focus is innovation and knowledge synthesis of complex development challenges, including the future of work, food security, and climate change. He has broad experience in various roles in international advocacy, program management, and policy research at the International Development Research Centre and Global Affairs Canada. Follow him at @KaiHsinHung

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