What a year: 2011 was full of huge natural disasters, widespread political turmoil, civil war, terrorism and rioting.
The financial failures of previous years ago haven’t really gone away despite billions of dollars being thrown at them. They are now threatening to explode: at the time of writing, world financial markets are nervously taking bets on which huge economy will fail first.
People occupy public spaces to protest against the rich getting richer while everyone else must work like dogs to pay for the increased inequality. The most notable response to protests so far has been police violence.
Add global warming to the mix, and it’s a scary line-up for 2012. In the past, so many problems at once would’ve lead to a global meltdown and suffering on a terrible scale.
There’s no doubt we’re screwed in a variety of ways, but it won’t be as bad as it might have been for previous generations, thanks to technology and, in particular, the internet.
The Internet is transforming the worldwide economy at an accelerating pace, and it is already hugely valuable. McKinsey Global Institute reckons the size of the Internet economy is around eight trillion US dollars. What’s more, the Internet is responsible for a fifth of GDP growth in in developed economies and the expansion shows no sign of stopping.
There are some concerns that this kind of economic growth is ”jobless„ in that automation eliminates jobs. It is true that automation and greater efficiencies lead to job losses. However, recent reports from McKinsey and Deloitte believe the technology creates something like 2.6 jobs for each one lost.
We really do need to be part of the Internet economy in other words. Does it mean that we should all geek out and become techies to take advantage of the booming Internet economy? No: this is where it gets complicated. Something like three quarters of the economic value of the Internet actually goes to traditional industries, and not the tech sector as you’d imagine.
Tech by itself doesn’t create many jobs. A recent study from Massachusetts Institute of Technology found that hi-tech accounted for a mere 2.8 per cent of jobs in the US.
That small workforce manages nevertheless to produce some impressive results. Apple for instance rakes in almost half a million US dollars per employee in profit each year; Google worker bees bring home $300,000, and Microsoft a quarter of a million dollars each.
If we could have an AppleNZ or GoogleNZ, great; but perhaps we don’t actually need one? See, the US captures a third of Internet revenues globally, and two-fifths of the worldwide income. That’s a huge amount of money and remember, something like 75 per cent goes to non-tech companies.
That’s the ”techno-economical„ backdrop for next year and it’s been developing over the last decade and a half. Even so, our politicians just don’t seem to get how important it is that we have fast and affordable network connections. That’s understandable though. Many don’t even do their own emailing.
The messy Ultra-Fast Broadband project that’s rolled out at a leisurely pace is evidence that the Internet economic transformation hasn’t hit home with our elected representatives yet.
What should be the most important infrastructure project for generations is at risk of creating a second communications network monopoly, with 75 per cent of the UFB going to Chorus. All subsidised by taxpayers, unregulated for over a decade, and nothing to show for it afterwards.
Another one is the Rural ”Broadband„ Initiative that kicked off this year (good) but promises ”5Mbps peak speeds„ over wireless 3G with 5/10GB data caps which is risible in 2011.
Rural New Zealand happens to be a huge part of our economy. I can definitely leverage technology and benefit from it, so it should be at least as well served with broadband as the cities.
That vision and ensuring New Zealand gets first-rate Internet infrastructure sooner rather than later are both sorely lacking from our political parties this election year however.
Ensuring that from 2012, we get our fingers into that eight trillion dollar Internet economy pie is an investment in the future, and it’s not even a particularly large one. Contrast the UFB money, $1.35 billion over ten years, with roading budget for the same period which is $11 billion.
That funding isn’t going to make the country any money either. For the Puhoi to Wellsford motorway, every dollar spent will return 40c which includes every possible economic benefit such as lower greenhouse gas emissions. In comparison, Chorus is eyeing up a return on investment for the UFB in the 20 to 24 per cent range. That’s just for the network build and deployment, and not counting incidental benefits to the greater economy.
My hope for 2012 is that the Government will see sense and spend our money where it will do everyone a heap of good, namely technology.