A new economy is coming. We know it’s coming... but we can’t exactly see it coming.
Economic climate change is nothing new, but there’s never been anything on this scale before. This is the drawing together of several powerful, world-changing economic forces and the dawn of an Ether Economy.
Its component drivers exist in the ether, invisible and powerful. From digital currency to the growth and empowerment of AI — it’s real and it’s making a difference.
The first economic force is the much talked about arrival of The Fourth Industrial Revolution. This is a new kind of industrial revolution — it is made up of the descendants of those clanking, steam-driven job-deprivers of the past — and it’s all in the mind. A mind imagined and built by real men and women, a mind that is growing and improving now, all by itself. It’s a mind that will likely mastermind the extinction of jobs and careers as we understand them today — and open doors to something else entirely.
Artificial Intelligence — another tour de force — is a revolution of the mechanical mind — we were at the birth and now this brainchild is coming in from the cold, coming of age and learning fast; and with it gathers a technology storm. They are both part of an economies’ collective that makes up this next evolution and there is no doubt that robots will impact the labour market. It’s us who have to evolve now — to stay relevant and salaried.
The Digital Economy is the third leg upon which this Ether Economy stands. It has been with us a relatively short time, but it has seen off media, printed books, scheduled programming by broadcasters; welcomed in the world of narrowcasting, made us all commentators and journalists, created on-demand consumers shopping in clicks and orders shops and encouraged us to view a world that revolves around ‘Planet Me’.
There’s even a currency for this Ether Economy — The Bitcoin.
Perhaps the most well-known crypto-currency (or digital currency) on the market, Bitcoin is the Ether Economy’s digital gold. There is a finite supply that can be ‘mined’ every year using sophisticated software.
But there are important implications of such technology being implemented across society.
We’re not 100% sure how to process this — or at least not enough of us are. Right now we’re just not built for it, or maybe we’re just not brave enough for it. There is no doubt that for some there will be gains, but it is very difficult to bring the Bitcoin to heel.
Digital currencies are a decentralized system. Wholescale embracing of digital currencies would see governments lose control over the economy. It goes without saying, most governments are unlikely to become Bitcoin poster boys.
A more authentic version of a Free Market, well possibly, and the currency comes with some advantages that have high appeal — to those who really understand it. While your other online activities generate a digital footprint, bitcoin is secure and private. You can remain anonymous while using it. You have to wonder, is that because so few are watching?
Bitcoin value isn’t anchored to any country — because it’s an Ether Economy currency. That means more if you live in places where the local terrestrial currency is even more volatile.
But with no one overseeing the valuation, Bitcoin is extremely exposed to fluctuation, opportunities for money laundering are legion, thanks to a lack of any government legislation and no links to real-world financial institutions. It just means that Bitcoin can create its own rules.
NHS bosses and the government found out that Bitcoin had real bite when a cyber-attack left hospitals vulnerable and crippled services back in May of 2017.
The health service faced a weekend of chaos after hackers infiltrated the NHS’s creaking computer system and demanded a ransom as the system went into meltdown.
Operations and appointments were cancelled and ambulances diverted as up to 40 hospital trusts became infected by a “ransomware” attack demanding payment to regain access to vital medical records.
Doctors warned that the largest cyber-attack in NHS history — could cost lives.
Computer screens were “wiped out one by one” by the attack, which spread to companies and institutions worldwide, including international shipper FedEx Corp in the US, and Germany’s rail operator.
The ransomware attack affected people and businesses across the world.
Cyber experts said the health service appeared susceptible to attack because many trusts were using obsolete systems, while others had failed to apply recent security updates which would have protected them.
The hack was thought to be part of a wider attack, which affected the Spanish telecoms giant Telefonica, which also owns 02.
The ransomware attack was orchestrated using malware called Wanna Decryptor, also known as WannaCry, which demands each user affected pay $300 (£232) in the internet currency Bitcoin, to have files restored.
So the currency that is defined by the digital economy is one to watch. It’s new, shiny and not quite there yet, but we know we need to keep an eye on it. It’s more than likely it will be used in the course of doing something else unexpected — we need to work out what that looks like and get a better handle on protecting our businesses and our public sector services.
The Fourth Industrial Revolution is only just starting to reveal its true colours but it appears there will be no ‘settling’ into a comfort zone. Continued and accelerating pace and continual development will define this revolution. Our economists, our business people and our politicians will have to become more intuitive in their approach to modelling outcomes and creating forecasts. The age old practice of forecasting involves examining what happened under similar circumstances previously. Only we don’t really have that measure here. There hasn’t been anything like this under similar circumstances. Today’s four-year-olds are the ones defining intuitive. They’re thrown by anything as old-technology as a TV screen that’s impervious to swiping, but they’re the ones growing up with the next generation’s gadgets.
We now have resources at our fingertips that deliver instant answers. We can model outcomes before we build anything, before a test pilot climbs into the flight deck of a brand new aircraft and starts his or her pre-flight checks. We can save money, save lives and more. Harness the speed of linear mechanical thinking and answers are arrived at, at impossible speed. This has got to be good for health, wellbeing, nutrition — in short, pointed in the right direction, this incredible power is a power for good.
What is puzzling is that there is still an incredible shortage of engineers. Engineers are the architects of this brave new world. Engineering is the coolest career, but its perception hasn’t quite caught up yet.
They are the people designing everything from hyper-fast new-breed mobile devices to the robotic arms performing keyhole surgery two continents away from the consultant surgeon directing the procedure.
In a world where the gadget has outgrown the geeks and become as necessary as the flint once was to Neolithic man — arrows, blades and striking plates for food, protection, clothing and heat — it’s engineers who are stepping into the spotlight.
Yet the great UK engineering shortage shows no sign of abating — 1.8 million are needed by 2025 in an industry dominated by white males. Italy faces similar challenges — it’s a global phenomenon. Not enough young people are being given the opportunity to fall for a career in engineering, and not enough women are considering it as a career.
Parents, teachers and employers are not reaching children early enough with the message, not only that you can be an engineer, but what that means.
We can’t afford to see our young children turned off a career in STEM (science, technology, engineering and mathematics) before they even reach secondary school — by then it’s too late. Employers have to do more — sooner — to promote modern engineering.
Teachers can’t be relied on to engage across every career open to children — that isn’t their job — but instilling excitement and possibility has to happen sooner if the gap is to be plugged.
EngineeringUK says the country needs almost two million new engineers and technicians by 2025.
While some schools include work experience in the school year it isn’t compulsory, and engineering companies are often put off by additional health and safety headaches involved in engaging with youngsters. But employers can do more to convince those teachers that modern engineering offers rich career opportunities.
And new economy challenges don’t stop there. There’s Brexit to contend with. Companies have a lot on their plates at a time of uncertainty — and it’s coming from every angle.
Certainly, as we see workplace opportunities blur and redefine themselves thoughts turn to how we are treating our students, how their education is funded, how they navigate the world and how they can be helped to choose a path that will be productive for them and for their place in and contribution to that Ether Economy.
Some within the younger generation share an ideology that everything is free — social media is free, ideas are free and we all share and benefit from them — of course this is not true.
Ideas only work if you pay.
Facebook isn’t free. There is a cost to using the platform even if you’re not investing in sponsored posts or Facebook ads. Just by being part of the audience you are complicit in the money making machine. You have agreed to share your information and allow access to your likes and dislikes. You are giving your profile to those who most want to make commercial gains from it and, of course, the best way to do that is to show you more of what they know you know you want!
It is a platform based on money.
However economies change, however they cluster and however ephemeral they become the same principles of building healthy economies apply. The only one that works — and this is something that can be applied to any breed of economy — is hard work, success, freedom, entrepreneurship, capitalism and innovation. These are what deliver rewards. They are solid values to hold onto. There is nothing new about them — all the more reason to make them the base of these new economies.
The new economy might be hard to see, difficult to pin down and tricky to predict, but it has a lot of its forebears about it. Not everything has changed.
Taxes have to be paid, money has to be earned, credit has to be repaid and food, heat and shelter afforded. These basic human needs don’t change and these basic economics don’t change either. From flint to fibre optics, some of the rules don’t bend.
Whatever we’re doing in the new economy, we’ll only succeed if we’re putting the effort in. Bloggers are judged on their success not by the quality of their content, but by the people they reach and who engage with it. Getting there is hard and it will remain so.
Some of the Ether Economy mega brands ride rough-shod over the old rules of good economy, amassing huge profits and paying derisory levels of tax. Google and Amazon, two of today’s biggest brands appear to have little respect for the old rules of economy.
Google and Amazon are no longer the new kids on the block. They should be setting an example — not behaving like barrow boys.
There is one rule for smaller business and a long line of deference for the biggest players when it comes to power and influence. Lower down the chain of power, smaller companies moving to merge in the UK will be referred to the monopolies and mergers commission.
Amazon and Google are both monopolies and are allowed to exist — the old rules of competition don’t apply to these companies because they are growing so quickly. The faster they shape-shift, the harder it is to define their structure and tax them accordingly.
Google isn’t a free service — Google Drive is a paid for service — there is always a price attached somewhere. So this new economy has another commonality with its predecessors; no such thing as a free lunch.
The 18th-century philosopher Adam Smith, often called the father of modern economics (and the father of capitalism), explored the idea of the invisible hand — the tendency of free markets to regulate themselves by means of competition, supply and demand, and self-interest.
But he also considered charity and human ethics — the counter play to self-interest and maximising return. He argued that people might be self-interested, but still like to help others. It’s human nature. Morality and human sympathy coexist alongside our economic ambition.
Businesses that have strong corporate and social responsibility values do better in terms of attracting and keeping customers and staff. So, morality and human interest also serve that commercial self-interest. Feel good has a value, it’s part of what building brands is all about. Most of the share value of any company lies in its reputation. That’s why the best companies — and industries — fight hard to protect and grow their stakeholders’ perceptions of them as good to do business with, genuinely invested in people and serious about giving back.
Does all of this have a place in the new economy?
Smith wrote of Laissez-faire philosophies, such as minimizing the role of government intervention and taxation in the free markets, and about that “invisible hand” that guides supply and demand — and he was doing it in the 1700s.
These ideas reflect the concept that each person, by looking out for him or herself, inadvertently helps to create the best outcome for all. “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest,” Smith wrote.
While everything is changing, it would appear that the accepted foundations of economic growth are changing very little.
By selling products that people want to buy, the butcher, brewer, and baker are planning to make money. If they meet the needs of their customers satisfactorily, then there is no doubt they will succeed.
All three have found something that people want, and a way to make money out of it. So they have demand and opportunity.
Smith argued that this kind of system, this kind of economy, creates wealth not just for the butcher, brewer, and baker, but for the nation. At least it does when that nation’s people are working productively to better themselves and address their own financial needs.
He went on to note that a man would invest his wealth in the enterprise most likely to help him earn the highest return for a given risk level; an eminently sensible strategy. The invisible-hand theory is sometimes presented as a natural phenomenon that guides free markets and capitalism in the direction of efficiency, through supply and demand and competition for scarce resources, rather than as something that results in the well-being of individuals.
In his book “The Wealth of Nations” Smith’s ideas generated international attention and charted the move from land-based wealth to wealth created by assembly-line production methods — and greater production efficiency driven by the division of labour.
His thinking changed import/export commerce, created the concept of (what is now known as) gross domestic product (GDP) and argued for free exchange.
Before “The Wealth of Nations,” was published countries expressed their wealth based on the value of their gold and silver deposits. Smith was critical of mercantilism; he believed countries should be evaluated based on their levels of production and commerce.
As Brexit continues its march toward cast off for HMS UK, it’s interesting to examine this 400-year-old thinking. Before Smith’s book, countries had been nervous of to trading with other countries, unless it benefited them. Smith’s free exchange should offer both sides the opportunity to become better off. Self-interest and greater good for each nation neatly wrapped up.
Imports and exports increased and countries began judging their value accordingly.
Smith wanted less government control and legislation that promoted an open and free market. His vision included areas where governments did need to retain control — education and defence for example.
His thinking became the foundation of the classical school of economics. This Ether Economy we’re on the cusp of now is a thinking economy he would not be entirely unfamiliar with.
Capitalism’s polar opposite, Communism, looks as though it is also changing under this new economic tide. Red appears to be paling to orange.
A 2014 survey conducted by Reason-Rupe revealed that 52% of young Americans, between the ages of 18–29, favoured free markets and capitalism. Yet, a full 25% of younger people chose septuagenarian socialist Bernie Sanders; he captured more of the millennial vote than both Trump and Clinton.
Some say that Millennials are “lazy” and favour the thought of re-distributing wealth from the richest to the not-so-rich, but the answer is not as simple as that. There is some resentment toward their parents’ generation who lived and worked under a different system — buying homes and accruing pensions.
Those Millennials’ parents, the Baby Boomers, came of age in the 80s and when “trickle-down economics” was seen as the way to go.
That decade incubated the theory that some corporations are just “too big to fail,” — and we all know what happened to the economy after that.
The crash of 2008 saw Millennials’ parents lose their jobs and their houses. The Baby Boomers were mired in debt. While ordinary lives were disintegrating, big corporations and banks were bailed. So Millennials started re-thinking the idea that capitalism favours those who work the hardest. The “trickle-down economics” theory didn’t work.
Getting an education became more expensive and came with a burden of debt. Workers at the start of their careers had more debt at the outset than any other generation before them.
The financial crash affected the labour market, pension funds are under pressure and retirement age recedes. Older workers either choose to or have to defer retirement; with fewer jobs for those young people.
The combination of increased debt and fewer job opportunities has put the brakes on the upward mobility of Millennials as they live with their parents longer and put off life-stage decisions such as marriage and children based on affordability.
Millennials have eschewed credit cards, preferring cash — a return to old values — to avoid the ‘invisible money’ trap.
Given all these factors, it’s not surprising Millennials are re-thinking their political inclinations. Most don’t consider the Soviet Union the arch-enemy their parents did, and favour a more liberal view — but just how informed are their choices? Do they really understand what socialism or communism means?
True socialism and communism haven’t influenced this generation’s life as much as it did their parents and grandparents’ generations. They have, however, been negatively affected by the mishandling of the economy by the capitalist system.
Now many have arrived at the view that there must be more to life than paying debt and buying a house. So the young people who engage with politics are looking to pick out the pieces that work for them, and look towards orange as the new red.
The fact that Millennials want a more socially and economically inclusive society doesn’t mean they are embracing old-school socialism or communism. They are really redefining the words in their own terms.
Jobs for life are a thing of the past, life-long learning will define much more winding career paths as we jog down one route only to find a dead end, backtrack and start down a different one. Our younger generation’s ‘career sat nav’ will have to chart obstructions and recalculate on a much more regular basis.
Further education is now seen as a natural next step for everyone — but young people need to carefully consider whether the debt and the time is worth it — and indeed whether the course has any currency outside in the real world. Cyber security is one growth area that is predicted to fuel unprecedented demands for competent and enlightened talent. Vocational qualifications will rise to the top of the educational tree, offering higher-value rewards for the time and cost.
Vocational subjects (medicine, engineering, architecture) require lengthier courses, but there are areas where time and money can be cut.
The further education machine needs to change, its funding needs to change. Two- year degrees are possible in some areas, and more appealing with a little re-engineering around the structuring of terms (3 x 11-week terms instead of 4, allowing a term off a year). And they’re less expensive to fund.
With the first year is free (Government funded) and the second costing £10k, which students pay back on a standard basis (as opposed to the current income-linked system), the cost of the first year is around the same level as the current non-repayment of student loans.
The three years plus vocational courses could be charged on the same basis as current post-graduate courses with huge benefits for students (and their parents).
Fees incurred for the two-year degree courses would amount to £10,000 as opposed to £27,000 on graduation. Lower debt and less negative impact on aspiration leads to a more engaged employee. There’s a lower barrier to entry, particularly for students from poorer backgrounds, so the system would embrace a meritocracy and open up choice.
Employers have a part to play too. The golden hello doesn’t have to be reserved for people at the zenith of their career. Re-paying a student loan at the outset to attract the best students — particularly important for STEM subjects — will deliver loyalty and stability.
The Ether Economy is challenging, yes, and complicated. What we have to remember is that if an 18th Century philosopher was able to explore beyond ‘the known’ at the time to visualise how economies could work better — then there has to be plenty of scope to meet those challenges. It just takes a bit of thinking about.🔷