Questions to Michael Mandel, chief Economic Strategist at the Progressive Policy Institute in Washington DC.
VENICE. This week, Italy kicks off its EU presidency with a digital summit, Venice Digital Week. One of the key events is the Can the IoE bring back the High-Growth Economy in Europe? – time to learn a new acronym: IoE means Internet of Everything, which supposedly is the next step after the Internet of Things, connecting not only devices but “data, people and processes” also. This Cisco announcement gives an idea of the concept, at least according to one Silicon Valley giant (you will have to filter out the usual: buzzwords innovation, disruption, exponential growth etc). Netopia got a chance to speak with keynote speaker Michael Mandel – previously Business Week’s Chief Economist, now Chief Economic Strategist at the Progressive Policy Institute in Washington DC. Dr Mandel’s paper with the same title as the event set the tone.
Per Strömbäck: You make the point that IoE will bring similar change to “physical industries” as the internet did to “digital industries”, such as news media and finance. But those industries are struggling and jobs were lost. Why would physical industries fare better?
Michael Mandel: Industries that innovate will create new jobs. We see tremendous growth in places such as New York and London as the result of innovation. The problem for the news industry is too little innovation, not too much. Most job loss has been in industry, finance has grown with digital technology and entertainment see tech related job creation. There are more journalists than ever before, only fewer people in the production process. At the moment we have access to far more news and far more analysis than ever before. If my kids would consider a career in journalism, I would encourage them. It’s a good career.
PS: But you left journalism to go back to being an economist?
MM: Well, I had been in journalism a long time and wanted a change. There are various successful journalists, it’s the journalistic organisations that are in trouble. The industry is not innovative. Manufacturing is where the real opportunity is for the internet. There is a chance to regain jobs from overseas. Historically, you would think about airplanes as job creators and job destroyers at the same time. The internet age is a peculiar industrial revolution because it’s based on only one tech. In most cases, historically, it’s several technologies. What has happened in the EU is that the number of journalists have gone up, news organisations have gone down.
PS: There is a soundbite from the entertainment industry: “analog dollars vs digital pennies”. How does that apply to the manufacturing industry? Will those companies have similar difficulties charging for products?
MM: Which question are you asking? Adverts or revenue? Just because there is a production process without monetary payment, doesn’t mean there is no interchange. Most international exchanges don’t leave a monetary foot print. That makes it look like less.
PS: A big topic at the World Economic Forum this winter was that the speed of change is too fast for society to adjust and individuals to train for new skills. What’s your view on that?
MM: “Speed of change” is too narrow to capture this. My view is we should improve the technology of training. This debate will be settled. It’s the nature of change.
PS: Jill Lepore wrote a very critical opinion on “disruptive innovation” in The New Yorker recently. Is it still a helpful concept?
MM: Disruptive innovation is extremely important because it explains why some big companies struggle to keep up.
Per Strömbäck, editor Netopia
Note: Jill Lepore’s column makes two main points, first that the research of Clayton Christensen (who coined the term) is mistakenly used to predict change where it is only a theory of why companies fail, and second that as such it i s not very convincing and relies on poor evidence. Read it here.
