The IT revolution has entered a new stage. Cloud computing, fiber optics, and mobile devices are forming a global network that is stronger and more accessible than ever. Zero-cost information communication is expected to be realized. Some analysts believe that following the emergence of IBM mainframe computer in the 1980s and the emergence of personal computers in the 1990s, the third wave of IT revolution came. This revolution will have a profound impact on the organization of economic activities. In particular, it will eliminate many intermediary agencies. Therefore, the raging IT revolution will rejuvenate and reshape the world economic structure. The cake may eventually become larger, but the process will be quite painful.
If a large company is basically composed of white-collar professionals, its efficiency must be very low. We often use the "28 law" - that is, 20% of people do 80% of the work - to explain the reasons for inefficiency. The inefficiency arises because the price mechanism loses its role in the processing of information. There are always some employees in the company who are more efficient than Other employees. They are more likely to get promotion or raise. But this is not always the case. Sometimes the price mechanism gives way to company politics. The superior does not always like the most efficient employees. Because these employees may threaten their superior jobs. These complex situations reduce the morale of employees' active work.
The development of IT can eliminate white-collar inefficiency from two aspects. First, the output can be measured. For example, after a doctor sees the disease, he can track the patient's condition at a very low cost. Patients and hospitals can understand the data of each doctor's efficiency and diagnosis and treatment. For other professionals, such as accountants, lawyers, cooks, and bankers, they can measure their efficiency in the same way.
Efficient output measurement analysis will lead to: (1) the price difference of white-collar professionals' remuneration will further increase; (2) the number of managers controlling these people will be further reduced. Perhaps the "28 law" phenomenon will still occur. However, 20% of employees with higher production efficiency will receive 80% of total compensation. And their boss-manager will be much less. In this way, the "28 law" phenomenon will not lead to inefficiency.
The core of developed economies is the middle class, and the impact on income distribution may jeopardize the models of advanced economies. It may be due to inefficiency, the income distribution of service-oriented economy is even, and everyone's salary is similar. If the output can be accurately measured, the income distribution will be doubled. Cakes can grow bigger, but many people will only be assigned to a small one.
Second, the decline in communications costs can eliminate multiple levels in the supply chain. After the Internet came into being, new online agencies, especially more efficient intermediaries, began to emerge. Next, I am afraid that even network agents will disappear. With lower and lower communication costs, small service providers can serve everyone in the world at zero cost. And everyone can contact each small service provider at zero cost.
The financial services industry is losing its added value to users and the real economy. It depends more and more on system games and profits from the ignorance of customers. This makes the industry and financial markets more turbulent and more likely to induce bubbles.
The emergence of cloud computing, fiber optics, and mobile user equipment has made the cost of communication between people close to zero. It undermines the foundation on which the agency depends - economies of scale. We are witnessing this wave of impact on white-collar economies. This is the speedy version of Schumpeter’s creative destruction theory.
This force will prolong the employment crisis. Globalization of production is the most important driver of the blue-collar job crisis in the West. The bubble economy through the creation of bubble jobs masked the negative impact of the western blue-collar job crisis. The financial crisis has exposed the employment crisis. The ongoing IT revolution has produced extremely destructive power for white-collar workers, making it difficult for advanced economies to reduce unemployment in the foreseeable future. The IT revolution's destabilizing force may be similar to the fossil fuel revolution of the last century. In the next 10 years, the West may enter an unstable period.
Developing countries have benefited from the personal computer-Internet revolution. It established an OEM processing model in the manufacturing industry, making trade an engine for economic growth. The third wave of the IT Revolution will accelerate the drive of developing countries to drive domestic demand. By reducing intermediary costs, developing countries will soon enter a period of development dominated by domestic demand for services. Because the developing countries have not yet established an intermediary service industry, they can maximize their new technological achievements by reducing the prices of services and goods in the country, thereby improving domestic demand and making it an engine of growth. The western employment crisis has hindered the growth of domestic demand. Therefore, it is urgent for developing countries to develop their domestic demand. It is time for the third wave of IT revolution to come.
Today, the global economy is divided into two parts, namely the weak developed countries and the thriving developing countries. The two are significantly different due to the shift of liquidity from the former to the latter. If the current liquidity bubble bursts, the economic development of developing countries may slow down. However, the cost advantages of developing countries are much stronger than those of developed countries and will continue to maintain strong growth. The third wave of the IT revolution will amplify its outstanding performance in economic development. If the world continues to be peaceful, the two worlds, developed and developing, will surely converge in this century.
If a large company is basically composed of white-collar professionals, its efficiency must be very low. We often use the "28 law" - that is, 20% of people do 80% of the work - to explain the reasons for inefficiency. The inefficiency arises because the price mechanism loses its role in the processing of information. There are always some employees in the company who are more efficient than Other employees. They are more likely to get promotion or raise. But this is not always the case. Sometimes the price mechanism gives way to company politics. The superior does not always like the most efficient employees. Because these employees may threaten their superior jobs. These complex situations reduce the morale of employees' active work.
The development of IT can eliminate white-collar inefficiency from two aspects. First, the output can be measured. For example, after a doctor sees the disease, he can track the patient's condition at a very low cost. Patients and hospitals can understand the data of each doctor's efficiency and diagnosis and treatment. For other professionals, such as accountants, lawyers, cooks, and bankers, they can measure their efficiency in the same way.
Efficient output measurement analysis will lead to: (1) the price difference of white-collar professionals' remuneration will further increase; (2) the number of managers controlling these people will be further reduced. Perhaps the "28 law" phenomenon will still occur. However, 20% of employees with higher production efficiency will receive 80% of total compensation. And their boss-manager will be much less. In this way, the "28 law" phenomenon will not lead to inefficiency.
The core of developed economies is the middle class, and the impact on income distribution may jeopardize the models of advanced economies. It may be due to inefficiency, the income distribution of service-oriented economy is even, and everyone's salary is similar. If the output can be accurately measured, the income distribution will be doubled. Cakes can grow bigger, but many people will only be assigned to a small one.
Second, the decline in communications costs can eliminate multiple levels in the supply chain. After the Internet came into being, new online agencies, especially more efficient intermediaries, began to emerge. Next, I am afraid that even network agents will disappear. With lower and lower communication costs, small service providers can serve everyone in the world at zero cost. And everyone can contact each small service provider at zero cost.
The financial services industry is losing its added value to users and the real economy. It depends more and more on system games and profits from the ignorance of customers. This makes the industry and financial markets more turbulent and more likely to induce bubbles.
The emergence of cloud computing, fiber optics, and mobile user equipment has made the cost of communication between people close to zero. It undermines the foundation on which the agency depends - economies of scale. We are witnessing this wave of impact on white-collar economies. This is the speedy version of Schumpeter’s creative destruction theory.
This force will prolong the employment crisis. Globalization of production is the most important driver of the blue-collar job crisis in the West. The bubble economy through the creation of bubble jobs masked the negative impact of the western blue-collar job crisis. The financial crisis has exposed the employment crisis. The ongoing IT revolution has produced extremely destructive power for white-collar workers, making it difficult for advanced economies to reduce unemployment in the foreseeable future. The IT revolution's destabilizing force may be similar to the fossil fuel revolution of the last century. In the next 10 years, the West may enter an unstable period.
Developing countries have benefited from the personal computer-Internet revolution. It established an OEM processing model in the manufacturing industry, making trade an engine for economic growth. The third wave of the IT Revolution will accelerate the drive of developing countries to drive domestic demand. By reducing intermediary costs, developing countries will soon enter a period of development dominated by domestic demand for services. Because the developing countries have not yet established an intermediary service industry, they can maximize their new technological achievements by reducing the prices of services and goods in the country, thereby improving domestic demand and making it an engine of growth. The western employment crisis has hindered the growth of domestic demand. Therefore, it is urgent for developing countries to develop their domestic demand. It is time for the third wave of IT revolution to come.
Today, the global economy is divided into two parts, namely the weak developed countries and the thriving developing countries. The two are significantly different due to the shift of liquidity from the former to the latter. If the current liquidity bubble bursts, the economic development of developing countries may slow down. However, the cost advantages of developing countries are much stronger than those of developed countries and will continue to maintain strong growth. The third wave of the IT revolution will amplify its outstanding performance in economic development. If the world continues to be peaceful, the two worlds, developed and developing, will surely converge in this century.
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