Brislen on Tech: New World Order 2.0
The global world order we've grown up in and are familiar with is ending. The pendulum that swings from nationalism to globalisation is swinging back towards isolationism and the new world order appears to be based around "what's in it for me?". The era of the independent central bank is over and the coffers are largely empty.
If all this is alarming coming from me, imagine how I felt hearing it from a very senior economist who specialises in macro-level financial crises. He had the facts to prove it, I just have a cold dread which I'm more than happy to share with you.
The decade since the Global Financial Crisis has seen this movement gain steam and take over our democracies and move us to a world where the president of the United States says he may not step down if voted out of office - something that would have been unthinkable only a few years ago but which now is all too possible.
Is the era of the nation state coming to an end? Is the power once wielded by countries, with their access to mineral reserves and raw materials such as people no longer the power house it once was?
We elect governments to govern, to look after the people in society, but if they're not up to the job, if they can't afford to do all the things we need them to do, is there much point to it all?
All of which got me thinking about the alternate model and the rise of the tech giants.
Rather than being geographically based as businesses have traditionally been, these new businesses are verticals, serving customers wherever they can and scooping up resources on a global scale.
The user base is spread around the world across multiple jurisdictions. The customer base (often quite a different thing from the users, don't forget) is likewise spread across the world and the benefits of this globalisation is apparent to anyone who has bought a phone that was designed in the US manufactured in China from rare earth minerals dug up in the Congo and shipped to New Zealand.
It also means these companies can deploy cheap labour where possible, lower cost manufacturing where they need it and reap the benefits of fatter margins, and that's before we even start talking about taxation regimes and the games played there.
It's becoming increasingly more difficult to pin these companies down to a single set of rules or regulations around anything - from tax to defamation laws to objectionable material - and nations seem ill-suited to the idea in normal times, let alone when they're facing their own existential crisis.
If it all sounds horribly familiar it's possibly because this isn't the first time we've seen power concentrated in the hands of a few men outside the auspices of governments.
The second half of the 19th century saw a huge economic transformation spurred on by the western expansion in the United States.
Back then it was all about oil, transport links, steel, even financial market manipulation and it ultimately led to such a concentration of wealth in a few individuals all men with names you'll be familiar with: JP Morgan, Cornelius Vanderbilt, John D Rockerfeller who was once called the richest man in modern history and who was worth around US$300 billion in an age where personal tax was non-existent.
That sounds an awful lot like the lives lead by Jeff Bezos, Mark Zuckerberg and a few select others. They have cornered the market in terms of data and the modern goldrush that is the internet age. From retail shopping to social media, from search to maps to publications, the internet era is dominated by a small handful of companies that operated internationally and are bound by very few restrictions.
I was thinking about this when I saw my latest complaint to Facebook about fake 5G content was rejected as it didn't breach Facebook's community standards. There is no right of appeal, there's no sense that I can contribute to Facebook's standards, there is no process whereby I can influence Facebook's direction in the slightest way. Even shareholders have no say - Zuckerberg famously owns the majority so it literally is his vision that is implemented and nobody else's.
Ultimately, even Rockerfeller's oil empire was regulated - broken into more than 30 sub-companies - but his fortune remained largely intact. Regulating internet companies is going to be so much more difficult.
I asked the macro-economics speaker whether he thought the rise of the vertical businesses that take data from everyone and turn them into profits and who are seemingly beyond the control of any jurisdiction whether he was concerned. Yes, he said, but what can we do?
Welcome to Robber Barons 2.0.
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