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Are technological advances leading to greater market concentration in firms such as Google and Facebook and, in turn, creating what could be described as a New Gilded Age? Is now a time for a new era of trust busting? Can start-ups compete against larger, more established firms? What is the prospect for “technological unemployment” that John Maynard Keynes forewarned of in 1930? The answers to these questions hold the key to how the IMF and policymakers should address productivity, inequality, and the future of work.

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Contributor: John Bishop, Secretary's Department

Moderator: Christine Lagarde, Managing Director, IMF

Panelists:

Alec Ross, Author, former Senior Advisor for Innovation to U.S. Dept. of State

Bridget van Kralingen, Senior Vice President, Global Industries, Platforms and Blockchain, IBM

Tharman Shanmugaratnam, Deputy Prime Minister, Singapore

Richard White, Professor of American History, Stanford University

Rising inequality, political polarization, and the dominance of a handful of tech giants have led some to question whether the digital revolution is ushering in a new Gilded Age. The Managing Director and a panel of thought leaders and policymakers discussed the role of data, regulation, and multilateralism in this new era.

Key Points:

• The winner takes all. Panelists generally agreed that the benefits of the digital revolution had not been shared equally. Ross argued that the current business models in the technology space allowed a small number of individuals and firms to reap the lion’s share of the digital economy’s promise. Tharman noted that inequality was not the only challenge facing the world. While innovation was vibrant in the technology frontier, it has slowed across the broader economy, leading to slowing productivity growth, stagnating incomes, and a mood of despondency.
  
  
• New technologies promise to spread the gains. Van Kralingen noted that both large and small companies are experimenting with artificial intelligence (AI) and blockchain technology, with outcomes that hint at their broad applications. Doctors in India have used IBM’s Watson to assist with oncology diagnosis; and a pilot microfinance program between IBM and Twiga Foods in Kenya employed blockchain to issue instantaneous behaviorally based loans to food vendors, increasing sales volumes and boosting profits.
  
  
• Workers, policies, and education must adapt. Van Kralingen noted that previous technological revolutions suggest that the majority of occupations would be unaffected by new technologies such as AI, but that the tasks done within those occupations would change dramatically. Meanwhile, policymakers must create an ecosystem that will allow societies to adapt to this change. Tharman stressed that national policies should help local communities develop partnerships between schools, employers, and R&D institutions. Several panelists strongly emphasized the importance of retooling the educational system for this new era. Tharman highlighted the importance of continuing education for workers and the vital need to provide effective basic education in Africa, Latin America, and South Asia. 
  
  
• Regulation will require a multilateral approach. Panelists broadly agreed that more regulation would be necessary as these new industries evolve, but a number of critical questions must be explored. Multilateral approaches will be necessary given that corporations are transnational and data is the new coin of the realm. Lagarde cited taxation as one area that would require governments to work together. Van Kralingen highlighted that a set of global principles and values for the use of AI must be established.

Quotes:

“Land was the raw material of the agricultural age. Iron was the raw material of the industrial age. Data is the raw material of the information age…He or she who own the data, control the data, or can harvest meaning from the data are creating the industries and businesses of the future.” Alec Ross

“As governments around the world are short of revenue…the fact that there are no boundaries, that the principle of permanent establishment is no longer applicable to some of those [technology] players will bring governments to the table, where they will have to discuss the new rules of engagement and the way taxation will be devised. That has to have a multilateral dimension.” Christine Lagarde

“People can certainly benefit from education. But if people feel as if they don’t have control over their own civic lives and their working lives, there’s going to be very little incentive to have education.” Richard White