SITTING BY AS REVOLUTION
OVERTAKES US ...
[Deviant
Art, United States]
Financial Times Deutschland, Germany
High-Tech Killed
Finance - and Media May Be Next
"What the world is
experiencing is primarily a consequence of the underestimation and lack of
mastery over the technological revolution. …
IT has radically altered the rules for financial markets and thus the
economy. Equally as radically, IT has altered the rules of how information is
disseminated in democracies."
By Thomas Klau
Translated By Jonathan Lobsien
February 13, 2009
Germany
- Financial Times Deutschland - Original Article (German)
One cause of
the crash lies in technological progress. Society has failed to comprehend the dimensions
and consequences of the IT Revolution. And the next victim may be the media.
Unbridled greed,
hyperactive government deregulation, passive federal oversight, and an
erroneous distribution of global supply and demand - these are the phenomena most
frequently mentioned as the causes of today's global economic crisis. But there
is another interpretation, which up to now has only been touched on and which
warrants being brought much more clearly into focus: what the world is
experiencing is primarily a consequence of the underestimation and lack of
mastery over the technological revolution.
The orgy of
speculation that the financial world has indulged in over recent years, and its
Big Bang ending which has resulted in such a rare annihilation of wealth, would
not have been possible without the preceding Big Bang in information
technology. Initially, developments in the field of IT made possible
speculative modeling that relies on statistical averages. The complexity of
these models exceeded the capacity of bank boardrooms to comprehend them. And
with the leveraging these models made possible, both gigantic profits and even
more gigantic losses were generated. Both deregulation and global macroeconomic
imbalances achieved their full destructive potential, thanks primarily to IT.
NAIVE AMAZEMENT
The financial
elite, such as regulators and lawmakers, have in the past 15 years failed to
grasp that the highly vaunted opportunities presented by technological progress
have also created completely new potential for risk. One can view the crisis as
the collective failure of a generation of leaders who grew up using the
fountain pen and when confronted with a new technology, left management to a
small number of very young experts. All of us looked and marveled at this. Some
found the new toy to be a good thing, others often found it troublesome. We
didn't understand what we were witnessing.
Now that it's too
late, the enormous destructive power of the technological revolution in
corporate finance and thus in the real economy has become apparent. But on the
whole, the technological revolution is still being underestimated. We
recognized too late that along with oversight and regulation, IT has radically
altered the rules for financial markets and thus the economy. Equally as
radically, IT has altered the rules of how information is disseminated in
democracies.
Up until now, the
process was described as an emancipation from the established monopolies of
information dissemination - for example, magazines, newspapers, television and
news agencies. In retrospect, it was erroneous to blindly accept the effects of
the IT revolution as a beneficial process of emancipation, and it is just as
wrong and irresponsible now to take this attitude in the area of disseminating
information in a democracy.
IT is
revolutionizing the fundamentals of the media, and it would be disastrous if,
in the coming years, we came to the conclusion that we slept through and
misjudged the consequences of this revolution just as we misjudged the
consequences of the Big Bang in the financial sector. This isn't just about
beleaguered newspapers, which along with news agencies produce the overwhelming
proportion of serious news available on the Internet. It's about the medium of
books, which due to the digitization of libraries have been massively affected
in terms of their commercial dimension. And it's also about other information
and cultural assets, like films or music.
Posted by WORLDMEETS.US
We should at
least make clear that IT is altering our world as radically as Bill Gates
predicted it would 15 years ago; the time of change is now upon us, and it can
have both dramatically positive or - if it isn't carefully thought through and
hence controlled - destructive consequences. As we all looked on, the financial
sector used information technology in a way that led to its own quasi
self-destruction. Now we're looking on passively as IT alters the fundamentals
of how information flows into the democratic debate.
Month by month, a
new world of information is emerging, and it still isn't clear whether it will
advance the public debate nearly as well as it has up to now. Widely
underestimated is the extent to which politicians, columnists, commentators, bloggers
- as well as those who are taking advantage of this new medium on the Internet
to deliver the distinguished work of the old media - draw their insights from
the news and research of the old media. To the extent that the capacity for
news production of traditional media shrinks, the quality of every part of the
public debate is impoverished.
COMPREHENSION AND CONTROL
It's possible that in
retrospect, historians will analyze the implosion of the financial world and
the severe crisis of the traditional press as parallel symptoms of the same
societal incapacity to analyze. The challenge is to comprehend the dimensions
of the information-technology revolution and its consequences for the economy
and democracy. It would be in vain to wish away this technology, the
thoughtless and uncontrolled exploitation of which has contributed to bringing our economy to
the brink of collapse. And it would be foolish, in a backlash against the
enormous potential of IT, to ignore its capacity to change the world for the
better.
Posted by WORLDMEETS.US
But the existential crisis in
our financial services industry shows how urgently we need to recognize that
the technological revolution requires a much more careful examination of the
dangers that can emerge out of its underestimated potential to create change.
IT rewrites the rules of the game of life and economics, and our lawmakers and
thinkers must now set about gauging the effects - and drawing the necessary
conclusions. It is high time to confront the information revolution. This is a
debate that is only just beginning.
*Thomas Klau
is an FTD columnist and heads the Paris Office of the
European Council on Foreign Relations.
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HERE FOR GERMAN VERSION
[Posted by WORLDMEETS.US
February 22, 12:28pm]
