At a recent family dinner I sat through two younger cousins talking about the love of their lives: their latest mobile phones. The glow and the happiness on their faces was very visible, even though they were at the opposite ends of the spectrum. One had bought the latest version of Samsung Galaxy and the other had bought the latest version of the Apple iPhone.
We live in an era where internet-led technology plays a great role in the lives of people. It also gives a lot of meaning to their lives, as is the case with my cousins. Every new gadget, be it the latest mobile phone or the latest tablet, gives us a feeling of progress. And we regard these recent changes as revolutionary.
But do they really make a difference? Of course, they do. It would be foolish to say they don't. So let me reword the question. Does the progress in information and communications technology, almost all of which use the internet, really make as much difference as, let's say, the availability of running water or the invention of the washing machine and other household appliances?
Robert Gordon, an American economist, has this to say in a research paper titled: "Is US Economic Growth Over? Faltering Innovation Confronts the Six Headwinds. (You can read the research paper here).
He writes: "The biggest inconvenience (in the past) was the lack of running water. Every drop of water for laundry, cooking, and indoor chamber pots had to be hauled in by the housewife, and wastewater hauled out. The average North Carolina (an American state) housewife in 1885 had to walk 148 miles per year while carrying 35 tons of water. Coal or wood for open-hearth fires had to be carried in and ashes had to be collected and carried out. There was no more important event that liberated women than the invention of running water and indoor plumbing, which happened in urban America between 1890 and 1930."
Cambridge University economist Ha-Joon Chang makes a similar point in his brilliant book 23 Things They Don't Tell You About Capitalism: "The internet revolution has (at least as yet) not been as important as the washing machine and other household appliances, which, by vastly reducing the amount of work needed for household chores, allowed women to enter the labour market."
Running water, washing machines and other household appliances helped women save time on the daily chores and thus enter the job market. As Chang points out, "Washing machines have saved mountains of time. The data are not easy to come by, but a mid-1940s study by the US Rural Electrification Authority reports that, with the introduction of the electric washing machine and electric iron, the time required for washing 38 lb of laundry was reduced by a factor of nearly six (from 4 hours to 41 minutes) and the time taken to iron it by a factor of more than 2.5 (from 4.5 hours to 1.75 hours). Piped water has meant that women do not have to spend hours fetching water (for which, according to the United Nations Development Program, up to two hours per day are spent in some developing countries). Gas/electric kitchen stoves...have vastly reduced the time needed for collecting firewood, making fires, keeping the fires alive, and cleaning after them for heating and cooking purposes."
The impact these developments have had on the way we live has been really fundamental. The same does not stand true for the internet. At least, not as yet. As Chang explains, "To be sure, for some, the internet has profoundly changed the way in which we work... However, for many other people, the internet has not had much impact on productivity. Studies have struggled to find the positive impact of the internet on overall productivity - as Robert Solow, the Nobel laureate economist, put it, 'the evidence is everywhere but in the numbers'."
Many of us maybe spending more and more time on the internet, but that doesn't mean it has had an impact on economic productivity and economic growth and in turn made our lives 'really' better.
Economist Bill Bonner explained this dichotomy very well in a 2011 column. As he wrote, "Nowhere was the Internet revolution more focused than in the USA. Nowhere did people have higher hopes for it. And nowhere were the results more disappointing. The typical teenager now spends half his life... not just half his waking hours, but more than half a day on some sort of electronic device. Does it make him smarter? Richer? More civilised? More coherent? Not so we've been able to detect! Not every technological advance results in an increase in standards of living. Take Twitter, for example. Or nuclear weapons. Or dozens of other innovations and inventions. The Internet, like TV before it, is a great entertainment device. It is also very useful, improving productivity in a vast number of industries. But it has not sped up GDP growth or improved living standards."
To summarise the argument, the Internet is not a revolutionary technology (again, we need to caveat it by saying not yet) that it is made out to be. But such is the fascination for it that it has distorted our perspectives. And these distorted perspectives have an impact on many political and economic decisions that are being made.
"It would not matter if this distortion of perspectives was just a matter of people's opinions. However, these distorted perspectives have real impacts, as they result in misguided use of scarce resources. The fascination with the ICT (information and Communication Technology) revolution, represented by the internet, has made some rich countries - especially the US and Britain - wrongly conclude that making things is so 'yesterday' that they should try to live on ideas... This belief... has led those countries to unduly neglect their manufacturing sector, with adverse consequences for their economies," writes Chang.
The love for the internet-led ICT revolution has distorted perspectives in India as well. Uttar Pradesh Chief Minister Akhilesh Yadav has been distributing free laptops to students. While that is a noble idea, it is worth remembering that UP continues to be one of the most backward states in India. Wouldn't the money be better spent by ensuring that there is a regular supply of water in more villages? Wouldn't that money be better spent in ensuring that electricity is available for longer hours?
In a country where resources are scarce such questions need to be asked. Of course, if Yadav goes about ensuring regular water supply in more villages and better availability of electricity, it doesn't make for great news. Distributing 'free laptops' sounds so much more 'economic' and 'social' progress than ensuring the availability of water in villages (I mean, we have been trying to do that since 1947. Give me something new).
On the flip side, compare this to Nitish Kumar, the CM of Bihar, distributing free cycles to girls and boys, so that they could continue attending school. A solution like this clearly has a greater economic impact than giving away free laptops. (Though it needs to be said that instances of fraud have come to light, where people have collected cheques to buy cycles and then disappeared).
This distorted perspective has also led to more and more state governments in India falling over one another to attract IT companies to set-shop in their states. A similar zeal is not seen when it comes to setting up of manufacturing companies. IT companies also continue to get income tax exemptions. At an individual level almost every engineer now wants to work for an IT company, which means a shortage of talent for companies in other sectors.
But the bigger problem with this distortion is the rapidly growing belief that India can skip the manufacturing revolution. "Especially with the rise of service offshoring, this view has become very popular among some observers in India. Forget all those polluting industries, they say, why not go from agriculture to services directly? If China is the workshop of the world, the argument goes, India should try to become the 'office' of the world," writes Chang.
But there is a problem with this distorted perspective. It has never happened before, except for a country like Seychelles, which has a population of around 85,000 people with a per capita income of $9,000. As Chang writes, "No country has so far achieved even a decent (not to speak of high) living standard by relying on services and none will do in the future... As for the developing countries, it is a fantasy to think that they can skip industrialisation and build prosperity on the basis of service industries. Most services have slow productivity growth and most of those services that have high productivity growth are services that cannot be developed without a strong manufacturing sector."
People often talk about Switzerland as having avoided the manufacturing revolution because all the black money of the world goes there. That is not true. "In per capita terms, Switzerland has the highest industrial output in the world (it could come second after Japan, depending on the year and the data you look out)...We don't see many Swiss manufactured products around because the country is small (around small million people), which makes the total amount of Swiss manufactured goods rather small, and because its producers specialise in producer goods, such as machinery and industrial chemicals, rather than consumer goods that are more visible," Chang points out.
Given these reasons, it is important that we rid ourselves of this obsession that we have for the 'so called' internet-led information and communication technology revolution. There are other more important issues to think about.
Vivek Kaul is a writer. He tweets @kaul_vivek
Published Date: May 25, 2013 15:06 PM | Updated Date: Dec 20, 2014 18:57 PM