What have widening income gaps got to do with globalisation & IT revolution?15 Aug, 2011

15 Aug, 2011, 01.38PM IST, Thomas L FriedmanThomas L Friedman,New York Times

What have widening income gaps got to do with globalisation & IT revolution?



London burns. The Arab Spring triggers popular rebellions against autocrats across the Arab world. The Israeli Summer brings 250,000 Israelis into the streets, protesting the lack of affordable housing and the way their country is now dominated by an oligopoly of crony capitalists.

From Athens to Barcelona, European town squares are being taken over by young people railing against unemployment and the injustice of yawning income gaps, while the angry Tea Party emerges from nowhere and sets American politics on its head. What's going on here?

There are multiple and different reasons for these explosions, but to the extent they might have a common denominator I think it can be found in one of the slogans of Israel's middle-class uprising: "We are fighting for an accessible future." Across the world, a lot of middle-and lower-middle-class people now feel that the "future" is out of their grasp, and they are letting their leaders know it.

Why now? It starts with the fact that globalisation and the information technology revolution have gone to a whole new level. Thanks to cloud computing, robotics, 3G wireless connectivity, Skype, Facebook, Google, LinkedIn, Twitter, the iPad, and cheap Internet-enabled smartphones, the world has gone from connected to hyperconnected. This is the single most important trend in the world today. And it is a critical reason why, to get into the middle class now, you have to study harder, work smarter and adapt quicker than ever before.

All this technology and globalisation are eliminating more and more "routine" work - the sort of work that once sustained a lot of middle-class lifestyles. The merger of globalisation and IT is driving huge productivity gains, especially in recessionary times, where employers are finding it easier, cheaper and more necessary than ever to replace labor with machines, computers, robots and talented foreign workers. It used to be that only cheap foreign manual labour was easily available; now cheap foreign genius is easily available.

This explains why corporations are getting richer and middleskilled workers poorer. Good jobs do exist, but they require more education or technical skills. Unemployment today still remains relatively low for people with college degrees. But to get one of those degrees and to leverage it for a good job requires everyone to raise their game. It's hard.