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25 April 2018

The Digital Revolution: Promises and Realities

Globalization | Mass Media | OpenMind Event | Perplexity
Estimated reading time Time 3 to read

The new technologies, scientific advances and democratization of access to information via the internet have reshaped democracy and individual involvement as well as the world’s political and financial order. Fear of automation, robots and Artificial Intelligence are transforming employment, training and education. Uncertainty, discontent and mistrust are paving the way to populism at a time dominated by a collective feeling of perplexity.

Presentation of the book “The Age of Perplexity. Rethinking the World We Knew” in Madrid, April 2018. From left to right: Ana Ortas (presenter), Francisco González (Chairman of BBVA), Zia Qureshi (Researcher, Brookings Institution) and Diana Owen (Professor, University of Georgetown) / Image: BBVA

BBVA analyzes all of these challenges in the latest book in its OpenMind collection: “The Age of Perplexity. Rethinking the World We Knew.” Data has set the route for this age and the Digital Revolution has made our mental frameworks obsolete– Political, economic and social actors must respond to the change, facilitate the transition and rethink seemingly up-to-now unquestionable convictions.

A path without a compass: how certain is the digital promise?

Will the new technologies help to create a more prosperous and sustainable world?  When transitioning to the digital world, can we expect poverty to be eradicated and inequality to be reduced? The digital transformation of the financial system; the role of the new media; and the impact of technological advances on productivity: these are three key elements to be able to answer these questions.

1. Finance, new competitors and regulation

What will happen in a hyper-competitive financial setting where many of the players (start-ups and leading online companies) are used to working in an absolutely globalized regulatory environment with ample leeway for tax “freedom”? In spite of the challenges faced by the economy in this digital reconfiguration; in spite of fraud, cyberterrorism, and “mostly importantly because it is much more general, misuse of intellectual property and client data,” Francisco Gonzalez describes himself as a techno-optimist:

“We are at the threshold of a stage of high growth and improved welfare with new and better jobs.” Francisco González, Chairman of BBVA

Additionally, González underscores the need for global regulations of digital activities that prevent unprotected user data or digital fraud. In this context, in his article, González also stresses the importance of equipping users with “more rights and control over their data” in the face of digital providers.

2. The media, democracy and fake news

Diana Owen, professor of Political Science at Georgetown University, analyzes the role of the new media in political communication using the case of Donald Trump during and after his presidential campaign as a paradigm. How do politicians use the new media now? What is the effect on their image and the political decisions of voters of using these media?

The phenomenon of mistaking politics for entertainment generates evident wear and tear of democracy. To restore the system’s credibility and transparency, we need good quality journalism that people can trust, says Own. Disseminating “fake news” (a term with “no clear definition yet” according to Diana Owen) has had a determinant impact on election results as well as the way people use social media. According to the researcher, the danger is that “this disinformation is becoming institutionalized.” The author’s thesis can be found in her article “The New Media’s Role in Politics,” where she also analyzes the influence of automatic software and the potential danger of manipulation using bots in the age of post-truth, mistrust and populism.

3. Technology, productivity and inequality

Given that exponential technologies have entered our daily lives and our workplace, why has there not been a noticeable and consequent increase in productivity and purchasing power? “Their potential to deliver productivity growth has not been fully tapped,” states Zia Qureshi, researcher at the Brookings Institution. The slowdown of productivity in most economies seems to reflect growing inequality between the leading companies and all other companies.

“The benefits of new technologies have been captured, for the most part, by a relatively small number of larger firms.” Zia Qureshi

“To achieve better outcomes, we need policies that revitalize competition, spur innovation, upskilling and reskilling workers, and reforming social contracts,” argues the author in his article. The paradoxes currently faced by the economy can be analyzed from different positions as regards the potential of technology: techno-optimists, techno-pessimists and techno-adaptationists. However, it is vital to take measures that enable a dynamic transition at the intrinsically changing pace of the new technologies.

OpenMind

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