On 24 October 2019 — #UNDAY — I had the privilege to participate as a panelist at the United Nations General Assembly Second Committee Side-event: “Emerging models of economic activities: Implications for sustainable development”.
Thanks to the hosts — UN/DESA and UNCTAD, for including me, and thanks to the other panelists for their contributions. We covered lots of ground, touching on environmental sustainability, the creative economy, and on improving the digital economy.
I’ll share my (rough) remarks below the video. My remarks start at minute 28, but there lots of good stuff before and after.
In order … (Chair) Hamid Rashid, Chief, Development Research Branch, UN/DESA (Panelists) Helge Elisabeth Zeitler, Environment and climate counsellor at the EU Delegation to the UN; Jonathan Donner, Senior Director for Research at Caribou Digital; Alex Rosenblat, Author, “Uberland: How Algorithms Are Rewriting the Rules of Work Research Lead at the Data & Society Research Institute; Fidan Ana Kurtulus Professor, Department of Economics, University of Massachusetts Amherst; Patrick Kabanda, Author, “The Creative Wealth of Nations: Can the Arts Advance Development”; Ambassador Mohammad Koba, Ambassador/Deputy Permanent Representative to the UN, Republic of Indonesia.
Emerging models of economic activities: Implications for sustainable development - Side Event of…
Emerging models of economic activities: Implications for sustainable development - Side Event of the UN General…
My remarks are in response to this question by the moderator. What do you think policymakers should do to better manage the digital economy and ensure that it does not exacerbate income and wealth inequality?
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Thank you distinguished colleagues, UN/DESA and UNCTAD, the moderator, and panelists for this opportunity to be a part of this panel.
Over the past several months I’ve had opportunities to dialogue with folks in the UN system about these broad questions, specifically UNCTAD around the Digital Economy Report.  This report is excellent, and is a good companion and follow-on research to the topics we’re covering today.
In that spirit, the first thing to keep in mind is that the digital economy isn’t just phones and PCs and networks. Your framing remarks and the DER underscore how it’s bigger than that. Digitization transforms agriculture. It doesn’t replace it. Digitization transforms manufacturing and services. It doesn’t replace them, either.
So, it is perhaps more helpful to frame the challenge as how to achieve inclusive, equitable sustainable development in a digital age. And in that, to highlight some changing and urgent roles for policymakers as they address the whole of the economy, as touched by digitization.
The second thing I’d note is that getting close to the data is to be critical. Among large institutions in big rooms like this, there is a temptation to exchange abstractions about something like digitization. But abstraction should be balanced with listening, observing, and sharing the complexity of experiences of real people, in the contexts in which they live and work. Work documenting the experience of drivers, or Mechanical Turk workers, farmers, etc. must be at the core of any policy.
Recently Caribou Digital, with the support of the Mastercard Foundation, did some interviews with micro entrepreneurs in Kenya, talking to them about how “the platform era” is redefining what it means to be a micro-entrepreneur.
● Faith has used WhatsApp for her Juice business. Every morning, she posts a different status picture, representing the juice she has that day. She’s traditional microenterprise, using free communications in a new way.
● Dorcas is a self-employed baker. She pulls her recipes from baking videos on youtube — particularly French ones! This is an interesting new way of acquiring skills
● Robert sells phone accessories on the African marketplace Jumia. He’s happy with how the AI-powered seller center helps him grow his business and is participating in larger and more dynamic domestic ecommerce marketplace than he could do on his own without the platform.
● Daniel runs a shop in the day, freelances on Upwork at night, and has a team working with him — re-imagining value chains and flexible organizations, exporting via a global skills platform
This is only 4 people, with admittedly positive stores, but there are thousands of permutations of how digital is intertwined with traditional ways of value creation. It’s not all bad news.
Three kinds of policy challenges
But there ARE concerns, if there weren’t, we wouldn’t be here. But you can see what I’m hinting at — it’s a tangle of opportunities and risks, rather than one overarching story. So, for the second bit of my response, let me distinguish between a few potential areas for policymakers who might want to shape the increasingly digital economy for inclusion, equity, and sustainability.
- The first is to address how digitization shifts the relationships between individuals and the organizations they work for, whether as an employee or not. This is a question of power. It’s a generality, but with mobility and access comes precarity. Digitization often seems to privilege organizations vs atomized, fractional workers in ways policymakers should be attentive to. So, there’s work to do to update the policy levers to protect and respect workers, their capacity to organize, and their capacity to move from one workplace to another. But these aren’t NEW questions, and governments already have a variety of perspectives on how much and how best to intervene, if they have the mandate to do so. For example, there’s an encouraging new law, assembly bill 5, passed by California that seeks to ensure that captive contractors, like rideshare drivers, are classified as employees. But I was reading in the Hollywood Reporter (as one does, thanks to algorithmic news feeds) about how freelance journalists will be caught up in this). They have an exception in the law, but if they write more than 35 submissions a year, they’ll be employees. That doesn’t fit how many journalists work, since the rules were made for weekly columnists. This is just a small illustration but illustrates how challenging it will be to craft policy across industries and contexts. In one state in the US, let alone worldwide.
- The second is the structure of markets — within and across industries. Again, here, these questions aren’t new. There are important trends towards new forms of concentration of power, particularly in a small number of platform and data businesses who sit astride not just one market, but several interconnected ones. An example is WhatsApp, bought for billions of dollars when it had about 50 employees, and now run as basically a subsidy for a billion grateful, engaged daily users, while eroding SMS and closing out possible competitors. As the Digital Economy Report notes, these structures can make it difficult for regional innovation systems to thrive. But the existing lenses and levers policymakers have — particularly taxation and promoting competition, can be updated for digital firms (like the platforms) or to traditional firms with increasingly digital modes of value creation.
- And there’s a third area, and here we’re on more exploratory ground. Brand new social forces are emerging, thanks to advances in digitization. In Artificial Intelligence, there is a growing sense that the technology needs greater transparency, attention to ethics, and protection from algorithmic bias. Similarly, the governance of data itself — the ways infinitely reproducible, combinatory elements are converted into value, will prove difficult, and will be harder still if that governance is to encourage responsible uses and for the benefit of all. Again, these will vary by sector and context. Ask a biotech professional about AI and you’re likely to hear optimism. Ask a journalist about what an algorithmic newsfeed or automated content filter is doing to her market, you might hear pessimism. From identity to currency to automation, digitization is renegotiating the relationship between individual, the state, the private sector, in ways which will strain our existing models of how policy can shape an economy.
My goal in distinguishing third set of tensions from the others is to underscore that we are still in the early stages of digitization, and that things are moving too quickly to rely on broad doctrine. Our current tools aren’t up to the task yet.
That said, there is headway being made. GDPR is illustrative of a promotion of global principles of privacy and data protection; could be a model for digital policy levers to address other outcomes, like in AI transparency and data governance. But it’s a start, not a detailed recipe for success. It, like the California law, needs to be reflected both nimbly and carefully through local context.
So, getting the balance right between general principles and context specificity will not be easy. It will be a challenge to every country’s policy-makers to develop nuanced understandings of how digital impacts value creation in their countries; perhaps most so in smaller countries, who might have more trouble working with global platforms to act in ways that create and retain value in the country. In the meantime, there are more recognizable levers available for shaping the relationships between organizations and those who rely on them for livelihoods, and for shaping the relationships between companies in international value chains.
But to come back to those enterprises in Kenya…I’m struck by how much of an onus we’re putting on them, as individuals, to innovate and adapt their way into livelihoods that work. Providing them the right set of skills and an education for the digital era will go a long way (that’s another policy area). But the onus should not fall entirely on them.
As the Digital Economy Report also argues, there is a need for ongoing conversation, to create an international community of practice and of policy, with space for experimentation and continual refinement, to develop the policy choices that, over time, can help make the digital economy work better for everyone.