🇬🇧Pandemic Digitalization: Benefits or Harm?
Covid-19: Forward Kicks For Social Digitalization and Crypto-Ecomomy, Head Kick For Privacy
Those who read Spillover before the pandemic (and perhaps re-read it in the during) will surely agree with the assertion that Covid-19 is not a Black Swan, as framed by Nassim Nicholas Taleb in his writings.
Nevertheless, the ‘tail’ event in question has undeniably been the one with the greatest impact, and sudden in its effects, for the process that generally falls under the phenomenon of digitalization, from its inception (first half of the ‘950s) to the present.
The rapid, obligatory, leap forward has been multi-ambit: it has invested the social and the individual, the public and the private, the techno-enthusiasts and the techno-skeptics without distinction. The cause of the violence and speed of impact, and thus its powerful transversality, is that either you follow the path of forced digitalization or you remain isolated from the socio-economic contexts you belong to, both at the micro and macro level, given the type of measures available and needed in the real, in the physical, to mitigate the effects of the pandemic.
Therefore, following a linear logic, we could say that Covid-19, despite the deleterious consequences of which we all would have gladly done without, has had at least one positive effect, namely that of moving society towards greater digitalization and in less time (quickly).
For techno-enthusiasts, such as the writer, who see digitalization as a factor of social progress, this should be a factor of contentment. It is not so.
Firstly, the starting points were different in different countries. In its progress, digitalization needs techno-social substrates without which it is impossible to force it. If, for example, in a country, on the one hand, there is no backbone for broadband and, on the other, digital illiterates make up a significant part of the population, the haste resulting from the emergency has no effect: the timeframe is not compressible. Don’t be misled by the number of active devices/landlines because they only represent penetration due to providers marketing.
Having internet at home or in the office or on the cell phone, the amount of fixed and mobile bandwidth available and its territorial distribution, the availability of advanced digital services, being aware of being able to use them and to do so, are all factors with their own development functions in relation to time. With the exception (in part) of the purchase (or emergency supply) of devices, all other factors cannot be compressed by virtue of haste and remain in place, pandemic or no pandemic; this is all the more so since they have a strong correlation of development, so they are very dependent on each other, so that in a complex perspective the temporal dysfunction of one stops the whole system.
Even more burdensome is the fact that two other fundamental variables in the process, the digitalization of the public administration and of the economic fabric, are rigid with respect to the logic of urgency. They are the consequence of structural, multi-year, bipartisan and shared choices between public and private elites that cannot be remedied by the necessity of the moment.
Even the phenomena of leapfrogging are not helpful: they have always occurred, historically, when there was a minimum technical structure at the base that would allow them, services suitable for their progressive and rapid development, users who understood their usefulness and, above all, thinking heads who would guide them.
So one thing is a windbag, politician or private, who make promises in the face of the emergency; other is the daily reality, for individuals and companies, with a socially and economically critical situation to deal with.
As emblematic examples of the situation, I will briefly illustrate some that have occurred in my country, Italy; this is not because I like to rub it in but because, I think, the type of country is also emblematic.
In fact, on the one hand we have one of the top ten economies in the world (and one of the first three, before the pandemic, also for absolute public debt and per capita) and, on the other hand, growth has been stagnant for more than twenty years and the structural level of socio-digitalization is lower, considering the various publicly available rankings, than many emerging countries and/or much smaller economies. Therefore, a giant with clay feet, which combines in itself, in a concentrated and all-encompassing way, many of the shortcomings that are present, in a fractioned way, in other countries:
- the first example, on a macro-social level, the role that social networks and digital big-ones have played in influencing public opinion, for better or for worse, with regard to health and socio-economic aspects. The problem of the uncontrolled digital pervasiveness of these actors has been known and generalized for at least 10 years and no one, politically and for convenience, has ever seriously dealt with it. Now that the horse has bolted (with regard to fake-news, deplatforming, various censorships, conspiracy theories, massive surveillance, etc.) there is much talk about it, but the technical solutions to contain it are not there and cannot be improvised. The confusion generated in the social fabric by the infodemic has caused (socially) more damage than the emergency itself, especially in those countries characterized by the absence of reference points, and/or the inability of references to communicate and/or to be considered credible from a reputational point of view or, simply, a widespread awareness of their existence;
- the second example, again on a macro level, only the banking systems of medium-high tech countries have been able to cope with the characteristics of immediacy required by interventions to support the economy. In most cases, Italy in the lead, the intermediation of the banking system in direct payments, in their various forms, to citizens and businesses, has proved a disaster for two reasons: the banking logic is to make profit, and therefore neither help people nor digitalization, and governments have no binding power towards the system of payments entrusted to private sector. This confirms the fact that, at a European level, the take-off of the various CBDC projects is due to the bogeymen of Facebook’s Libra and China, not to the demand for greater efficiency deriving from the pandemic emergency;
- third, in Italy, for example, the efficiency of the public administration has worsened by several points as a result of smart-working. This is not because one is incapable of using, or learning to use Zoom (or because one sleeps more at home than in the office), but because a large part of the archives are still paper-based, despite the framework laws on the digitalization of the public administration dating back to 1993 and 2005. It’s not a question of dealing with a Black Swan, but of political quackery and more than ten years of private indifference;
- the fourth example Amazon, likeable or not, was not born yesterday: it is a business model that originated in 1994 and reached a balanced budget in 2004, so respectively more than 25 and 15 years ago. I think that even for the most ramshackle of trade associations (those that fill the media with messages such as “let’s start over together” and “all together we can make it”) these times are sufficient even if only to copy, and save it for later, an application model (you never know if the wind is turning and some certainties are lacking), to be able to teach and apply to their members in a short time. I am reminded of the most affected categories (retail, tourism, artisans, small catering) where it is only the enterprising private individual that is making a difference, not the words of the state nor those of corporatism.
These are examples that, individually or in partial combination, can be found in a multitude of countries: in some, however and for historical reasons, they are accumulating, concentrating and giving rise to catastrophic effects in relation to the emergency.
The most frightening prospect, as a scenario, is that the windbag people are still the same, before, during and after the pandemic: they are planning the use of the recovery fund (and the intellectual and empirical nothingness is becoming apparent throughout) and, what is worse, they will handle it.
This prospect, absurdly, would make it preferable not to use the funds so as not to unnecessarily pass on further mountains of debt to future generations.
Therefore, the pandemic has been a kick for the progress of the digitalization of countries, but with a difference: the kick will be virtuous for those countries that are even moderately foresighted and righteous (France, Germany, … to remain in Europe) in terms of economic and social policies; it will be a further reason to increase the negative gap for those (like Italy for 40 years with regard to the issue) indeed have been unable to go beyond words for lack of competence and sense of community (read: country system) of the elites.
Instead, the pandemic has been a boon to the cryptoeconomy. Analytically not for the entire industry but, specifically, for the pioneer, Bitcoin.
The turning point has been only one, and that is the decision by large and medium-sized investors, including non-financial ones, to make it a portfolio and/or treasury asset. On these decisions, the pandemic was key because it forced fund holders to find unusual investment solutions in the face of an unusual situation of criticality of traditional safe haven assets.
Thus, Bitcoin has been used as a speculative asset globally and the issue has a few consequences. First, visible from the charts, the appreciation towards USD: it is the first one due to real market factors and not, like the previous ones, to rumors regarding corollary such as regulatory prohibitions/permissiveness and/or the adoption as a payment regulation tool by some market bigwig.
Second, Bitcoin ceases its utopia of decentralized and alternative currency to enter, in its own right, the sphere of traditional finance. Third, the entire industry is reflexively benefiting, both in the crypto-monetary and application sectors: the quality of attention for the entire crypto-movement has risen because the reputation of Bitcoin as an asset has risen.
So the pandemic has helped give a big kick to the cryptoeconomy that goes far beyond the BTC/USD quotes you read about these days.
In this aspect, it is not necessary to dwell on it. If, on the one hand, the emergency urgency has given a formidable impulse to the digitalization process, on the other hand it has, without many differences between countries, necessarily lowered the threshold of control over digital human rights, which was already very low before the pandemic.
Territorial examples such as Singapore, Israel and the last USA performance, with regard to the governments use of data collected for pandemic purposes for different purposes, or the power of censorship and deplatforming of social networks or, again, the sprawling pervasiveness of monopolies such as Amazon in the daily life of each, are the tip of the iceberg for which, without any guarantee and protection, the individual has had to abdicate his rights to have a possible way of survival not only health but also social and labor.
The worst is yet to come because, on one hand, regulations have not been adapted, and in many cases they have been by-passed in the name of emergency, and the exact consequences will come to light, as usual, after some time and by the work of the various leaks; on the other hand, the current condition is predisposing scenarios, such as the introduction of tools like CBDC and the health passport, absolutely positive, functional and necessary, but devastating for individual liberties if not properly designed and managed.
This is an English adaptation of a neuronal Italian/English AI translation by DeepL.