Telling the truth about SME life today

Technology is causing the recession

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The PM’s outgoing adviser, Steve Hilton, caused consternation when he said that the Whitehall headcount could be more than halved. Was he so foolish” Private-sector businesses are doing their damnedest to contain fixed-cost commitments (leases, pension commitments, company car schemes) so they’re lean enough to adapt if market conditions change. The media industry has been decimated by the internet but, through the advent of “citizen journalism” (grass-roots reports filed on YouTube, Facebook etc), it’s actually managed to become more relevant, dynamic and responsive. For the sake of the country’s structural deficit, wouldn’t it be smart for the public sector to do the same

Better but smaller” – that’s the phrase you hear regularly, and in resigned tones, from business owners these days. We’re becoming more efficient, but we’re also shrinking.

Over and over again, the job-destroying and GDP-reordering logic applies: drones replace soldiers; self-ordering tables replace waiters; SATNAV technology removes the need for taxi driver training instructors.

And it will get worse: self-cleaning glass will remove the need for window cleaners; robots, rather than nurses, will accompany surgeons; 3D printing (aka DIY manufacturing) will annihilate bog-standard manufacturing.

Across the UK and the developed world, great swathes of business and society have been shown to be irrelevant and inefficient at a time of technological change. The internet and digital technology have shone a light that will not go away. The power of technology is sucking the life out of the economy. Automation is destroying thousands of jobs in the UK, and millions around the world.

As a result, many industries and aspects of life are becoming dramatically more efficient. Does anyone seriously want to return to the days of queuing at a Post Office to renew your car’s tax disc

Of course, the new technologies, and the new business models they unleash, are themselves spawning new jobs and industries, opening new markets. My favourite story is Wiggle, which started life as Butlers Cycles, a small independent bike shop in Portsmouth that had been trading since 1920. This could have been another high-street failure, but the owners had the foresight to start selling bike kit online. Thirteen years later, Wiggle sells 250,000 product lines to 70 countries. Now that’s real wealth and job-creation.

However, right now, we have too many Butlers Cycles and not enough Wiggles. The new technology-enabled economy is not yet substituting for the large-scale, lost contribution to employment and GDP. That task will require time, re-skilling and rebuilding: a global industrial catharsis.

They won’t do it, but it would be smart politics for our government to admit their quasi-helplessness in the face of such seismic change. Vince Cable has come close when he talks of a “once-in-a-lifetime phenomenon”. Here, though, is the truth: technology is killing our economy, but it’s also our only hope of recovery. Time to wiggle…

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