Hamish McRae: Technology holds the key to the future

Technology is the engine of global growth, not politics or law, not even business
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The Independent Online

Amidst the background noise from the economy, MPs' expenses, Afghan elections, the BNP and all the other stuff going on at the moment, you might not have noticed that shares in Apple Inc have been shooting up this week. Indeed they are around an all-time high. The particular reason for this is that on Monday it produced terrific profit figures, on the back of strong sales of the latest generation of iPhones, iPods and Macs, and expectations of a launch of the tablet computer next year.

Good for Apple, you might think, and that it is. But there is something happening here that is much bigger than this one company, or even the whole communications industry. It is that technology is the principal engine of global growth, the main force that is transforming our lives. It is not politics; it is not the law; it is not the civil service; it is not even the business world, except in so far as this brings the fruits of technological advance to the rest of us. No, it is the relentless ingenuity of human beings in developing new technologies and then working out how to deploy these in ways that we other human beings want and need.

Communications technologies are particularly important right now, partly because they are racing forward while advances in most other areas have become incremental, but also because, at this point of the economic cycle, they are one of the few sure-fire sources of additional demand. We buy new electronic kit not because we have to, or are seduced into it by clever advertising, but because we really want to have the stuff. But what is most interesting of all is not so much the ingenuity of the technology but the unpredictable and unpredicted ways in which it is being used. Take two very different current examples.

The first is the ways in which the ordinary mobile phone is being used in Africa to do all sorts of other things than make phone calls and send texts. One is money transfer. Only one in five African households has a bank account. So do you send money to someone else if neither of you have accounts? The answer that a much higher proportion of households have a mobile phone – so you do it by phone. You pay cash at a phone office or kiosk in one city, transfer the money text to someone who picks it up at an office in another.

Given this sort of opportunity it is unsurprising that Africa has become the fastest-growing market for mobile telephony in the world. However what I find even more impressive is the fact that when mobile telephony was first developed, it never occurred to the boffins that it would be used for banking. They did not originally have a text function ... and now there are more texts sent every day than there are people on the planet.

Take the other example, though I am afraid a less inspiring one. It is the case of the worker on the London Tube who shouted abuse at an elderly passenger who had got his arm stuck in a train door. The event was filmed by another passenger on his mobile and put on YouTube. As a result the event has been seen by thousands of people and cannot be covered up. The point here is that we have flooded our cities with fixed cameras that survey our every move and these have had only a limited effect on improving public safety. But the combination of mobile phone cameras and YouTube will gradually influence the behaviour of all of us.

The parallel between the two cases is that in each instance there has been a failure. In Africa it is the failure of basic infrastructure: poor fixed-line telephone services, of course, but also inadequate banking systems. In the UK it is a failure of civic society – or at least weaknesses in it. In each case a technology designed for a quite different purpose is being used to correct something that has been going wrong.

Everyone will have their own examples of how technology is being deployed in ways the developers did not envisage but at this stage of the economic cycle technology has become the vital driver of growth. That is happening in three main areas.

The most obvious is new products, including all the electronic stuff coming through, but that is probably the least important element in the boost to global demand. Western consumers will buy the new iPods and laptops and we will find new ways of using them. Given all our worries about energy use some of us will switch to lower-energy products, even if it is simply replacing old light bulbs with low-wattage ones.

But about three-quarters of the additional consumer demand in the world right now is coming from China and the Chinese are buying more mundane stuff, such as cars. China is now the world's largest car market. So the new products, and their applications, will deliver some growth but we should not overestimate the impact of that as a driver of recovery.

More important are the increased efficiencies that companies all over the world are reaching, simply because they have to find ways of doing more with less. Recession has been a harsh disciplinarian but, as we emerge from it, the world's giant companies will be "better" in the sense they produce better products or better services with fewer resources. The principal weapon companies have to lift efficiency is to apply technology more thoughtfully.

One of the reasons why share prices worldwide have been so strong in recent weeks has been that company earnings have been better than the markets had expected. Earnings are some measure of efficiency, albeit a crude one.

It is the third area, however, that I find most intriguing. This is the changes in working patterns and practices that technology will permit. Take public services. People are the biggest cost, making up a much higher proportion of total costs than in most commercial companies. So one great challenge will be how to improve public services when there is less tax revenue available. Using technology to change work practices will be one of the few obvious ways of doing so.

Other changes to work patterns will include an increase in tele-working and self-employment. There is some evidence that the new technologies are making it easier to start new businesses: you don't need an office, merely a computer. And so on.

The big point here is that technology, applied thoughtfully, makes us all richer. I am afraid politics doesn't.