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Impact Investing

IPE special report May 2018

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Resist the backlash against tech

Sometimes patterns are not clear until they are examined closely. In the hubbub of daily life it is easy to miss unfolding trends.

The worrying backlash against technology – sometimes called the ‘techlash’ – is a striking example. It is hard to discern the bigger picture as the assault has run along several tracks. As I argue in this article, the charges include undermining democracy, endangering privacy, fostering new forms of addiction, letting sexual harassment run riot, failing to tackle inequality, avoiding taxes and engaging in monopoly practices. Anyone who thinks this claim is exaggerated can use Google to verify it.

Such concerns are not the preserve of a few marginal cranks. On the contrary, they are pervasive in the top echelons of politics and the media. They also stretch along the political spectrum and across the Atlantic from the US and Europe. Action is being taken to tighten the regulation of the technology sector from the Trump administration to the European Union, to the German anti-cartel authorities. In some cases there are even calls to break up some of the largest firms or to regulate them as if they were public utilities.

The shift in just a few years is dramatic. It used to be common to laud the new technology as a force to liberate humanity. Many credited it with the election of Barack Obama as America’s first black president in 2008 – defeating over two centuries of institutionalised racism – and the Arab Spring uprising against autocratic regimes in the Middle East.

Perceptions of technology seem to have shifted from one extreme to another – over-hyped in the recent past to excessive doom in the present. That is not to say that everything is perfect now but surely the pendulum has swayed too far in the negative direction.

“Perceptions of technology seem to have shifted from one extreme to another – over-hyped in the recent past to excessive doom in the present”

Clearly the swing against technology could have damaging effects. From an investment perspective the most obvious is increasing the risks of holding assets in the sector. It is also likely to stifle innovation as a more conformist culture takes hold in response to the hysterical attacks. Worse still, is the chilling effect on free speech as people become more nervous about expressing themselves on social media.

Understanding what has driven this shift is essential if it is to be arrested. Perhaps the most plausible explanation at present is that the old media (newspaper, magazines and the like) is getting its revenge on the new media. Services provided by the likes of Google and Facebook have led to an erosion of traditional advertising. But this account is far from convincing. The techlash extends much further than traditional print publications. In any case they, too, were lauding the new technology not long ago.

It will be necessary to take a broader view to comprehend and then resist the extraordinary backlash against technology.

Daniel Ben-Ami, Deputy Editor
daniel.ben-ami@ipe.com

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