Brave new 21 st century

The recent advancements in the information and communications technology – in particular the advent of the internet and smartphones – are fundamentally reducing transaction costs and improving production efficiency. And this is just the start of a new industrial revolution.

While as unsettling as any deep transformational change, this one offers a world of opportunity and socio-economic prosperity. For instance, humanity soon will be able to effectively deal with global extreme poverty and raise living standards in ways unimaginable decades ago.

This is not to say there are no challenges. Yet resisting — like modern luddites — the colossal transformational forces is not a wise approach. Better instead to adapt and turn the new technological capabilities in our favour.

The current spat over ‘sharing economy’ apps such as Uber is a good example of counterproductive resistance.

In France, taxi drivers promoted violent protests; in California, the Labour Commissioner just [mis]ruled that drivers should be treated as employees, not independent contractors; in Australia, the ATO was quick to impose GST on all drivers, regardless their income turnover.

These drastic and misplaced actions are against the interest of consumers and competition. Accordingly, Harper’s Competition Policy Review already points in the right direction, by recognising that: “Mobile technologies are emerging that compete with traditional taxi booking services and support the emergence of innovative passenger transport services. Any regulation of such services should be consumer-focused, flexible enough to accommodate technical solutions to the problem being regulated and not inhibit innovation or protect existing business models.”

Australia should lead the change and reap the benefits with a clever regulation environment that fosters entrepreneurship and innovation. It’s time to look forward and embrace this brave new 21st century.

Fiat Lux!