Technology's Paradox: Increased Profitability & Economic Inequality

Introduction

Humans are always looking to find new ways to ease their ways of life, hence coming up with progressive tools to achieve these goals. Society has been through an ever-changing industrial revolution starting with the usage of tools for food production, using electric power for mass production, use of electronics and technology to automate the production process. The fourth industrial revolution is the digital revolution “characterized by a combination of technologies which is blurring the lines between the physical, digital, and biological spheres.” (Schwab, 2015). People have found ways to link artificial intelligence to the human body such as recognizing a person by scanning a finger or an eye.

Technologies are invented to ease humans of difficult tasks and save time for humans to do what we want to do. Scientists are continuously innovating technologies to better human lives. Recently, the first-ever image of a black hole was captured through the Event Horizon Telescope which is made up of eight telescopes linked across the globe. 'It is remarkable that the image we observe is so similar to that which we obtain from our theoretical calculations. So far, it looks like Einstein is correct once again' stated Dr. Ziri Younsi of University College London. (Ghosh, 2019). What was deemed impossible a few decades ago is now made possible with the combined efforts of researchers.

All these development in the usage of technology have positive as well as negative impacts on the business industry. Businesses are benefited by technology to drive down the cost and improve the profit margin. In doing so the economies with skills to do manual labor will be deprived of their chance at industrialization increasing the existing inequality in the global economy. The usage of the Internet reduces the cost of trade which will open new markets and drive economic growth. However, the internet poses a greater threat to the entertainment industry.

Pros and Cons of using technology

By using technology, companies can cut down costs and raise their profit margins. It saves expenses of employing, training, and upkeep of human resources. The machines are efficient and cut down on the wastage of materials as the chances of making mistakes are relatively lower. For instance, to make a pair of shoes from start to finish, a machine in Speedfactory took five hours, whereas the same process will take several weeks in the Asian supply chain, according to Morgan Stanley analysts. (Bissell-Linsk, 2017). Simple everyday snacks like potato chips are manufactured using automated machines. Beginning with the production of the potatoes till the point of sale where a pack of chips can be purchased from a vending machine.

Robotics are used for production assembly for speedy production with minimal error. Businesses do not have to worry about the environment of the workplace as the possibility of accidents is reduced. The manufacturers have control over the quality of products and can produce with greater efficiency. Adidas’ Speedfactory in Germany has started producing sports shoes using robots and 3D printing technology which saves the company from offshore production costs including transportation and logistics in different countries. (The Economist, 2017). Similarly, Nike’s Flyknit Racer is produced using a special knitting machine which uses less labor and fewer raw materials in producing the shoes. Analysts Jim Suva and Kate McShane of Citibank estimate that “by using the Flex manufacturing process to produce Nike’s 2017 Air Max shoes, one of its top-selling lines, the cost of labor would decrease 50 percent and materials costs would fall 20 percent.” (Bissell-Linsk, 2017)

Artificial Intelligence can be used to take care of basic tasks freeing up employees to focus on challenging and complex tasks, thereby increasing overall business productivity. (Chinner, 2018) With the revolution, a computer can be used to record, in video, audio, and even written format, the minutes of the meetings freeing the employees to focus on the actual process of the meeting. The employees can concentrate on managing/solving the challenges their business is undergoing which cannot be solved by technology.

The business transaction has become efficient due to access of the digital world where technology has made it possible to buy products and services virtually. The customers can purchase the products from the comforts of their homes which saves time and money for both customers and the business. Online shopping, clearing the bills, playing a game, listening to music, and watching a movie are now done with a simple click on electronics without physical human interaction. It saves the cost of transportation and renting a business location.

While big corporations reap the advantages, robots will deprive many countries of their chance at industrialization. For instance, as Nike embraces more automation with its growing sales, the production line in Asia will have to be closed affecting the over 493,000 workers employed in fifteen countries across Asia. (Bissell-Linsk, 2017) The factories/infrastructures in these countries will go into waste and people will lose their job increasing inequality in the world.

Automation will enhance cost-cutting for the industries who can afford and adopt to purchase these technologies which will increase their wealth further and become wealthier. However, those economies which are being replaced by automation will grow weaker because the revenue they were generating by providing labor-intensive work to the industrialized economies will be taken back. They have no capital to start their own automatic production line and they cannot continue producing manually as it is proved inefficient and costly for businesses in the technology-savvy world.

The revolution has brought significant inequality across every country including OCED countries. Robots are replacing care workers in Japan and South Korea, and an IBM supercomputer is being programmed to perform “robo-surgery’ in Cancer Center in New York. Human workers have not been able to keep up with the changing technology and many have fallen behind. Since the 1990s, the ever-emerging technology has been dividing the economies by creating winners and losers, differences between high-skill vs. low-skill workers, differences between capital and labor, and between superstars and everyone else. (Capgemini Consulting, 2017) There has been a definite increase in wealth in the world, however, the distribution of the wealth has not been shared equally.

The usage of internet technology diminishes the cost of a trade. The revolution has led to a drop in the cost of transportation, communication, and logistics. The interaction between different products and suppliers can happen real-time with technology such as Cloud and Big Data Analytics. With the e-Commerce marketplace, online businesses have flourished. With a click of a button, customers get to enjoy the convenience of not leaving their comfortable homes to get everyday products while the businesses deliver the products at their doorstep. Online businesses such as Amazon, eBay, Alibaba, and Catch are the highest revenue-earning online business where they sell products such as books, consumer products, and online entertainment products. With the use of the internet, communication between the chain of supply has shortened and become efficient. As soon as a customer submits an order, everyone in the chain is notified and the product is delivered from the nearest store making it cost-effective for the suppliers.

The availability of information readily is a game changer. The interconnectivity of the systems makes the decision-making process effective; timely delivery and maintenance, inventory can be anticipated and coordination at the workplace is enhanced. Marr, B., 2018 states that “As we implement smart technologies in our factories and workplaces, connected machines will interact, visualize the entire production chain and make decisions autonomously. This revolution is expected to impact all disciplines, industries, and economies.” The adoption of “The Internet of Things” and “cyber-physical systems” affects the way people work and relate to one another. (Marr, 2018)

The usage of the internet and websites is threatening the entertainment industry. It is true that entertainers gain instant popularity with online posting of their audio and video recordings, it has impacted the revenue earning of the industry. It gave global platforms to new talent and cultures. The products are constantly being pirated and it's difficult for the owners to trace who is breaching the copyrights. Hackers are hard to locate as they use different software to vandalize entertainment products and sell in unregulated markets.

As the information can be easily accessed, there has been a demonstration of the creation of fake news which can be used to spread online bullying and blackmail the entertainment businesses. Celebrities are shammed and scandalized by self-appointed critics and haters, and the cost of hushing the leak is huge for the industry. The competition is cut-throat making it hard for an artist to keep his/her reputation untarnished and consumers shift their preferences too quickly.

Although there are negative impacts on business due to the industrial revolution, the positive impact outweighs the negative.

Conclusion

The challenge ahead of us is to rethink our institutions so that we get more people participating. We’re optimistic that this can be done, but it’s not going to happen automatically. (Capgemini Consulting, 2017)

They may introduce their own torrents so as to capture the major market share. In short, the internet can be a helpful tool as well as a threat to the current entertainment industry depending upon the way it is being utilized. (FEVA, 2019)

Overall, the inexorable shift from simple digitization (the Third Industrial Revolution) to innovation based on combinations of technologies (the Fourth Industrial Revolution) is forcing companies to reexamine the way they do business. The bottom line, however, is the same: business leaders and senior executives need to understand their changing environment, challenge the assumptions of their operating teams, and relentlessly and continuously innovate.