(Reposted from the Huffington Post, December 10, 2013)
By Ho-Hyung ("Luke") Lee
Recently, in an Apostolic Exhortation, Pope Francis
urged global leaders to fight poverty and growing inequality in his first major
work saying, "As long as the problems of the poor are not radically
resolved by rejecting the absolute autonomy of markets and financial
speculation and by attacking the structural causes of inequality, no solution
will be found for the world's problems or, for that matter, to any
problems."
Yes, we should solve the problems of poverty and
growing inequality, but how? Is there any clear and better alternative to
replace the existing free market or economic system? What is the real
structural cause of inequality? Unfortunately, no clear answer has been
developed or discovered on these until now.
Can we solve the problems simply with tougher
economic regulation and democratic supervision of the capitalist system, with
political change or even with more charity or goodwill toward the poor as Pope
Francis suggests? I think that’s not
enough and, even if it is possible, it will take too much time in the existing divisive
political and social situation.
What should we do then? What could the real
structural cause of inequality be?
Here I would like to suggest you and our global
leaders ponder the changed economic environment for jobs in the Modern
Information Age.
I believe two major changes for jobs have occurred:
(1) Increased
IT efficiency in robotics, various software applications, and electronic
transaction systems usually leads to replacing rather than creating jobs in
production lines or supply chains. I
think this is already a well-known change for jobs and many scholars are very
concerned about the further advancement of technology, especially in robotics.
(2) Increasingly
unfair conditions for competition between big companies and small- and
medium-sized enterprises (SMBEs) in the changed modern supply chain processes
have killed jobs in the market on a massive scale, along with raising barriers
to market entry for new business creation. This must result in a big change for jobs, but
very strangely, nobody has recognized it and considered it in his or her ruminations
about the economy until now.
More seriously, it seems that a vicious cycle for jobs between (1) increased IT efficiency and
(2) increasingly unfair conditions for competition is already firmly
established in the economy. This
situation is analogous to an ant death spiral. That is, an economic death spiral has already
formed in our economy. If this is true,
no sustainable solution will be found with the existing economic plans and
policies until that economic death spiral is broken.
How can we break down the current economic death
spiral? Let’s see first how the supply
chain processes have changed in the Modern Information Age.
Many information-based, streamlined, supply chain
processes have been developed by remarkably reducing the number of transactions
and functions in a supply chain process and significantly increasing the
efficiency of each function through the use of information technology in all
industries over the last 30 – 40 years of the Modern Information Age. Almost all IT-based supply chains were privately
developed and owned by big companies (such as Zara and Walmart) and used only
for their own benefit.
On the other hand, most SMBEs and individuals are
still using the conventional ways of separate supply chain functions exemplified
by wholesalers and distributors.
Mainly due to the much faster speed and higher
efficiency of the new streamlined supply chains than conventional separated
supply chain functions, a new unfair competitive condition has been created
between big companies and SMBEs.
Let’s see some examples: Zara, the largest clothing company in the
world, developed a private, information-based, streamlined, supply chain
process and now needs just two weeks to develop a new product and get it to its
stores, compared with a six-month industry average for other small- and
medium-sized companies. Walmart, the
largest retailer in the world, also did it and could keep its "Low prices,
always" advertising slogan, differentiating it from other small- and
medium-sized retailers.
So what’s wrong with this? Something is seriously
wrong.
If it is assumed that there is a supply chain river
to cross between suppliers and customers, this situation is just as if there
were no public bridges in the real world. No publicly available information-based supply
chain process (or infrastructure)! Strangely
enough, not even a single one has been developed in the whole world. If this is true, it is the main structural
cause of the current jobs crisis and thereby economic inequality. That is, the loss of appropriate
infrastructure in the modern supply chain process has caused extensive
unemployment.
If an appropriate and efficient public
information-based supply chain infrastructure is developed and implemented in
the supply chain process of the economy, I believe the current economic death
spiral will easily be broken down by providing a fair condition for competition
to all and removing the blocks to new business creation. Thereafter, many of the problems of the poor
and also the current economic crisis will also be easily solved.
I hope our global leaders recognize this as soon as
possible and take every possible action to solve the problems of the current
economic inequality and save our economy, before it is too late.
