Commentary

Nobel Intentions, Ignoble Consequences

by Gord Hotchkiss , Featured Contributor, January 12, 2016

It was 20 years ago that I discovered the Internet. According to the International Telecommunication Union, that put me in select company. There were only 77 million users of the Internet by the end of 1996. That represented a little more than 1% of the world’s population. 66% of those were in the U.S., due likely to access restrictions in other areas. I know I logged on to the Web as soon as I could. I had actually been online with Compuserve for a few years prior to that, but it was in 1996 that the first ISP opened in the Canadian city I live in. I was one of the first to set up an account.

Three years later, I changed my business to focus exclusively on online marketing. We became one of the fastest growing companies in Canada. Eleven years after start-up (or, more accurately, realignment), we sold that company.

Things moved rather quickly after I first went online. At least, I thought they did. But compared to the growth of other startups -- say, Google for instance -- I was a very little fish in a very big pond.

The Nobel Survey

In 2001, Cisco conducted a survey of past Nobel Prize winners. By then, Internet usage had mushroomed. Half a billion people -- almost 9% of the world’s population -- were online. The Internet appeared to be a real thing. The question asked was, “Where will the Internet take us over the next 20 years?

The Laureates were mostly optimistic in their replies. Here’s a quick summary:

· 87% said the Internet would improve education.

· 93% felt it would provide greater access to libraries, information and teachers.

· 74% saw the coming of virtual classrooms by 2020.

· 82% said it would accelerate innovation.

· 83% felt it would improve productivity.

· 72% believed it would improve quality of life and provide more economic opportunity to people in less-developed countries.

· 93% saw it improving communications with people in other countries.

· 76% predicted a breaking down of borders.

On the negative side, 65% feared it would violate personal privacy; 51% saw it increasing alienation; and 44% felt it would lead to greater political or economic inequity.

15 Years :ater…

I think you could safely put a check beside every single box on the Nobel Laureate wish list. In fact, as optimistic as these predictions seemed just 15 years ago, they seem conservative in hindsight. Online classrooms have been a reality for a few years, and education is undergoing a massive reformation. In 2011, 10 years after the survey was conducted, McKinsey estimated that 10% of GDP growth in developed countries was directly attributable to the Internet. And the fact that almost half the world now has Internet access speaks to the role it plays in communication across cultures.

But none of the Laureates predicted a gut punch to the cab drivers of the world. No one foresaw the short-sheeting of the traditional hospitality industry. And there was not a peep of new forms of investment predation that would be measured in microseconds.

The Biggest Can of WD-40 Ever

All the benefits of the Internet -- and all the negative consequences –--come from the same common factor: the elimination of friction. Economist Ronald Coase rightly identified friction -- or, in his terminology, “transactional costs” -- as the reason corporations exist. Until very recently, geographic distance introduced friction into pretty much every aspect of our society. It took physical resources to overcome friction. Physical resources required capital. Capital could most efficiently be raised and controlled by corporations.

The Internet enabled a new type of connection. It was agnostic to physical distance. But, more importantly, it was a peer-to-peer connection. There was no hierarchy to the Internet. Hierarchies depend on friction. As soon as that friction is removed, the hierarchies begin to fall apart. They are no longer required.

All the good things that were predicted in 2001 came from a removal of friction. But so did all the bad. In the case, the word “regulation” can often be substituted for “friction.” Regulation is just another form of hierarchical control.

I’ve been “online” for 20 years now. It's certainly accelerated every aspect of my life: most positively, some negatively. But one thing’s for certain: Going backwards is not an option.

internet, technology

3 comments about "Nobel Intentions, Ignoble Consequences".

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Jonathan Hutter from Northern Light Health, January 12, 2016 at 11:15 a.m.
Those were all good insights, and good predictions. The one thing I don't see mentioned is how it affected personal interactions, especially the breakdown of manners and personal respect. As a can of WD-40, it's removed the filters that society places on human interaction, creating polarization of viewpoints and just plain impoliteness.

Yes, there are many great things that came out of internet use. But this to me is the biggest negative.
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Rick Monihan from None, January 12, 2016 at 12:27 p.m.

I'm not sure if you're classifying the impact on cabs and hospitality as negatives when they are overwhelmingly positives for the vast majority of people in the world. The internet has made markets more efficient and opened opportunity and choice to a broader audience.

I've used Uber and AirBnB - both made trips more pleasant, and more cost effective.

As a result, assuming they weren't 'predicted' is a precise statement, but not accurate. Your list says that 83% felt productivity would improve, 72% would improve quality of life and economic opportunity in less developed countries, 93% saw it improving communications in other countries, and 76% saw it breaking down borders. Funny, because Uber and AirBnB do all these things. In fact, when I used them, they did 3 of the four things (I didn't use them in less developed nations, but if I went to one I could have).

So while nobody said "hey, we can break the monopoly the government has created to jack up medallion prices and the cost of cabs in urban areas" (at least not until Uber and Lyft said it), the idea was implied in those predictions.

The benefits far outweigh any negatives. People work from home far more frequently now. People can start their own businesses at a much lower cost. People can sell goods sitting around in their homes that they used to throw away (which I've done, and I've also used Freecycle to give away goods to people who can use them rather than throw them away).

I can think of very few negatives which come along with the internet. There certainly are some, but on the whole, I think they remain manageable.

Nicholas Fiekowsky from (personal opinion), January 12, 2016 at 2:43 p.m.

Add Moore's law driving ever-lower info tech cost and higher capability to the Internet's WD-40 and it turns into a solvent. Where are the phone booths, record stores, camera shops and travel agencies? Bookstores? Computer shops? What's happening to malls and newspapers? Even PCs and data centers are getting scarcer!

All of these were physical solutions to information scarcity and cost. As the barriers drop, those physical solutions are less appealing.

The revolution isn't over yet. A wise person regularly asks whether their role and delivery channel/s will be the most effective solution for market demands in two to five years.