Poverty and the capacity for technology to bring Change

"The capacity for technology to drive change is limited by two things: the will of the people who use that technology to demand change; and whether governments are willing to murder their own citizens in order to prevent change."

I was speaking as part of a panel at the IESE Doing Good and Doing Well conference in Barcelona.  Our topic was "Does Information Equal Power?"

Far from being able to disable one state-owned telephone service, the Iranian government has had to face an onslaught from Twitter, Facebook, Google and other social media as citizens vent their frustration with the results of the last election.  Despite this powerful array of technology the protest has been brought under control.  The Iranian government merrily turned to violence and murder when electronic jamming failed to prevent ongoing dissent.

In South Africa, a small minority vent their frustrations about corruption, violence and crime using an astonishing range of media. They face little in the way of censorship or obstruction, yet their numbers are small and the politicians concerned pay little mind. 

The capacity for mobile phones to disrupt entrenched market relationships is also in doubt.  One of the most quoted stories is how fishermen use their mobile phones to find the best markets for their catch.  “I hate hearing my research quoted incorrectly back to me,” says Dr Reuben Abraham of the Indian School of Business.  What his research actually showed was that, while such information helps the wholesalers and distributers it doesn’t help the fishermen.  “Most of the poorest fishermen will borrow money from a wholesaler in order to afford to go to sea.  They’ll pay that loan back with their catch and so can’t go where they like.”

Technology can only take you so far. 

The search for technology’s impact on market efficiency isn’t limited to emerging economies.  Numerous studies have struggled to find a hard link between increased technology and economic returns.  Clearly, the explosion of information technology has created more wealth over the past two decades than at any time in history.  But which bit, and what technology?

Developed countries have eagerly accepted advances in medical and telecommunications technology but have resisted advances in genetically modified foods, no matter the science that shows the benefits.  Likewise, while proclaiming an interest in alternative energy, nations around the world continue to subsidise their coal and oil producers.  The poorest nations keep foreigners out for all but the least politically-sensitive industries.

The conundrum can be summed up as follows:  even in the most open of societies, incumbents have a tremendous advantage in preventing new competitors from undermining them.  Those incumbents can be companies, the government, or even a majority of a nation’s citizens.

The biggest voting blocks in wealthy nations happen to be the retired or almost-retired.  Even though advances in medicine have given them longer lives none are likely to vote for a government that extends the retirement age.  And so these governments face crippling bills to finance pensions.

Industries which have faced little competition have consolidated until only a small handful of extremely large companies dominate.  These companies are major employers and big political patrons, supported by big unions and big government.  Why would a large coal-producer want to make things easier for a start-up wind-turbine power producer?

Steffen Ehrhardt is Google’s emerging market product specialist tasked with finding untapped markets outside of North America and Western Europe.  “We’re not trying to make a profit right now. We’re trying to understand these markets and create things that work,” he says.

Google’s deep pockets give them some immunity to the worst excesses of protectionism but, even so, they have withdrawn from China and their operations are threatened in Iran and Italy.

Technology brings change by leveraging itself into the small spaces between incumbents.  Where those gaps are small, the chances for change are tiny.