There are two defining characteristics of any economic revolution, one is that they bring unprecedented prosperity to the regions that these revolutions start off and another is that these revolutions percolate to other regions albeit gradually. As an after-thought there is a third characteristic as well, they are taught in schools long after they are over.
However it might have been an interesting thing for someone to have gone and asked people of those times whether they knew they were part of a revolution. Chances are that most of them would not have realized that they were part of any revolution at all and a still greater part of the population would not even have known what a revolution is and would have thought that the prosperity that they were enjoying was temporal in nature and the cause of it was there own diligence and intellect.
The later half of the 20th century and the 21st century would be known in the history of mankind for another kind of revolution which is the IT revolution. While people who live through this revolution would also be unaware of the cause of the prosperity that they enjoy and would also see incomes rising in a way never known before there is one factor which will make the IT Revolution different from all other revolutions of the past.
The difference is this ? This revolution would in times to come not be known as belonging to one country but rather one class of people belonging to most of the countries in the world.
By its very nature IT and the internet are making the world smaller, at a personal level they are making it far easier for people of one culture and country to connect to another and making the world boundary less in a never before known manner. At the level of businesses and corporates, IT would strengthen the invisible hand of Adam Smith to hitherto unknown strength and business would truly reach where it ought to for economic reasons as the geographical boundaries that are put up by countries would be breached not by swords or cannons but by megabytes and fiber optic.
In this revolution not only would people from all across the world be able to participate but would also contribute to it by bringing to the table skills to the disposal of enterprising individuals at never before known prices and would make doing business much easier and much more profitable than it was for any individual during the history of mankind.
How does this work? Take an example of a violin manufacturer in Australia who wants to sell his violins in Australia and other parts of the world through his ?physical? shop and also his virtual shop which is the internet. The internet provides the Aussie a means to hire a web designer in Romania to design his website and a content writer in India to write the content, using the services of a website hosted and run by a company in the United States and ultimately using his website to sell violins to people of Australia, UK and New Zealand among other countries. The most striking point about this is that all continents but Africa and Antarctica have been involved in this business cycle.? Africa I am sure will pick up in years to come but we will have to wait till the Penguins learn English for Antarctica to really join in. All this is already happening today, I know because I have been part of this chain and anyone who looks around him would find many more examples for himself.
The future would see more of this because of which small businesses would thrive and there would be truly a monopolistic market without any geographical boundaries. Competition would be intense and in this competition the fittest will survive regardless of the country of there origin.
The reason why the IT revolution promises to be ?boundary-less? is that the people from all these countries would benefit from the enterprise of there people and increasingly more and more people from different countries would be participating in a single business cycle and these business cycles would in turn promote other business cycles locally like for instance our Romanian developer spending money on Ice cream in Romania which helps everyone right from the retailer to the ice factory.
The sum would be much greater than the parts and although at the end we may see that one country has benefited from IT more than others the world in general would be a richer place.
At the end of the IT revolution or rather when the IT revolution as we see it today has peaked out one would see that a lot of countries have thriving businesses started off by first generation entrepreneurs who employ lot of smart people around the world and the number of Multinationals that we have today would have grown multifold with businesses doing business across geographies and making money across continents hiring people from all of these places. These business would spread there wealth across the world creating sprightly economic conditions in not only there own country but in a lot of other countries.
For investors such as me and probably you what is important is to recognize that there will be a lot of interesting stocks which will be ?start ups? and which will either enable these business cycles or be part of it, and on a more macro level we are in a revolution so don?t get left out by sitting on the fences.
Manshu Verma
Essentially the salary of the workforce is really nothing but the price of a “skill” . Seen in this context more and more people would learn what you know today and thereby reduce the price of the skill.
However it is unlikely that the workforce which is skilled enough to know that skill in the first place is not upgrading itself, therefore someone who knew A,B and C today will in all likelihood move to a more profitable D and thereby make room for a new comer to practise A,B and C.
It follows therefore that people who have been in the business for quite some time are more likely to reap higher dividends from there knowledge than relative newcomers.
That makes sense.. I’ll like to know your thoughts about how does all this impact the earnings of the workforce which is making it happen. It might be a topic unrelated but since even in this boundry-less word there are still shifting and merging clusters of workforce, I thought you might have an insight.
I say this because 4 years ago someone in North America could have posted a job listing in craigslist of any city in the world and he would have been flooded by responses from developers and companies based out of India willing to work from $5-$15/hour.
Today, if such a posting goes up even in New Delhi or Bangalore itself, you still get responses from Indians but this time, all of them are US based. So what happened? Do we now have more work being outsourced to India than it can handle?
Great thought Manshu!! I was wondering what could be the size of Global GDP? how many trillion $$?? which country has what share?? is it that there is a fixed global turnover? Each country is trying to maximize its share through free trade etc? or Global output also increasing in terms new natural resources exploration, and other mind based outputs? any article in this regard would be great..