Globalization, Integration, and Big Data = Big Solutions

Stephen DeAngelis

July 14, 2014

Jaime Pozuelo-Monfort, an author and social entrepreneur, writes, “I think it is important [to] transition from today’s world to a world without extreme poverty, a world characterized by food abundance and universal health care, education, water and sanitation.” [“Why I Embrace Integration,” The World Post, 12 December 2013] Although that statement has an idealistic tone, Pozuelo-Monfort believes it is backed by pragmatism. As the headline of his article declares, he believes that global integration is the key to transforming idealism into realism. He explains:

“If integration is feasible, transaction costs will be reduced and economies of scale will emerge. Transaction costs and economies of scale will allow us as a global society to liberate funds and shift their allocation, so that liberated funds can be spent in areas that are vital for the future of human kind and the preservation of Planet Earth. In order to spend the liberated funds we will need Strategic Teams in each country and territory that are neutral, pragmatic, forward-looking and supportive of future prosperity of the whole of society.”

Although you can argue that his vision remains idealistic, Pozuelo-Monfort points out that the opposite of integration is fragmentation and no rational individual believes that fragmentation is better for the planet. Unfortunately, there are extremists who are not rational and are pursuing fragmentation as one of their objectives. Such extremism, however, needs to be challenged with as much vigor as integration is supported. Pozuelo-Monfort describes integration this way:

“Integration means market unity, standardization, identification of benchmarks that may enable peer-to-peer comparison, unification of policies whenever possible, resource pooling whether hard or soft, and the elimination of barriers. Integration is far more possible today thanks to technology than it was in the aftermath of World War II. … In order for integration to work first of all a phenomenal educational effort needs to be undertaken if barriers are to fall naturally. Tearing down mental barriers (defying stereotypes and fears of one another) will automatically enable tearing down physical barriers. The opposite would probably require war. In order for integration to work generosity and thus the implementation of redistribution policies must take off.”

I agree with Pozuelo-Monfort on many points; but, especially the point he makes about education. Education, I believe, begins with literacy; which is why I am a supporter of the Global Literacy Project. To learn more about this project, read my post entitled “The Global Literacy Collaborative Demonstrates the Power of Technology-assisted Education.” The elimination of barriers is a significant part of what globalization should be about. McKinsey & Company analysts, James Manyika, Jacques Bughin, Susan Lund, Olivia Nottebohm, David Poulter, Sebastian Jauch, and Sree Ramaswamy, write, “Global flows have been a common thread in economic growth for centuries, since the days of the Silk Road, through the mercantilist and colonial periods and the Industrial Revolution. But today, the movement of goods, services, finance, and people has reached previously unimagined levels. Global flows are creating new degrees of connectedness among economies-and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.” [“Global flows in a digital age,” Telecom, Media, & High Tech Extranet, 30 April 2014 (registration required)] The McKinsey analysts go on to explain why the vision described above by Pozuelo-Monfort might not just be the dream of an idealist. They write:

“The spread of the Internet and of digital technologies is transforming all types of flows and creating new ones. Global online traffic across borders grew 18-fold between 2005 and 2012, and could increase eightfold more by 2025. Digital technologies, which reduce the cost of production and distribution, are transforming flows in three ways: through the creation of purely digital goods and services, ‘digital wrappers’ that enhance the value of physical flows, and digital platforms that facilitate cross-border production and exchange. The enormous potential impact of digitization is only beginning to emerge. Consider that international Skype-call minutes grew to 40 percent of the present level of traditional international calls in just a decade. Or that cross-border e-commerce has grown to represent more than 10 percent of trade in goods in less than a decade. The network of global flows is expanding rapidly as emerging economies join in. Rising incomes in the developing world are creating enormous new centers of consumer demand, global production, and commodities trade, as well as sending more people across borders for business and leisure. Existing routes of flows are broadening and deepening and new ones emerging as more countries participate. Developing economies now account for 38 percent of global flows, nearly triple their share in 1990. South-South goods flows between developing countries have grown from roughly $200 billion (6 percent of goods flows) in 1990 to $4.2 trillion (24 percent) in 2012. … Not only more countries but also more players are participating in global flows.”

When most analysts talk about global economic growth, they look south and east to emerging market countries where large numbers of people remain in poverty’s grasp. Analysts don’t see these people as hopeless welfare cases, but as future consumers in a burgeoning middle class. These billions of people represent the best hope of the world’s future — if they can be integrated into the global economy over the coming decades. According to Gideon Rachman (@gideonrachman), that is a big “if.” He reports that there are three political “superbugs” that are as resistant to integration as biological superbugs are to drugs. [“Growth and globalisation cannot cure all the world’s ills,” Financial Times, 27 January 2014] He explains:

“Three political superbugs are causing special concern. The first is the spread of conflict in the Middle East. The second is the growing rivalry between China and Japan. The third is rising inequality in the western world – and the threat of social conflict that goes with it. … No appeal to economic rationality is likely to end the war in Syria – where both sides are fighting for survival. It is also clear that the jihadists who are flourishing in Syria, Iraq and elsewhere are unmoved by the fruits of globalisation.”

Rachman nevertheless has to admit that globalization still offers the best hope for most of the world’s inhabitants. “The idea that capitalism and globalisation are the best antidotes to political conflict – for all its flaws – retains a lot of attraction,” he concludes. “Even if the old economic treatments for political conflict are losing some of their potency, they are still the best we have.” Michael Hodin, the Executive Director of the Global Coalition on Aging, points out what he considers another superbug — the belief that developed countries will lose their ability to maintain economic growth as their populations age. He maintains, however, that “demography is not destiny. It is the result of a failure to realign societies to population aging and the new demographics of the 21st century. With the right policies and practices, rapid aging and rapid growth can become parallel phenomena.” [“Big Data Solutions,” Huffington Post The Blog, 7 May 2013] As the headline of his post declares, Hodin believes that Big Data analytics is going to play a significant role in finding solutions that keep aging populations productive in the decades ahead. He writes:

“Part of the answer to enabling healthy, productive aging may come from Silicon Valley’s hottest trend du jour, big data. It may seem like a stretch, but there is ample reason to believe that Big Data can revolutionize the ways that people age. While there are innumerable possibilities, the most fundamental contribution that Big Data can make is to trigger health and medical breakthroughs. … The balance of global economic power is shifting, and the aging of ‘rich’ societies is accelerating this new world. Global economic fortunes, however, do not need to be a zero sum game. One nation doesn’t need to get poor for another to get rich. We can all see the sun rise, and that’s the win-win-win of market capitalism embracing evolving demographics — understanding that the debate over austerity is the wrong one. This is a debate over growth and, particularly, how healthy and active aging populations can become new sources of economic growth. Now there’s a goal worthy of 21st century imagination.”

Big data analytics will play a significant role in areas other than healthcare as well. Big Data will help the world tackle climate change and food security and will help cities use resources smarter. This is significant because the world continues to urbanize. The road to the future is not a smooth one. It is pocked with challenges that can’t be ignored. Some of those challenges (like those posed by extremists) may require some areas to be isolated or quarantined; but, most of those challenges can be addressed through better integration, more globalization, and the insights gleaned from Big Data analytics.