Germany faces a second machine age | Business| Economy and finance news from a German perspective | DW | 16.05.2018
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Germany faces a second machine age

The future of work doesn't just interest workers. Germany still dreams of being better connected. Yet digitalization can be a curse and a blessing; global leaders need to be honest and fair.

It's a refrain heard again and again: The digital future is coming and Germany is not prepared. But is this any wonder in a country where high-speed fiber optic connections are patchy, privacy concerns add layers of administration to the most basic affairs and most shops shun credit cards?

Read more: Futureproofing Germany: Can Europe's powerhouse live in the digital fast lane?

The government has preached about the need to bring fast internet to the remotest corners of the country. For years there have been calls for a full-fledged Digital Ministry. That hasn't happen, but in March as a consolation prize the government finally created the position of state minister for digital affairs.

Nonetheless, in Germany artificial intelligence (AI), the Internet of Things, Industry 4.0 and blockchain are principally hollow terms thrown around without much thought. Only autonomous driving seems to have registered, but more as a diversion from the diesel engine than as something to be embraced.

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At a German Chambers of Commerce and Industry (DIHK) meeting in Berlin, business leaders came together to discuss how German businesses can step up their digital game. It will be an uphill battle. As software becomes as important as hardware, it highlights how far apart "Made in Germany" is from "Blockchained in Germany."

The silent filter

It is true that technology and connectivity have already touched nearly all aspects of life and work. Everything from how we buy and listen to music to how we communicate with friends, file our income taxes and look for jobs. Smartphones tell us when to take our pills and even graph our night's sleep.

Read more: Faster internet needed in new era for German farmers

Youtube and Amazon filter out what users probably won't like, thereby helping them stay in their bubble while at the same time ensnarling them in the surveillance apparatus which George Orwell predicted in 1984.

German philosopher Richard David Precht has a clear vision of the future. Over the years he has though a lot about work. Taking a bird's eye view he has come to the conclusion that we are in a "second machine age," and like the original one that made manufacturing possible on a grand scale, this one will also radically upend society.

Despite all the changes on the horizon, he assumes some jobs are safe like big data analysts, programmers, virtual reality designers and jobs that need the personal touch like teachers. Even now there is a shortage of employees in some areas, a state of affairs that is unlikely to change since curves are hard to predict and timelines to train staff are much longer than the changing job environment.

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Winners to the rescue?

Though Germany is better off than most other European countries — in the near future Precht sees the loss of millions of jobs for which retraining will not work. Earlier this year, Bitkom, an IT industry association, came to a similar conclusion proffering that Germany would lose around 3.4 million jobs to digitalization within the next five year. Bank tellers and even lawyers will be replaced with robots and algorithms. 

Read more: Bitkom: Digitalization to wipe out millions of jobs in Germany

Even those who keep working will probably work less. The system of wage labor as we know it will change. How society cares for those without a job will be one of the most important test of our humanity. "Unemployment in the future is not a questions of statics," says Precht, it is a question of people.

Yet for Precht two other problems stand out when discussing digitization: increased energy use and the harm to developing world economies.

Despite advances in efficiency, the energy needed to power the machines of the future grows with the number of machines, which in turn harms the environment and adds to climate change. Rising ocean levels or temperatures will have the hardest impact on poor nations. These developing economies could be devastated at the same time by the quicker turn around of 3D printers closer to rich markets.

picture of Ulrich Nussbaum

Germany's new undersecretary in charge of digitization, Ulrich Nussbaum, has a pedigree of being a pragmatic business expert. He's made a fortune from running SLH Sea Life Harvesting, and has close ties to national and regional politicians.

Back to the chalkboard

Nevertheless, even in rich countries the digitized economy is also vulnerable. When talking about international trade, Ulrich Nussbaum, the newly appointed undersecretary of the economy, pointed to recent sanctions and their sudden and chilling impact on German businesses. Years of planning were thrown out of the window in seconds. 

The more interconnected everything is, the more susceptible everyone becomes to changes or war or flooding across the world. One closed factory or downed power station can have dramatic repercussions.

For a globally connected economy to work there needs to be more "global solidarity" according to Precht. A tax on machines like the one Bill Gates has suggested would be impossible: companies would just pack up their digital workers and send them somewhere else. Global norms and legal regulations must be strengthened to stand up to political bullying and cyber attacks.

Technology is a fast-paced mobile game. Germany is not known as a quick adapter or risk taker. Its current success makes it even harder to convince policy makers and businesses of the need to change. Yet no matter what Germany does or doesn't do, the world around it is changing. Leaders need to be more honest about the needs and consequences of the changing global order. There will be winners and losers. Responsible action needs to be taken to soften the blow.

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