In analyzing the economic turmoil roiling the world, have we missed something essential about the causes? According to Thomas Klau of the Financial Times Deutschland, we not only missed the dangers of how IT was transforming the financial sector, we are now standing by as IT has an equally unpredictable and potentially devastating impact on the media – and on how information is disseminated within democracies.
Thomas Klau writes in part:
“Unbridled greed, hyperactive government deregulation, passive federal oversight, and an erroneous distribution of global supply and demand – these are the phenomena most frequently mentioned as the causes of today’s global economic crisis. But there is another interpretation, which up to now has only been touched on and which warrants being brought much more clearly into focus: what the world is experiencing is primarily a consequence of the underestimation and lack of mastery over the technological revolution.”
Later, remarking on the IT impact on old media and the new, Klau writes in part:
“IT is revolutionizing the fundamentals of the media, and it would be disastrous if, in the coming years, we came to the conclusion that we slept through and misjudged the consequences of this revolution just as we misjudged the consequences of the Big Bang in the financial sector … a new world of information is emerging, and it still isn’t clear whether it will advance the public debate nearly as well as it has up to now. It is widely underestimated to what extent politicians, columnists, commentators, bloggers – as well as those who are taking advantage of this new medium of the Internet to deliver the distinguished work of the old media – draw their insights from the news and research of the old media. To the extent that the capacity for news production of traditional media shrinks, the quality of every part of the public debate is impoverished.”
By Thomas Klau
Translated By Jonathan Lobsien
February 13, 2009
Germany – Financial Times Deutschland – Original Article (German)
Unbridled greed, hyperactive government deregulation, passive federal oversight, and an erroneous distribution of global supply and demand – these are the phenomena most frequently mentioned as the causes of today’s global economic crisis. But there is another interpretation, which up to now has only been touched on and which warrants being brought much more clearly into focus: what the world is experiencing is primarily a consequence of the underestimation and lack of mastery over the technological revolution.
The orgy of speculation that the financial world has indulged in over recent years, and its Big Bang ending which has resulted in such a rare annihilation of wealth, would not have been possible without the preceding Big Bang in information technology. Initially, developments in the field of IT made possible speculative modeling that relies on statistical averages. The complexity of these models exceeded the capacity of bank boardrooms to comprehend them. And with the leveraging these models made possible, both gigantic profits and even more gigantic losses were generated. Both deregulation and global macroeconomic imbalances achieved their full destructive potential, thanks primarily to IT.
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