(This article has been translated into French.)

Digital technologies are changing not only what happens in our economy, they are also changing its fundamental character. At this moment, a 3D printer is producing a human replacement organ using a digital model and the patient’s own cells. As you read this, iron ore is being extracted from a mine in Australia by autonomous machines supervised by a small crew of people more than a thousand kilometres away. While you slept last night, an architectural engineer in Bangladesh was working through a tasking platform and creating house plans that meet Ontario building codes for a client in Canada. And people can now monitor online the water quality in lakes and rivers near some industrial sites in Canada.

None of these examples of digital technologies is particularly new. If any are surprising, it is because, to quote William Gibson, “The future is already here — it’s just not evenly distributed.”

It takes time to understand what disruptive technologies mean for our economy as they mature and combine, and to fully grasp the challenges and opportunities they present. When dealing with a system that is undergoing rapid change, the challenge for policy-makers is to consider the range of plausible futures that could arise and make the best decisions in the face of uncertainty. Evidence-based policy is good, but as all data is drawn from the past, it does not provide a complete toolkit for systems in rapid change.

Policy Horizons Canada, the public service’s foresight unit, released two reports in June 2019 that provide insight and examine the policy implications of what could face Canadians in the near future: The Next Digital Economy explores how technology could redefine the organizing principles of the economy, as it revolutionizes value chains and changes the who, what, where, when and how of production and consumption. The Future of Work report identifies five game changers that could disrupt work and employment for Canadians. In this article, we draw from these two reports to provide some examples of what we could see in the future.

Work across distances and borders

Advanced telepresence technologies are poised to help people and machines work together closely irrespective of their geographic location – as long as they have good Internet access. Expertise from anywhere in the world could be used in Canada, and Canadians could offer their skills and expertise globally. A firm could unbundle many cognitive and physical jobs into separate tasks, which workers could bid on without having a traditional or legal employer-employee relationship with that firm. Firms might not have any physical or even formal legal presence where the workers, managers, data or AI-enabled machines they use are located.

In such a future, countries and cities may compete to attract residents who could earn anywhere in the world, because those residents will spend and pay taxes locally. If you earn your money from a firm in Dubai but you live, buy groceries, send your kids to school and volunteer with an organization in Kamloops, you are benefitting the local economy and community.

Custom everything at your doorstep

While services are provided across borders, manufacturing of many consumer goods might be “reshored.” In the last decades, large manufacturing firms have been mass-producing identical goods in giant factories in jurisdictions that have low labour costs. They ship these products to warehouses around the globe at huge environmental costs. In the Next Digital Economy, we could see highly customized goods being produced locally by multipurpose factories – think automated 3D printing centres that can print objects from unique digital files and a library of hundreds of standard printable materials.

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In the future, goods could be made close to the end consumer, whose individual needs and community values could be reflected in “one-off” production lines. Do you need size 9.3 sneakers perfectly fitted to the shape of your feet, with a sole designed for the size of gravel on the paths in your local park? Do you want the uppers of your eco-shoes to be printed with a spider silk protein and cushioning made of the foam produced by algae? No problem – a drone will drop them off at your door tomorrow.

This is how economies of scale could give way to economies of scope, with firms providing a large number of offerings to local consumers whose needs they understand. Delivery from factory to consumer could take minutes, eliminating the need for warehousing and inventory.

Creating value in a digital world

As more goods become digital, you do not need a new device to get new value – you simply download new software for your phone (soon to be smart glasses). And as the marginal production cost of digital goods over time approaches zero, this additional value could come at very little cost. This has major consequences for the economy. Consumer welfare could rise dramatically as a result of digitalization, but GDP and incomes could flatline or even decrease. For example, it is likely that your digital photos are already stored and quickly accessible on the cloud, instead of collecting dust in albums or boxes at home. How much did you actually spend on printing photographs last year? And how many picture frames do you really need now? What happened to photography and music could happen in many other value chains. The discrepancy between how we experience value and how we measure it for economic policy purposes could widen. In the Next Digital Economy, traditional ways of measuring the economy could send signals that are profoundly out of step with how we are creating value for Canadians.

Preparing for plausible futures

Horizons’ two reports describe these and other plausible transformations in the future economy. They explore both the opportunities of technological disruption and the vexing challenges that could face Canadians and their governments. For example, if resource extraction does not create well-paid local jobs close to the mine or forest, what happens to the secondary economy – the diners, daycares and main streets – in rural resource-based towns? If skilled workers in countries that have low costs of living consistently underbid Canadians for work in the new economy, would reskilling help Canadians who are displaced by automation do those jobs? And will the taxation system, employment insurance and other social supports need to be redesigned for the economy and future of work on the horizon?

Our work involves anticipating a broad range of plausible disruptive changes. The goal is not to predict the future or prescribe policies, but rather to help Canadian firms, workers, civil society organizations and governments develop robust policy and programs. The hope is that, collectively, we can influence our Next Digital Economy, even if no one can fully control it. This is the promise of foresight: by getting a head start on understanding emerging challenges and opportunities, Canadians can play a role in shaping their futures.

Photo: Shutterstock, by kkssr.

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