Get Our Newsletter

Tech Cocktail DC

5 Factors That Determine Whether The Internet of Things Can Save the US Economy

internet_ofThings

By now, you’ve probably heard the buzz line “the Internet of things.” If you haven’t, then you’ll surely hear it mentioned more frequently in the media as the months go by. With an ever-increasing interest in the tech industry among both private citizens and public figures, “the Internet of things” is sure to find a footing in our vernacular sooner rather than later. Just this past Tuesday, The Washington Post hosted an “All Things Connected” forum in downtown D.C. to talk about the Internet of things (IoT). Featuring leaders and experts from both private and public organizations (ranging from the likes of Sen. Richard Blumenthal to founder and CEO of SmartThings Alex Hawkinson), the panel discussed the increasing influence of digital connectivity and its effect on various U.S. policy. Most notably, conversation centered on the potential for IoT to make a positive and sustainable impact on the U.S. economy.

Whether you’re familiar with the statement, the reality is that the Internet of things has likely already affected your life in one way or another, and oftentimes on a daily basis. From our mobile phones to things like appliances and even medication, the things in our lives are increasingly becoming connected to the Internet and, consequently, has enabled interconnectivity among them.

There was a consensus of opinion among the forum panelists that IoT can indeed be a saving grace for the U.S. economy, but only if certain conditions are met. Michael Mandel, the Chief Economic Strategist at the Progressive Policy Institute, set off the forum with three figures:

  • 20% – an estimate for the percentage of GDP that comes from digital industries;
  • 0.5% – the percentage of productivity gain/growth in 2012; and
  • 6.7% – the current U.S. unemployment rate.

Mandel said, that in order for economy to get better, we have to create an environment that allows the Internet of things to boost these percentages. And, according to the forum participants, whether IoT can save the U.S. economy is really dependent on five factors:

Continued Spread of IoT from Digital to Physical Industries

“The Internet up to this point has been about transforming the digtial industries; now, we’re moving into using the Internet to transform the physical space,” said Mandel. According to him, we’ve reached a stage of “pro-growth progressivism” in the technology sector – spreading innovations made in the digital and reproducing them in the physical. Whereas in the past, where we experienced cyclical technological revolutions in one specific field at a time (e.g. a period of innovation focused specifically on transportation tech), the Internet of things has led the way to innovations across several industries at once. And we’re certainly seeing this in the tech industry. Alex Hawkinson asserted that IoT “will touch every aspect of the economy that you can imagine,” noting that data gathered from the physical world can have a significant impact on previously untouched industries (he cites how insurance companies can potentially calculate rates based on actuarial risk rather than anticipated risk).

Recognition of IoT as a Job Creator

Mandel said that “[the United States has] a skills mismatch between the skills that are needed and the skills that are available in the workforce.” But, we shouldn’t interpret this as simply the need to develop the necessary technical skills – obviously we need to increase the availability of these skills in the labor force – but, rather, Mandel said that, on a more basic level, we need to remove our fears surrounding the Internet of things, before moving on to the issue of actually creating skilled workers: “don’t think of the Internet of things as a job destroyer; think of it as a job creator.”

Ability to Create a Skilled Workforce

According to Mandel, in order for the U.S. economy to benefit from productivity growth, we need to reach at least 1.5% or 2% growth, rather than our current 0.5%. The only way we can get there is if we are able to provide more people with more (relevant) skills to increase that productivity. The problem, however, is in our inability to provide an adequately-sized training population to help teach these new skills – those with talent simply don’t have the additional time or aren’t motivated enough to teach. But, even in this regard, Mandel thinks that the Internet of things will eventually prevent the need for human trainers; rather, we can simply learn new skills through innovative solutions that connect the digital and physical spaces.

Government Policy That Doesn’t Stymie Innovation

“Historically, the government has been known to slow down innovation rather than [to speed] it up,” said Mandel. He thinks that one of the most significant things preventing IoT from contributing to economic growth is an overall reluctance from the government. Senator Richard Blumenthal (D-CT) partially agreed noting that the government, on the whole, “prevent[s the] inhibition of innovation.” Policy establishing restrictions on tech innovation will only arise when private citizens no longer feel safe interacting with IoT. Maureen Ohlhausen, Commissioner of the Federal Trade Commission, asserted that this is her primary concern regarding IoT: “One bad incident early on will cause a regulatory over-action…and the government will roll out a lot of prescription regulation that could make consumers worse off.”

Companies Must Respect Users’ Rights to Data

For Hawkinson, prohibitive legislation can only be prevented if companies establish ethical policies that allow users to own their own data while, at the same time, ensure that innovation isn’t inhibited. If the Internet of things is truly meant to impact the U.S. economy, it’s important that the companies themselves recognize that there is a limit to which they can use consumer data. “Opting in is important, but it’s also important to have enough participants to a point where that data can become useful,” said Dave Icke, CEO of MC10 Inc. “There needs to be a way to offer predictive analytics using that consumer data, while also respecting consumer rights.”

Get more delivered to your inbox just like it!
Get Our Newsletter
Sorry about that. Try these articles instead!
About the Author

Ronald Barba is an associate writer and reporter for Tech Cocktail. Formerly a DC native, he's now based in New York City. He reports on the Mid-Atlantic and Northeast, looking at startup communities like Boston, Chicago, D.C., and NYC. He's especially interested in venture capital, M&As, and tech/business trends. Aside from startups, Ronald is interested in philosophy, cognitive science, politics, social justice, pop culture, and all things geek. He reads Murakami and Barthes, and alternates binge watch sessions of 'Doctor Who' and 'The Mindy Project'. Got something to say? Then email me (ronald@tech.co). Follow me on Twitter: @RonaldPBarba. Subscribe to me on Facebook. Find me on Google.

Tags:

Leave a Reply

  • (will not be published)