Nothing in the history of the world spreads as quickly as the information revolution, so it’s no wonder that it causes economic disruption beyond the borders of the Europe and the United States. The latest example, from the NYT:
The center of Jakarta, the Indonesian capital, was paralyzed Tuesday morning by a violent mass protest by taxi and other public transportation drivers against ride-hailing apps, with demonstrators blocking major roads and highways and attacking other taxis that were not taking part.
An estimated 10,000 members of the Indonesian Land Transportation Drivers Association had planned a protest march from the national House of Representatives complex to the Presidential Palace to demand that the government ban app-based transportation companies, including Uber and Grab, saying they were hurting their ability to earn fares.
Instead, drivers ran amok in the district near the legislative complex, blocking roads leading to the Semanggi Flyover, the city’s main highway artery, and Jalan Sudirman, a primary thoroughfare that runs through the heart of Jakarta’s business district.
Uber and similar services hurt the traditional taxi businesses in which many people in poor countries earn a living, but they are ultimately good for consumers and drivers. Despite the painful effects of the information revolution, the response can’t be to ban the use of new technology in the developing world—there is no recipe better calculated to keep countries in poverty than to restrict improvements in economic efficiency. If the revolution was just bringing us new ride-sharing apps, the disruption might not be serious enough to require major policy responses. But the revolution is far more extensive: just as manufacturing and information processing in clerical occupations are collapsing in the advanced countries, these sources of employment are drying up in the developing world as well.In the developed world, we call the failing economic system reliant on manufacturing and clerical work for middle class security the blue model, but the death of the blue model isn’t just a first world problem. The American-style middle class, based on home ownership and good manufacturing and clerical jobs, was mimicked across Europe and in Japan and Australia. Countries like China are quickly learning that the forces which are killing the blue model in industrialized countries also change the rules in the developing world. Manufacturing jobs no longer undergird a strong middle class in the American heartland, and—hand-wringing about China stealing Americans’ jobs notwithstanding—it’s increasingly clear that heavy industry and clerical work won’t be enough to keep building a strong middle class in the Middle Kingdom either.The death of the blue model is nobody’s fault, but it is a reality that will have and is already having some unpleasant political consequences. We should expect a rash of the kind of reactionary politics (Trump, Orbán, Le Pen) we’ve seen in stressed rich countries facing the blue model implosion in the developing world—a place where such politicians can do much more damage and where they face fewer institutionalized checks and balances.The blue model’s successes helped sustain the growth and appeal of liberal democracy. People around the world looked to American industry and middle class comfort and decided that they too wanted to live and work and vote like people in Detroit and Los Angeles and Atlanta. The blue model wasn’t perfect, but it formed the backbone of post-war American prosperity. Its death poses a challenge to the liberal order in ways that most people haven’t fully grasped. Finding its replacement—not trying to deny reality and prop up a failing system—should be the primary goal of responsible individuals, governments, NGOs, and companies around the world.