Envisioning An Internet-Fueled Future

Author

Harold L. (Hal) Sirkin

March 2, 2017

Alibaba Vice President Gao Hongbing is predicting that “20% of the world’s population will become self-employed or freelance via the Internet in the next decade,” providing fuel for those who see the Internet as a disruptive technology.

Whether Gao was, in fact, making a general observation or issuing some kind of warning is unclear.

Was Gao suggesting that the Internet has made business-as-we-know-it so obsolete that upwards of a billion-and-a-half people worldwide will, in the next few years, forgo traditional employment and strike out on their own—working independently and supporting themselves from virtually any location they choose, so long as they can connect to the Internet? Or was he merely observing that the Internet creates opportunities for many people that may not have existed in the past?

Part of the answer lies in what he meant by “self-employed” and working “freelance.”

Hundreds of millions of people around the world already are self-employed or working freelance, some by choice, others by necessity—many of the latter participating in their countries’ underground economies.

In the United States, we may already have surpassed the 20% self-employment mark—again, depending on how you define the term “self-employed.”

The Pew Research Center, using U.S. Census Bureau data, has estimated that in 2014, “self-employed Americans and the workers they hired accounted for 44 million [U.S.] jobs … or 30% of the national workforce.” The self-employed, Pew researchers found, numbered “14.6 million in all,” representing 10% of the U.S. workforce. “They in turn provided jobs for 29.4 million other workers,” some of whom also were self-employed, working in effect as sub-contractors, others of whom were payroll employees.

The numbers presumably don’t include full- and part-time workers who freelance on the side, working nights and weekends on their own, in many cases for unreported cash. This is where self-employment and freelance work intersect with the underground economy.

Globally, the percentages appear to be similar—with higher percentages of people working for themselves in developing countries, and lower percentages in the developed world. A 2014 Gallup poll, for example, found that 18% of all adults worldwide—or 29% of the global workforce—reported being self-employed in 2013. In Southeast Asia, 41% of the workforce reported being self-employed. In Sub-Saharan Africa: 36%. In the EU and North America: 10% and 7%, respectively. This latter figure is somewhat inconsistent with the Pew findings, but it’s not that far off (7% vs. 10%), and it may not include the increasing numbers of baby boomers who, since 2013, are choosing to start businesses rather than retire.

Interestingly, figures on unreported economic activity—the so-called underground economy—closely track those on self-employment.

Friedrich Schneider and Dominik Enste, in a 2002 paper for the International Monetary Fund, described the underground economy, as follows: “A factory worker has a second job driving an unlicensed taxi at night [this was pre-Uber]; a plumber fixes a broken water pipe for a client, gets paid in cash but doesn’t declare his earnings to the tax collector; a drug dealer brokers a sale with a prospective customer on a street corner.

“These are all examples of the underground or shadow economy,” they wrote, “activities, both legal and illegal, that add up to trillions of dollars a year that take place ‘off the books,’ out of the gaze of taxmen and government statisticians.”

A professor of economics at Johannes Kepler University in Linz, Austria, Schneider more recently calculated that the “informal shadow economy” of most of the world’s countries is, on average, about one-third the size of the country’s formal economy—higher in the poorer, less-developed countries of sub-Saharan Africa, significantly lower in the high-income countries belonging to the Organization for Economic Cooperation and Development (OECD).

The bigger point, and probably where Gao was heading with his thought, is that the Internet is a tool of empowerment for millions around the world, where an Internet connection can mean the difference between subsistence living and economic opportunity.

As the Boston Consulting Group noted in its 2016 Sustainable Economic Development Assessment, the Internet has provided millions of people with access to credit, “a safe way to deposit money, receive salary and other kinds of payments,” and has reduced the risk of robbery and bodily harm by minimizing the amount of cash small businesses need to keep on hand.

The beneficiaries of this financial inclusion, as often as not, already were self-employed in many cases: tilling the soil to put food on the table or making handicrafts that others, elsewhere, might sell to tourists.

Thanks to the Internet, they can now go mainstream, start small businesses and safely conduct commerce with others. Gao wasn’t talking about an Internet of disruption; he was talking about an Internet of possibilities.

Just think of the new business models and countless new businesses the Internet has spawned in just the last 20 years, such as streaming video services, social media, search engines, cloud computing, travel reservation and ride sharing services: Netflix (founded in 1997), Google (1998), Alibaba (1999), Facebook (2004), Airbnb (2008) and Uber (2009), to name a few.

Twenty years ago, nobody could have imagined making a living selling on eBay, Amazon or Etsy. Blogging for a living was unheard of. Twenty years from now? Nobody knows—the possibilities are limited only by our imaginations.

That’s the beauty of it. That’s Gao’s vision.

 

This article was written by Harold L. (Hal) Sirkin from Forbes and was legally licensed through the NewsCred publisher network.

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