Digital vs. Physical: The New Glocal Economy

Submitted by James Lee

By James H. Lee

Over the past few years, it seems like people have been feeling pulled in all directions.  Businesses have learned how to do more with fewer people. 

In the software and internet industry, we have seen the disappearance of jobs, the workplace, and the workweek. Work happens anytime and from anywhere.  Yet, other businesses are comparatively unchanged. Why is this?

The Globalized Digital Economy

We currently have two separate economies running in parallel – the digital and the physical.   

The digital economy benefits from the increasingly rapid globalized communication of ideas. 

One of my friends is now telecommuting from Malaysia to the University of Wisconsin. Another is a software developer who set up shop in Buenos Aires, simply because it features a lower cost of living and a better lifestyle. 

Meanwhile, even basic language barriers are gradually disappearing. Anyone who posts a design project on CrowdSpring may get dozens of proposals from around the world. Some of the more entrepreneurial freelancers are now using online tools such as Google Translator. This enables them to communicate with buyers and do business in a way that was simply not possible five years ago.     

Customer service jobs were outsourced overseas a long time ago. Over the next decade, expect more of the knowledge professions to follow. Telemedicine may mean that your family doctor is calling in from Hyderabad. Accounting is another profession that may soon find itself being relocated overseas.

The Localized Physical Economy

While the digital economy has been going global, there are signs that the physical economy will become more localized over the coming decade.

Let’s take a look at a few reasons why this might be happening:

1. Cost

Asian economics expert Joergen Oerstroem Moeller notes that European companies are “gradually discovering that transport costs erode the competitive advantages of outsourcing to China.”

Shipping from Asia made more sense when gasoline was cheaper than bottled water.  This is no longer the case. British retailer Marks & Spencer is planning to shorten the length of its supply chain by only shipping products within its own hemisphere. The company believes this may save GBP 175 million in costs annually.

2. Technology

New technologies such as 3D printing and scanning have the potential to move production to the masses. Instead of shipping to the other side of the globe, some types of manufacturing may move to the desktop, just like printing industry did two decades ago. 

We are just a few years away from being able to scan simple objects (such as repair parts) and then “faxing” them to customers who can print those parts on site – effectively minimizing delivery time.   

3. Social Preference

There has also been in increased interest in buying local artisanal goods when they are available, particularly among Generation Xers and Millenials. For example, the rising popularity of the slow food movement has given new life to many traditional family farms. The USDA now reports that there are over 7,800 farmers markets in the U.S. 

Meanwhile, these trends are further supported by emerging social technologies, such as time banking and local currencies. 

So, while the digital economy happens “anytime, anywhere,” parts of the physical economy may evolve more slowly. Workplaces that require the maintenance of physical facilities or equipment will continue to need people in traditional jobs, because flexible locations and hours do not work for everything. Houses can only be repainted in the daylight by the local handyman. Restaurants and waitstaff will always need to be present at mealtime. 

Good business values will always remain the same – showing up on time, doing a good job, and being appreciative to customers will never go out of favor. 

About the Author:

James H. Lee is a futurist and investment manager. He is also the author of Resilience and the Future of Everyday Life. Follow Jim on Twitter @jhlinde.