Penniless retirees and teen zombies: how hot tech has China and the world hurtling into a dark age

While I was giving a talk to a bored and sleepy audience one afternoon last month, they suddenly rose from their lethargy, clapping and cheering ecstatically. It wasn’t me. They were worshipping a gigantic picture projection on the screen behind me. It was the chart of cryptocurrency prices going vertical. The audience looked mostly like retirees from central China. Many of them were probably red guards during the Cultural Revolution and cheered at Chairman Mao with the same enthusiasm. Now cryptocurrencies are their gods.

Bitcoin has gone crazy. Ethereum has done better. There are over 700 cryptocurrencies. Whenever you see one taking off, you can be sure that a crowd like this, somewhere in China, is cheering like that.

The middlemen in this market are like the “wolf of Wall Street” on steroids, coming up with more fantastical stories by the day. If the CIA were looking for the perfect weapon to bring down China, this is it. Electronic currencies have put Las ­Vegas and Macau at the fingertips of all Chinese retirees. Sooner or later, most will lose their pension money. The resulting chaos will pose a critical threat to social stability.

And, talking about weapons against China, ­online gaming is even more powerful, being targeted at youth. Electronic currencies promise to make Chinese retirees mad, but ­online gaming is turning Chinese boys into zombies. A century and a half ago, the Chinese government fought the British to keep opium out. In the 21st century, China is happily doing it to itself. China’s successes have got many countries worried about their ­future. It seems those worries may be overblown.

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Lately, its official media waded into blaming one game for its negative social impact. But why this one, and why now? Online gaming has been a battle between mothers and sons in China for a decade. Would an occasional media intervention like this make a difference? Remember a similar episode about online searches? In China, the essence of searches is selling fake information. When someone died for believing in fake medical information, there was a media uproar. Has anything meaningful changed?

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In the West, tech isn’t so innocent either. The EU just fined ­Google billions of dollars for doing a little “evil”. Social media sites like Facebook hire psychologists to ­design tricks to keep users hooked. E-commerce providers find new ways to make people buy things they don’t need and can’t afford. In China, e-commerce is always about fake goods. The West is catching up.

Tech dominates media. There are sensational stories on a daily basis about new things to come. Silicon Valley has become more glamorous than either Hollywood or Wall Street. Geeky acronyms and terms like AI, AR, blockchain and big data crawl into daily conversations, like we are supposed to know. Even the Chinese government’s annual work report sounds like a speech by some guru at a venture capital conference. But, why do we still have ­boring lives? Worse, the global economy has been stagnating through this tech boom.

In the developed economies, people’s economic well-being is at a decades’ low. The angst has led to populist political upheavals in the US and Europe. Even emerging economies are not seeing significant growth from more tech. After so much attention to – and so much money invested in – the tech boom, where’s the beef?

The world has experienced tech crazes many times before. Each one was a financial bubble, but also ­produced a growth boom. Even the last IT bubble in the late 1990s led to prosperity for a few years. And its impact was lasting: multinational companies became truly global with integrated global management systems. This one, so far, feels only like a Hollywood show.

It’s easy to see why many hot techs have a negative impact on economic activities and the quality of life. When people are constantly checking social media for “likes” on pictures, how can they be productive or happy?

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Then, one may ask why people do things that are not good for them. Well, people gamble, smoke and use drugs. Human weaknesses are always there. When big businesses organise to take advantage of them, the world becomes a worse place.

There are two kinds of internet businesses that are profitable: arbitraging or connecting people. Sharing economy is about arbitraging. Car-hailing services are really about milking the value of taxi licences. Yes, the taxi business is a monopoly and should be subject to competition. However, the car-hailing business is good at redistributing value, but is not really creating much value for the economy.

We all applaud a good search business like Google that places the knowledge of the world at our fingertips. But, remember that the millions of people who created that knowledge are the ones who made the real difference. Google is a tool that makes them more accessible, it is just a form of convenience, not a revolution. When the internet makes it easier for people not to pay for content, content makers will produce less. The world is worse off as a result.

For the first time in human ­history, a tech revolution is making people worse off. It brings out the worst in human nature and makes unscrupulous people very rich. When the best and the brightest ­become rich by amplifying the good side of human nature, the world moves forward. When some people get very rich by taking advantage of the worst traits in human nature, a dark age is just around the corner.

Andy Xie is an independent economist