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„We’re constantly being manipulated“

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Which jobs are going to fade away? What should our children learn? What does the movie “Matrix” have to do with our lives even today? Telekom CEO Tim Höttges addressed these and other questions in a detailed interview with the German daily “Handelsblatt”. In doing so, he left no doubt that he considers the chances of digitization to be much bigger than the risks. Read here the second part of the interview.

Is it an obstacle to us that we subject our European companies to social constraints, for example preserving jobs? Or to be more specific: is this sort of thing the responsibility of Deutsche Telekom?

Höttges: Welfare, the fact that people can develop and find a degree of stability, creating employment – yes, that is also a task for companies, is my spontaneous response. For example, we have 225,000 employees. I have to protect our company on their behalf. It’s not just a matter of cash flow or dividend earnings. At the same time, only a company that makes profits can afford to be social. A social market economy doesn’t just consist of a single company. It’s a national economy. It’s the total of many companies and people that are as successful as possible.

... So says the man who will have to say goodbye to thousands of employees in the next few years. What role is Deutsche Telekom playing in the struggle of the U.S. giants?

Höttges: We quite deliberately decided that our engineers should not develop the next Google, but networks. We are experts on infrastructure. Thus we are concentrating on Europe, where we are at home linguistically, economically, politically, and culturally. And so we became Europe’s most valuable telecommunications company – and we want to stay that way.

Digitization will cost millions of jobs. And the experts agree about this. This is no longer just a matter of basic jobs. Programmers, engineers, and doctors must also fear being replaced by machines or algorithms.

Höttges: It would be cynical to talk up this development, even if it will improve productivity at the same time ...

... which we would dispute. Though the upheavals are so great, productivity is no longer increasing as in earlier industrial revolutions. Why is that?

Höttges: We measure productivity completely wrongly – that is, by still using the growth of revenue. Yet digitization leads to the fact that companies can work far more quickly and perhaps in a leaner way. It’s the same as with knowledge transfer. Previously you bought the Encyclopedia Britannica. Today I have Wikipedia, so much easier to access – and above all free of charge. We have the convenience and service of an encyclopedia, but that is not shown in the gross domestic product, because no one is buying it. The sharing economy is typical of this phenomenon: We share tools such as knowledge ... that improves efficiency, but not the total on the balance sheet.

What does this mean for your company specifically?

Höttges: It is no longer a futuristic vision that bots answer customer requests about their bills... and soon the customer will perhaps not even notice that they are talking to a machine. However, I hope that this additional productivity will once again release money for investment ... investment that will in the end benefit people.

You promise new jobs. Those who are in danger of losing their existing jobs will not find that easy to believe.

Höttges: At the moment, we’re investing 5 billion euros here to expand our infrastructure. This is creating specific new jobs.

Not much consolation for a call center agent in Mecklenburg West Pomerania who is about to be replaced by a voice computer.

Höttges: You can never calculate this one to one. But I’m sure that customer care is becoming more individual and personal – precisely because machines are taking responsibility for many standards away from us. The next generation of our employees must then of course gain qualifications for the tasks that cannot simply be dealt with by machines.

So in the end, robots will do the hard, dirty, physical work and even some of the mental tasks, and we’ll just sit around writing poems and painting mandalas?

Höttges: Of course that can’t be the end of the story. Just think of all the programming that will have to be done in the next few years and decades. So I’m not worried at all for graduates in the STEM subjects ...

... that’s science, technology, engineering, and mathematics. On the contrary, In our sector we already have hundreds of thousands of unfilled vacancies. Everything that combines precision mechanics and software has great future potential ... in medicine, in classic mechanical engineering, in the automotive industry, e-mobility, and basic research.

Let's be honest: What advice do you give your own children in career terms?

Höttges: One of my kids spends a lot of time on the computer. I say: And that's good! My wife constantly wants to send him out in the fresh air. But Pokemon Go means that young people move around outside more than ever before ... and through the game they learn a lot about the digital world.

We’re talking about the academic elite in industrialized countries. But the entire world population, now seven billion people, can’t all study IT.

Höttges: Just compare what is now part of general knowledge with what was the case 20 or 30 years ago. Curricula are being developed further, it’s not just a matter of elites. China has definitely succeeded in creating its own digital eco-system. In India too, amazing things are happening, and not just in Bangalore. So it’s not just a matter for the established industrialized states, even though at the moment we are experiencing a concentration on a very few super-rich U.S. companies. Anyways, that is also an internal problem for countries. Even in the United States, the middle class no longer feels secure. In the future, who belongs to "the lower classes" will have to be redefined and relocated. Poverty in old age, youth unemployment, and debt – all this causes social stress situations. Then people block things ...

... and vote for the extreme right-wing parties?

Höttges: If they bother to vote at all.

You can also understand the election of Donald Trump as an attack of the “left behind” against Silicon Valley and people like you who always just say: disruption is a good thing.

Höttges: Many people are indeed afraid. Not only in the U.S. Digitization has the unfortunate effect of constantly confronting people with their own inadequacies. Unfortunately, there’s never an end to what can be learned, there’s always something new happening. I experienced this in a very personal way. My mother was in despair because she couldn’t cope with the stupid iPad. So she sometimes felt excluded and no longer wanted. We have to supply explanations to all these people. Integrate them better and not exclude them. One small step in this direction is our Digital Responsibility initiative. Just have a look at telekom.com or #digitalduty on Twitter.

Why do you think that an unconditional basic income could be more than a sort of closure bonus for digital losers?

Höttges: First of all: We already have a sort of basic income in Germany.

Hartz IV …

Höttges: … and a variety of other social benefits …

… that are not universal, but only for those who need them.

Höttges: What seems to me more important: today we work in a different way – at home, in the office, on the move. Project-related. Our skills are constantly changing. A traditional job that I start after school and studies and keep until I retire hardly exists any more. Job platforms such as LinkedIn, where you promote yourself and your ability to work, are only symptoms of this mechanism. This also demands taking more personal responsibility. So there will be phases in which people do not have a job, undertake retraining, or only work part-time for a company. The welfare state will have to bridge these phases. Why should this complex support system not be replaced by an unconditional basic income?

Perhaps because it is simply unaffordable?

Höttges: We would have to see about that. But you have a point. In actual fact, the biggest problem is not the idea, but the financing. There is, however, one thing that I don’t like about the welfare state today: I have to ask for help even if I’ve worked throughout my whole life. The basic income would promise more dignity and might even strengthen entrepreneurship.

Dignity seems very important to you.

Höttges: Yes, very important. For example, in such a system you would also be respected far more if you decided to look after your sick parents. I don’t know whether the basic income will turn out to be the right idea in the end. But I’m sure that today’s system will no longer be able to finance the social security budgets of the future. It seems to me that we’ll have to think about completely new financing models.

Why should people go on working at all if they are paid anyhow?

Höttges: Which takes us back to the image of mankind. Of course there will be people who abuse this system. There already are today. But I don’t think that a basic income would lead to a society of slackers. Humans define themselves through their tasks. By using activities to make their lives meaningful. This might therefore encourage entrepreneurship and self-employment.

A tax could be levied on the robots which will then be doing part of our work.

Höttges: I don’t think that would be expedient, as has been shown throughout the entire history of economics. Such taxes are nothing but modern Luddism, they would be progress-killers and wealth-preventers. Taxing the profits of entrepreneurs is still the most sensible solution, in my opinion. The use of tax havens, which can still be observed, shows a lack of solidarity.

Then globally operating companies such as Apple or Facebook would at long last have to give up their tax avoidance tactics.

Höttges: Of course. Profits must be taxed. Period.

The basic income has prominent supporters in Silicon Valley of all places, where we began our discussion. Isn’t it absurd that it’s the apostles of creative destruction who inflicted all the changes on us that are now calling on the state to help? Uber, AirBnB, Apple and Co. don’t have to pay for it, after all.

Höttges: There’s no such thing as a free lunch! We can’t introduce a basic income and leave everything else – taxation, social security systems – exactly as it is. I think that saying taxes on profits must be the basis for a socially just system is a statement of the obvious. It’s all to do with justice, fairness, and solidarity. We must all ensure stability and social cohesion. As a matter of principle. And if anyone isn’t happy with that, they should be clear that the alternative is an era of radicalization, fanaticism, and terrorism that we can't anticipate today.

The fan-base for the basic income in Germany ranges from Katja Kipping of the Left Party through the anthroposophic entrepreneur Götz Werner to a traditional liberal economist such as Thomas Straubhaar. Have you already discussed it with them?

Höttges: I have actually debated the subject with Götz Werner and the Christian Democratic politician, Dieter Althaus. I’m surprised by the number of clever people from all sides who support the same idea. That isn’t very specific, but it shows a common desire for change.

Recently even Siemens boss Joe Kaeser called a sort of basic income “inevitable”.

Höttges: It’s interesting that someone from the manufacturing industry like Mr. Kaeser is now coming up with the same answers as we are from the IT sector. This shows me that we need a political discourse about the future. Our future prosperity depends on digitization. And on how we deal with it and organize participation.

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