The news that a 17 year old teenager could become a millionaire by selling a smartphone app he developed at 15 is remarkable. Very few could have predicted the success of this London teenager. Our tech specialist James Titcomb:
Nick D’Aloisio, 17, designed and built Summly, an iPhone app that condenses news articles for reading on the move after teaching himself to write computer code. Since its launch, the app has reached close to 1m downloads and yesterday, D’Aloisio announced that Summly had been sold for a sum believed to be close to £20m.
But while teenage whizzkids might be rare, surprises in markets are common. One of the most reliable features of markets is that no-one is able to predict with any degree of accuracy what they might look like in 10 or 20 years. The Centre for Policy Studies' Ryan Bourne argues that as markets become more fast paced, attempting to pick winners is increasingly futile:
The development of these industries challenges policymakers. The nature of the markets may generate more inequality, because the global rewards to the best innovators are likely to be huge (and education is not sufficient to dampen inequality). Likewise, distinguishing between entrenched monopolies and contestable markets, where businesses have high market concentration through having the best product, is tricky.
A key to our future success is whether we embrace or reject this inevitable change. On the one hand, we can resent that global marketisation offers high rewards to entrepreneurs, and demand punitive taxation to share the proceeds (at the risk these innovators will base their talents elsewhere). We can vote for generalised anti-rich populism, fail to distinguish between rent-seekers and innovators, and label all incumbent firms “big business” which need to be tackled and regulated, despite the barriers to entry this creates. We can pretend the government knows how markets will evolve, and try to pick winners and favour certain sectors.
Or we can take a pro-market approach by breaking down cronyism and rent-seeking, while recognising that a temporary high market share may not be the sign of an uncompetitive market but of providing the best products which enrich our lives. We can encourage established companies to locate here, but be more concerned about why Britain hasn’t produced its own Facebook or Twitter. We can celebrate the success of innovators, accept that inequality might increase, but find rewards for success more tolerable so long as anyone with talent or an idea has the potential to be upwardly-mobile and educational access is broadened. And we can recognise that markets are fast-changing and unpredictable – the exact reason why government can’t pick winners.