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Macroscope | The real lesson from Lehman Brothers collapse: tech disruption, not global debt, could spark the next crisis

Lee Howell says experts worrying about global debt are on the wrong track. The biggest development of the past decade is the dominance of tech firms and digital platforms, and regulators’ failure to keep up with the emerging winner-take-all market

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The rise of artificial intelligence and the digital economy might be more disruptive than global debt. Photo: AFP
It is human nature to pass judgment on calamitous events that harm almost everyone. It is also natural for the stories that emerge from such events to influence current assessments and future choices. The story of the collapse of Lehman Brothers a decade ago is a case in point – but with a slight twist. 
Today, experts point to a “dangerous dependence of demand on ever-rising debt”, and conclude that little has really changed since the global financial crisis. The data on global debt is certainly correct, but any prediction that we draw from it is likely to be overwrought, owing to our own hindsight bias.

We are hardwired to try to make sense of events that shock us, and this often involves recasting them as having been predictable. This heuristic, in turn, leads us to overestimate our ability to predict the future under what we perceive to be similar circumstances.

And, of course, one’s prognosis for the global economy depends on one’s own frame of reference. For example, student debt in the United States has now ballooned to US$1.5 trillion. From the perspective of younger Americans, that is certainly an alarming development; in the eyes of Europeans, it is also an economic absurdity.
Or, consider that Apple’s and Amazon’s market capitalisations have each topped US$1 trillion. Some Americans may be celebrating that fact, but Europeans are increasingly wringing their hands over the growing dominance of US tech titans.

Watch: Chinese firms crash America's biggest tech party

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