Maybe I’m wrong. Maybe everything will be fine. Maybe the “widening gap between rich and poor” is temporary. Maybe the steady growth in the proportion of jobs that are part-time and/or low-paid will soon reverse.
Or maybe the idea that all the homeless need are old laptops and a few JavaScript textbooks is not unlike the claim that new technologies automatically create new jobs for everyone. Maybe, unless something drastic changes, most people are totally screwed.
This has not been a great decade for the average American. The recession ended in 2009, but median household income remains 6.1% below what it was in December 2007…while the income of the top 10% rose. Meanwhile, productivity growth has been exceedingly sluggish on both sides of the Atlantic. The Economist explains, and theorizes:
In the early 2000s, in both Britain and America growth and wages peeled apart. The economy kept growing, but median earners did not feel the benefit… in Britain a net 360,000 self-employed jobs have been created in the first four years of recovery… The self-employed work longer but their median hourly earnings are less than half those of employees.
Another theory is far more disconcerting: it’s the suggestion that “the economic progress of the past 250 years may have been a unique period in human history.” As New York Magazine puts it:
At some point in the late sixties or early seventies, this great acceleration began to taper off … The rate at which life is improving here, on the frontier of human well-being, has slowed.
Which neatly echoes Peter Thiel’s essay “The End of the Future”:
Technological progress has fallen short in many domains… While innovation in medicine and biotechnology has not stalled completely, here too signs of slowed progress and reduced expectations abound… By default, computers have become the single great hope for the technological future. The economic decoupling of computers from everything else leads to more questions than answers, and barely hints at the strange future where today’s trends simply continue.
The strange present, we may conclude, is one in which the middle class is slowly being squeezed out of an economy that is gradually dividing into two camps, the few rich and the many poor. Furthermore, “rich” increasingly means “those working in technology.” Of course there are other wealthy sectors — oil, finance — but tech is the high-growth startup amid those stodgy, stagnating elephants.
This is happening first and most egregiously in San Francisco and Silicon Valley, which are “increasingly divided between young, wealthy tech workers and those who say they are being pushed out of a city they can no longer afford,” reports the LA Times, leading to:
…but the tech/non-tech divide will metastasize and spread everywhere else soon enough. That’s an inexorable consequence of “software eating the world.”
Henry Blodget says: “Hate To Say It, But If Companies Don’t Start Paying People Better, We May Need Unions.” But unions only matter if labor is valuable, and with every passing year, technology renders labor more irrelevant. When the 5.7 million licensed truck drivers in America are replaced by self-driving vehicles, they can go ahead and strike all they like. Nobody will care. Hardly anybody who matters — which is to say, the rich, the powerful, the technical — will even notice.
And it’s not just truck drivers and factory workers. Better software and better robots are already beginning to replace lawyers, bartenders, burger-flippers, even surgeons, and countless other workers, including those poor souls in technology who haven’t kept up. The new law of the economic jungle is this: either write the software that eats the world, or be eaten.
Maybe that’s why app stores are filled with “the next Facetasnapchatwittergram” instead of something practical, and why most app developers still target iOS first, instead of the Android masses. That’s where the (perceived) money is. As the rich get richer and the poor get poorer, faster and faster, the rich become an ever more tempting target…and the poor are more quickly forgotten.
So. The global economy seems to be bifurcating into a rich/tech track and a poor/non-tech track, not least because new technology will increasingly destroy/replace old non-tech jobs. (Yes, global. Foxconn is already replacing Chinese employees with one million robots.) So far so fairly non-controversial.
The big thorny question is this: is technology destroying jobs faster than it creates them?
A whole lot of people say hell, no! For instance, Scott Winship’s “For the Last Time, Robots Do NOT Cause Unemployment.” Similarly, last time I wrote about this I received angry Twitter commentary claiming that sociologists had proved this as fact long ago, complete with links to studies from, er, 1988.
These “nothing to worry about here” claims tend to advance two theses at the same time. The first is “this didn’t happen in the past, so it won’t happen now,” which — apologies to those people who will inevitably make that very claim in the comments below — is so foolish it makes me weep.
We live in an era of rapid exponential growth in technological capabilities. (Which may finally be slowing down, true, but that’s an issue for decades hence.) If you’re talking about the economic effects of technology in the 1980s, much less the 1930s or the nineteenth century, as if it has any relevance whatsoever to today’s situation, then you do not understand exponential growth. The present changes so much faster that the past is no guide at all; the difference is qualitative, not just quantitative. It’s like comparing a leisurely walk to relativistic speeds.
However. The second thesis is one which I am less ready to dismiss. As Winship puts it:
If technology reduces demand for labor by a quarter, that might translate into everyone working 25 percent less rather than unemployment rising by one-fourth.
I fully agree. Indeed, in my view, the ultimate purpose of technology is to destroy all jobs and bring on a post-scarcity economy. Let’s face it, a whole lot of today’s jobs are already total bullshit; but they persist because we live within an economic system built by, for, and around people with full-time jobs.
The trouble is, we can’t get there from here, not without wholesale changes. Machines will reduce labor, yes, great: but equally, across all of society? You must be joking. If technology cuts the demand for labor by 25%, then laborers will earn 25% less, or 25% of them will become unemployed, while all the benefits go to those who own and/or built/wrote that technology. That’s capitalism.
“Just turn the newly unemployed into entrepeneurs!” the cargo-cult believers chant. Yeah, right. Let me quote The Economist again: “The self-employed work longer, but their median hourly earnings are less than half those of employees.” Entrepeneurialism is not magic pixie dust. Most entrepeneurs fail.
Everyone I know was (rightly) contemptuous of, and disgusted by, the idea that the homeless can be raised out of poverty with a few JavaScript textbooks. But the notion that America’s six million licensed truck and taxi drivers will all find new-new-economy jobs once self-driving vehicles start putting them out of business? I fail to see how that’s much different.
And again, it’s not just truckers; almost every job, probably including yours, runs the risk of being obsoleted when software eats the world…or when the next version eats it again, even faster. Meanwhile, retraining is slow, 50% of the population is below average, and even if technology does eventually create as many jobs as it destroys, there’s no guarantee that those jobs will be available to the entire population, or appear in a timely manner. The result, in a world built around the precepts that most people must have jobs and unemployment is a disaster: economic devastation for those affected.
Maybe I’m wrong. Maybe everything will be fine and the next generation will quickly find themselves overwhelmed with offers for jobs that don’t exist today. But there’s no conclusive evidence either way, and by the time there is, it’ll probably be too late to make meaningful changes. So we need to at least seriously consider the possibility that our current economic system is fundamentally incapable of dealing with this rising technological whirlwind, and that most people live in houses with much thinner walls than they want to believe.
If I’m right, then the under- and unemployed masses will grow ever more frustrated, angry, and resentful of the distant and decadent elite who reap all the wealth and benefits of this Great Devouring. (I think we can all agree that San Francisco’s already getting pretty decadent.) The rich will in turn will presumably accuse the masses of trying to freeload on the immense wealth generated by their disruptive innovations. And instead of taking the first few faltering steps towards a post-scarcity society, i.e. a better world with fewer jobs, we’ll charge headlong into class warfare.
I’m a huge fan of capitalism. But I can’t shake the thought that in a decade or two we may need to move to what I call post-capitalism. Whether that means a basic income (endorsed by Milton Friedman!) or something else — and whether it has to happen the hard way, via some kind of social uprising by the have-nots — I don’t know. But I fear that if our basic economic foundation doesn’t evolve, then we’ll squander most of the enormous cornucopia of benefits that new technologies offer us. That’s not (yet) inevitable; but right now, alas, it seems to me all too likely.
Image credit: Baxter, by Steve Jurvetson, Flickr (CC license)