A CRITIQUE OF THE SECOND MACHINE AGE (Or the Need to Shed our Romantic Ideas about Wage Labor)

(This post is based on episode 11 of the Review the Future Podcast. For a more detailed treatment of this topic you can subscribe to the podcast via iTunes or download it from reviewthefuture.com.)

What is this Book?

The Second Machine Age is a book by Erik Brynjolfsson and Andrew McAfee that explores the impacts of new technologies on the economy. For those who are familiar with such topics, it’s not likely this book will teach you much you don’t already know. However, for the layperson, this book is an extremely well written and clear introduction to the economic pros and cons of our current digital revolution. Because of the skillful way it stitches everything together, Second Machine Age has a good chance of being one of the most important nonfiction books of 2014.

The Goal of this Blog Post

On the whole, we like The Second Machine Age. We think it tells a plausible story and for the most part we agree with its perspective. However, we have criticisms of one of the book’s later chapters, the one entitled “Long-Term Recommendations.” Thus the primary goal of this article is to articulate those criticisms. But first, for the sake of background, we will summarize some of the book’s main arguments.

A Quick Summary of Second Machine Age

According to Brynjolfsson and McAfee, exponential gains in computing, digitization of goods, and recombinant innovation are all driving rapid technological growth. Technology has begun to perform advanced mental tasks—like driving cars and understanding human speech—that were previously thought impossible. And in economic terms, these new technologies, according to the authors, are increasing both the ‘bounty’ and the ‘spread.’

Bounty is a blanket term for all of the productivity and quality of life gains provided by new technologies. Brynjolfsson and McAfee feel that the bounty of technology is growing tremendously, but, because of the limitations of our economic measures, we have a tendency to greatly underestimate the progress we are making.

Spread is a euphemism for inequality. According to the authors, technology is increasing spread because of (a) skill biased technical change, (b) capital’s increasing market share relative to labor, and (c) superstar economics. All three of these trends have some evidence backing them up, and the supposition that technology is the primary driver of these trends makes a great deal of sense.

The authors also suggest that technological unemployment—a phenomenon long thought of as impossible by mainstream economists—is in fact possible. They discuss three arguments for how technological unemployment could occur:

  1. In industries subject to inelastic demand, automation can lower the price of goods without creating any additional demand for those goods (and thus labor to make those goods). Over the long term, as human needs become relatively more satiated, this inelasticity could even apply to the economy as a whole. Such an outcome would directly undermine the luddite fallacy, which is the argument economists traditionally use to dismiss technological unemployment.
  2. If technological change is fast enough, it could outpace the speed at which workers are able to retrain and find new jobs, thereby turning short term frictional unemployment into long term structural unemployment.
  3. There is a floor on how low wages can go. If automation technology continues to drive wages down, those wages could cross a threshold below which the arrangement is not worth the employee’s time. Eventually the value of certain workers could fall so low that they are not worth hiring, even at zero price.

Policy Recommendations

The book makes several short term policy recommendations. We will not list them all here, as they represent a suite of largely uncontroversial proposals designed to speed up innovation and growth. These proposals, if they were enacted, would conceivably help to get our economy working more efficiently and increase our ability to match workers to the jobs that still need doing. They would also grow the technological bounty that makes all of our lives better. It’s hard not to agree with most of these proposals.

However, if we accept the premise that  “thinking” machines will encroach further and further into the domain of human skills, and that over the long term we are destined for not just rampant inequality but also wide scale technological unemployment, then all of the short term proposals provided by this book could actually accelerate unemployment. After all, more innovation means more and better machines, which ultimately could mean more displaced labor.

Long Term Recommendations

In this chapter, the authors address long-term concerns. In a near future where androids potentially substitute for most human labor, will the standard economics playbook still work?

Brynjolfsson and McAfee are clear about two major preferences:

  1. They do not want to slow or halt technological progress.
  2. They do not want to turn away from capitalism, by which they mean, “a decentralized economic system of production and exchange in which most of the means of production are in private hands (as opposed to belonging to the government), where most exchange is voluntary (no one can force you to sign a contract against your will), and where most goods have prices that vary based on relative supply and demand instead of being fixed by a central authority.”

We agree with these two premises. So far, so good.

Should we Adopt a Basic Income?

The authors go on to discuss an old idea: the basic income. This is a potential solution to the failure mode of capitalism known as technological unemployment. If an increasingly large number of people can longer find gainful employment, then the simplest solution might be to just pay everyone a basic income. This income would be given out to everyone in the country regardless of their circumstances. Thus it would be universal and unconditional. Such a basic income would ensure that everyone has a minimum standard of living. People would still be free to pursue additional income in the marketplace, and capitalism would proceed as usual.

Brynjolfsson and McAfee do a quick survey of all of the varied thinkers, both conservative and liberal, who have supported this idea in the past. Here’s a short list of people who favored a basic income:

Thomas Paine, Bertrand Russell, Martin Luther King Jr., James Tobin, Paul Samuelson, John Kenneth Galbraith, Milton Friedman, Friedrich Hayek, Richard Nixon

With such wide ranging endorsement for the idea of a basic income, one might expect Brynjolfsson and McAfee to jump on the bandwagon and endorse the idea themselves.

But, no! Basic income is apparently “not their first choice.” Why?

Because work, they argue, is fundamentally important to the mental wellbeing of people.  If we adopted a basic income, people might not be adequately incentivized to work. And therefore people and society would suffer on some deep psychological level.

To support this idea, Brynjolfsson and McAfee field a series of arguments.

Argument One: A Quote From Voltaire

The french enlightenment philosopher Voltaire once said, “Work saves a man from three great evils: boredom, vice, and need.” Now, Voltaire was a pretty smart guy, but whether someone from the eighteenth century has anything helpful to say about today’s technological reality seems doubtful. But for the sake of argument, let’s go ahead and examine this quote.

First of all, we’re not sure what Voltaire meant by “work.” Work can mean a lot of things. Work, in the broadest sense, could mean activities you do to upkeep your life, such as cleaning your bathroom or going grocery shopping. It could also consist of amateur hobbies that you undertake for fun, such as writing overly long blog posts.

However, this is not the definition of work that Brynjolfsson and McAfee are implying. They are implying a much more narrow definition of work as ‘wage labor’—meaning work done to serve the needs of the marketplace. Wage labor is work you do, at least in part, to earn money, so that you can continue to survive and exist in this modern world.

So let’s rephrase the quote to: “Wage labor saves a man from three great evils: boredom, vice, and need.”

Already this should start to sound a little bankrupt. Wage labor saves a man from boredom? Sure, a good job can relieve boredom. But a bad job can be one of the single biggest causes of boredom in a person’s life. We don’t have any statistics on this, but anecdotally we happen to know a lot of people who don’t particularly enjoy their jobs. And boredom is one of the biggest complaints these people have. A quick survey of the popular culture surrounding work would seem to imply that this is not a unique sentiment. We have a feeling that you, the reader—if you try hard enough—can think of at least one person who gets bored at their job.

(ADDITION: Gallup Poll Shows Thirteen Percent of Workers are Disengaged at Work)

So what about ‘vice?’ What even constitutes vice in 2014? Things you do for pleasure that are bad for you? Honestly, the word vice seems a bit anachronistic in this day and age, but we can think of some candidates for vice that are actually encouraged by wage labor:

  1. Aimless web browsing and perusing of “trash” media to ease the boredom of being stuck in a cubicle
  2. Sitting in a chair all day not exercising and slowly harming your health
  3. Drinking copious amounts of soda and coffee in order to stay awake during the hours demanded by your job
  4. Cooking less and eating more junk food because wage labor takes up too much of your time
  5. Needing a drink the second you get home in order to unwind after a stressful day of wage labor

Third on Voltaire’s list is ‘need’. But if wage labor could take care of need, we wouldn’t be having this conversation in the first place, right? Since we are speculating about a future where automation makes most work obsolete, then it is clear that in such a future most people will not be able to find lucrative wage labor. So looking ahead, wage labor cannot necessarily save a man from need any more than it can save a man from boredom or vice.

Argument Two: Autonomy, Mastery, and Purpose

Brynjolfsson and McAfee attempt to use Daniel Pink’s book Drive to further their point. Drive discusses three key motivations—autonomy, mastery and purpose—that improve performance on creative tasks. However, the authors of Second Machine Age seem to imply that (1) these qualities are needed for psychological wellbeing and (2) these qualities can best be obtained from wage labor. This is a misapplication of Drive’s actual thesis.

The three motivations described—autonomy, mastery and purpose—are not fundamental qualities of wage labor. In fact, wage labor is historically very bad at providing them. Thus, Pink’s book explains how modern businesses can specially incorporate these techniques in order to try to get better results from their workers.

Such mind hacking aside, wage labor has no special claims to autonomy, mastery, and purpose. Wage labor removes autonomy by forcing people to focus their energies on what the market thinks is important, rather than on what they themselves think is important. Mastery can just as easily be found in education, games, and hobbies. And purpose can be found in religion, philosophy, community service, family, country, your favorite sports team, or really just about anywhere.

Argument Three: Work is Tied to Self-Worth

The authors cite the work of economist Andrew Oswald who found “that joblessness lasting six months or longer harms feelings of well-being and other measures of mental health about as much as the death of a spouse, and that little of this decline is due to the loss of income; instead, it arises from a loss of self-worth.”

We don’t doubt that a loss of self-worth is a major factor contributing to the unhappiness of the long-term unemployed. However, we believe this outcome is culturally and not psychologically determined. The cultural expectations in America are that you are supposed to get a wage labor job and earn your living every day, otherwise you are seen as a freeloader, a layabout, a good-for-nothing. Jobs are seen as the premiere source of personal identity, and the first question out of most people’s mouths when they meet someone new is “what do you do?” We don’t see why these cultural expectations can’t change and in fact, if the premise of technological unemployment is correct, then they will have to change.

Laziness and doing nothing may always be looked down upon. But there is a big difference between doing nothing and being unemployed. As has already been articulated, there are many productive ways to spend one’s time that have nothing to do with wage labor. If our society fails to recognize the value of these non-wage labor pursuits, then the problem lies with society.

Today unemployment may be higher than we like, but work is still abundant enough that such a cultural expectation can remain unchallenged. But if the future looks like the one implied by Second Machine Age—a future where more and more people will be unable to find wage labor—then long-term unemployment will need to become not just normalized, but accepted. By reaffirming the importance of wage labor, Brynjolfsson and McAfee are helping to perpetuate the same social force that already makes unemployed people feel depressed and worthless.

Argument Four: Without Work Everything Goes Wrong

The authors cite studies by sociologist William Julius Wilson and social research Charles Murray that suggest unemployed people have higher proclivities towards crime, less successful marriages, and other problems that go beyond just low income.

Unlike Drive, we have not personally looked at this research so we cannot speak directly to the experimental rigor of these studies. Isolating for the effect of joblessness in real world communities is extremely difficult and requires controlling for a wide variety of complicating factors. In the case of Murray’s work, the authors seem to acknowledge this concern directly when they write “the disappearance of work was not the only force driving [the two communities] apart —Murray himself focuses on other factors—but we believe it is a very important one.”

As long as wage labor is directly tied to income, how can we be sure that what these studies are actually measuring is not “incomelessness?” In order to sidestep this issue, we would maybe like to see a study of two groups—one that receives a comfortable income without working, and one that receives an equivalent amount of money, but must work for it. What differences would exist between these two groups? Would the non-working group become aimless and depressed? Or would they simply repurpose their free time towards other productive tasks?

Negative Income Tax

After all this discussion of the fundamental importance of wage labor, one might expect Brynjolfsson and McAfee to recommend the creation of a Works Progress Administration or some other mechanism for artificially creating jobs. Instead they just double back and return to the basic income idea, only by another name.

The authors support Milton Friedman’s idea of a negative income tax. They claim that a negative income tax better incentivizes work. However, this distinction between a basic income and a negative income tax does not actually exist. Both a basic income and a negative income tax have two key features in common: they set an income floor below which people cannot fall, and at the same time they allow people to increase their relative income through labor. Thus we see no basis for the notion that a negative income tax better incentivizes work.

After doing some light research into Milton Friedman’s original statements we realized one possible source of the confusion. In this video, Friedman articulates the argument that a negative income tax will do a better job of incentivizing work than a “gap-filling” version of the basic income. This is certainly true. A gap-filling basic income would probably be a bad idea and have the problem of disincentivizing labor below a certain threshold. However, to our knowledge, none of the modern day basic income proposals are built around this gap-filling principle, so Brynjolfsson and McAfee’s distinction seen in this light would be a bit of a straw man argument.

What are the Goals?

We should not forget that wage labor is not the goal in itself. The real goals of our economy ought to be (1) alleviate people’s suffering and (2) increase the bounty through innovation. Although there are challenges involved, a basic income would seem to be a promising way to address both of these goals.

A basic income puts a floor on poverty and does so in a way that is both much simpler than our current alphabet soup of social programs, and more encouraging of autonomy. Rather than providing people with prescribed social services, people could spend their basic income dollars on whatever they feel they need. A basic income decentralizes decision making and puts the power in the hands of individuals.

As a corollary, a basic income might help unlock innovation by bringing people up to the subsistence level and thereby ensuring that they have the opportunity to compete and innovate in the market economy. Moreover, the safety net of basic income might spur entrepreneurship by reducing the risk of starting a small business. Is it possible more people would attempt to start businesses if they knew they had a cushion of basic income to protect them in the event of failure? (And as we all know, most new businesses have a high chance of failure.)

Under a basic income, there is no doubt that some people would choose to forgo wage labor altogether and live at the poverty line. But is this such a bad thing? These people would be making a personal choice. And we imagine many such people would find interesting and productive ways of spending their time that might be culturally valuable, even if they do not carry a price in the marketplace. If a musician chooses to live off of a basic income and make music, he doesn’t make money in the economy, but we all still get to enjoy his music. If a free software programmer chooses to live off a basic income, he doesn’t make money in the economy, but we all still get to enjoy his free software. If a history enthusiast chooses to live off a basic income, he doesn’t make money in the economy, but we all still get to enjoy his Wikipedia articles. As Brynjolfsson and McAfee argue earlier in the book, the value generated by digital content is not always well measured or compensated by the marketplace, but that doesn’t mean such content doesn’t improve our lives.

However, we may be preaching to the choir since Brynjolfsson and McAfee, despite their protestations, do in fact support a basic income. They just prefer the particular version of basic income that goes by the name “negative income tax.”

Pause for Skepticism

Now, it is worth noting that the “end of work” scenario is not a foregone conclusion. Here are two potential defeaters to this outcome:

  1. Human capabilities are not necessarily fixed. One byproduct of future technologies might be a redefinition of what it is to be human. If we begin to “upgrade” humans, whether through genetics or brain-computer interfaces or some other means, many technological unemployment concerns could become irrelevant. Upgradeable humans could solve both the retraining problem (just download a new skill set to your brain, matrix-style) and the issue of inelastic demand (super-humans might develop brand new classes of needs).
  2. A wide range of intangible goods—such as attention, experiences, potential, belonging, and status—might remain scarce indefinitely and continue to drive a market for human labor, even after the androids have arrived. Although it’s hard to imagine a market in such goods replacing our current manufacturing and service economy, it must have been equally hard for pre-industrial people working on farms to imagine the economy of today. Thus we may simply be lacking imagination when it comes to envisioning the jobs of the future. (For a more detailed discussion of this topic see episode 10 of the Review the Future podcast.)

Despite these defeaters, we definitely think the technological unemployment scenario is worth thinking about. First of all, the issue of timing is paramount, and at present it seems like we have a good chance of automating away many jobs long before we figure out how to upgrade human minds or develop brand new uses for human labor. Second, it won’t take anything close to full unemployment to create problems for our system. Even a twenty percent unemployment rate, (or an equivalent drop in Labor Force Participation) for example, might be enough to trigger a consumer collapse or at least great suffering and social unrest among lower classes.

Final Thought

Wage labor is a means to an end, not an end in itself. While the Second Machine Age paints a clear picture of some of the potential problems facing our economy, it fails to fully take to heart this fundamental distinction.

A Detailed Critique of “Race Against the Machine”

eBook available on Amazon

FIRST OF ALL, THIS IS AN EXTREMELY IMPORTANT BOOK

Race Against the Machine deserves praise for jump-starting an important discussion about the effect of technology on our economy. As the authors point out, the impact of computers and information technology has been largely left out of most analysis regarding causes of our current unemployment woes. This book, therefore, is an attempt to “put technology back in the discussion.”

BUT IT SUFFERS FROM SCHIZOPHRENIA

The book is divided into roughly two halves: one pessimistic and one optimistic. The first three chapters comprise the pessimistic portion and make a compelling case for how accelerating technological progress and rapid productivity gains are not only creating unemployment, but also contributing to greater inequality. The last two chapters take a more optimistic tone and attempt to lay out possible solutions to these problems.

Unfortunately, the pessimistic chapters are much more convincing. The net effect is rather dissonant, not unlike a general rounding up his troops and announcing, “Gentlemen, we’re outmatched in every possible way. Now go out there and win!”

An autonomous car at Stanford University

A QUICK SUMMARY OF THE “PESSIMISTIC” CHAPTERS

Race Against the Machine begins by building a strong argument for technological unemployment. The authors draw our attention to recent innovations like self-driving cars and Jeopardy-winning computers and show how such advances threaten to encroach further and further into realms once dominated by human labor. Such technologies ultimately affect all sectors of the economy since computers are a prime example of what economists call a “General Purpose Technology.” Like steam power and electricity, computers reside in a category of innovation so powerful that they interrupt and accelerate the normal march of economic progress.” Moreover, thanks to Moore’s law, computers are improving at an exponential rate, so we can expect very disruptive changes to arrive very quickly indeed.

Making matters worse, a host of related trends result in the benefits of technological progress not being shared equally. Not only is the value of highly skilled workers diverging sharply from that of low skilled workers, but the value of capital is increasing relative to that of labor. Also important is the “superstar effect.” Technological advances extend the reach of superstars in various fields and allow them to win ever larger market shares. This comes at the expense of the many, since “good, but not great, local competitors are increasingly crowded out of their markets.” Putting all this together you get the central thesis of Race Against the Machine: namely, that digital technologies are outpacing the ability of our skills and organizations to adapt.

A humanoid robot

HOW THE AUTHORS DISTANCE THEMSELVES FROM THE “END-OF-WORK”

In some ways this is a familiar argument. The idea that technology might replace the need for human workers on a large scale has been floating around for a long time, at least since the industrial revolution. However, it should be noted that early on the authors distance themselves from what they call the “end-of-work” crowd, thinkers like Jeremy Rifkin, Martin Ford, and even John Maynard Keynes, who have argued that with time the role of human labor is bound to diminish. Certainly, one can understand why the authors would be cagey about being associated with this idea. Historically, predictions regarding the coming obsolescence of human labor have been wildly exaggerated, and economists generally view such arguments as fallacious.

So what differentiates Race Against the Machine from a more traditional end-of-work argument?  According to the authors:

“So we agree with the end-of-work crowd that computerization is bringing deep changes, but we’re not as pessimistic as they are. We don’t believe in the coming obsolescence of all human workers. In fact, some human skills are more valuable than ever, even in an age of incredibly powerful and capable digital technologies. But other skills have become worthless, and people who hold the wrong ones now find that they have little to offer employers. They’re losing the race against the machine, a fact reflected in today’s employment statistics.”

In short, the authors are more optimistic because they believe there will still be plenty of jobs for humans in the future. We just need to update our skills and organizations to cope with new digital technologies, and then we will be able to create new avenues of employment and save our struggling economy.

BUT THE “OPTIMISTIC” CHAPTERS AREN’T SO ENCOURAGING

Which brings us to those last two chapters, the unconvincing ones I alluded to earlier. For I believe Race Against the Machine suffers from the same problem as a lot of nonfiction books: It does a great job of stating the problem, but a not-so-great job of laying out the solution.

Human-computer teams competing at "cyborg chess"

SO HOW ABOUT WE RACE WITH MACHINES?

The first suggestion the authors make can be summarized as “race with machines.” A human-machine combo has the potential to be much more powerful than either a human or machine alone. So therefore it’s not simply a question of machines replacing humans. It’s a question of how can humans and machines best work together.

I don’t disagree with this point on the surface. But I fail to see how it suggests a way out of our current predicament. The human-machine combo is a major cause of the superstar economics described earlier in the book. Strengthen the human-machine combo and the superstar effect will only get worse. In addition, if computers are encroaching further and further into the world of human skills, won’t the percentage of human in the human-machine partnership just keep shrinking? And at an exponential pace?

Moreover, as I’ve written about before on this site, the human-machine partnership can sometimes be less than the sum of its parts. Consider the example of airline pilots:

“In a draft report cited by the Associated Press in July, the agency stated that pilots sometimes “abdicate too much responsibility to automated systems.” Automation encumbers pilots with too much help, and at some point the babysitter becomes the baby, hindering the software rather than helping it. This is the problem of “de-skilling,” and it is an argument for either using humans alone, or machines alone, but not putting them together.” (link)

PERHAPS ORGANIZATIONAL INNOVATION WILL SAVE US

The authors go on to discuss the importance of “organizational innovation.” In particular, they discuss the creation of new business platforms that might empower humans to compete in new marketplaces.

Again, I agree in theory. Certainly some new platform may hold the key to productively mobilizing the unemployed. But current examples are far from encouraging. The authors cite websites like eBay, Apple’s App Store, and Threadless. An obvious point would be that the kind of people who are able to hustle and make a living on such websites are not exactly average workers in any sense of the word. Not everyone can run an online retail store, program an app, or design a t-shirt. But that’s beside the point. The question we should be asking is will such online marketplaces grow in the future? Perhaps they will expand to the point that they can encompass more and more ordinary workers?

I am highly skeptical. Once again, superstar economics apply here, since effectively everyone in these markets is competing with everyone else. One potential solution is the growth of niche markets. If you focus on selling unique items to a niche audience perhaps you can carve out your own little market in which you are the lone superstar.

But this idea also has its problems. How many niches can there possibly be? Enough to provide employment for the legions of truck drivers and supermarket checkers who may soon be exiting the workforce?

When discussing technology and unemployment, I think it is important not to leave digital abundance out of the discussion. Digital abundance has the potential to be just as disruptive as automation. Traditional businesses are under attack from two sides. Services are being automated, while at the same time goods are being digitized.

Imagine the domestic entrepreneur who has started his own eBay store. He sells niche action figures to a few enthusiastic fans. Nonetheless, enough fans exist that he can make a decent living, all thanks to the wonders of eBay’s “organizational innovation.”

Objects made using a 3D printer

Enter affordable desktop 3D printing, a technology that is rapidly arriving on the scene. All of a sudden once eager customers can buy cheap raw materials and print all the action figures they want. Digital files containing the precise specs for figures get designed, released, and traded extensively on file sharing sites. An explosion of innovation for sure, but also a potential threat to a business model that focuses too much on the sale of unique tangible goods.

Thought experiments like this reveal why intellectual property and digital rights management are going to become increasingly hotly debated issues. As tangible goods become digitized they go from being tangible property to intellectual property. So the efficacy of a lot of future businesses depends on the efficacy of intellectual property, and a survey of recent history quickly reveals the troubles inherent in this area.

OKAY, BUT AREN’T THERE OTHER TYPES OF ORGANIZATIONAL INNOVATION?

So far I have focused on marketplaces for goods. I should note that there are also online labor marketplaces like Taskrabbit and Mechanical Turk. These websites provide a great service by efficiently matching demand for labor to humans willing to work. While increasing efficiency is beneficial, such websites will be of limited help if demand for average-skilled labor falls in the aggregate.

Now I don’t want to sound overly pessimistic. In general, I would agree that the unemployed represent a huge slack resource, and quite possibly somebody is going to come up with some previously unimagined way to harness this large pool of people. But at the moment, such organizational innovation is just a theory. I do not see the seeds of a workable solution in the current crop of platforms.

ON MICROMULTINATIONALS

As their final example of organizational innovation, the authors mention the promise of “micromultinationals.” They write:

“Technology enables more and more opportunities for what Google chief economist Hal Varian calls “micromultinationals”—businesses with less than a dozen employees that sell to customers worldwide and often draw on supplier and partner networks. While the archetypal 20th-century multinational was one of a small number of megafirms with huge fixed costs and thousands of employees, the coming century will give birth to thousands of small multinationals with low fixed costs and a small number of employees each.”

I don’t know if this quote is meant to be taken literally, but for fun let’s crunch some numbers. The coming century (100 years) will give birth to thousands (max: 9999) multinationals with low numbers of employees (less than 12).  Therefore:

9999 x 11 / 100 = 1100 jobs/year. Not exactly encouraging.

Exponential growth seems mild at first and then suddenly manifests as extreme changes

LOOKING TO COMBINATORIAL EXPLOSION FOR HOPE

Early on in the book, the authors take time to explain the incredible power of exponential growth. They discuss Moore’s law and quote Ray Kurzweil’s book The Singularity is Near to illustrate how exponential growth can quickly shift from modest gains to “jaw-dropping” changes.

This puts us in a dire place. If we accept the authors’ premise of a losing race, in which technology (progressing exponentially) is outrunning our skills and our institutions, then how can society hope to catch up? Trying to win a race against exponential growth sounds like an impossible task.

In chapter four, the authors claim to come up with the answer: “combinatorial explosion.”

Combinatorial explosion is the idea that new ideas are combinations of two or more old ideas. Since digital technologies facilitate the easy exchange of information, and ideas—unlike physical resources—can’t be used up, we therefore have virtually limitless possibilities for innovation.

“Combinatorial explosion is one of the few mathematical functions that outgrows an exponential trend. And that means that combinatorial innovation is the best way for human ingenuity to stay in the race with Moore’s Law.”

This suggests a strange dichotomy. As if Moore’s Law is the exclusive tool of machines, while combinatorial explosion is the exclusive tool of humans. This is clearly false. Combinatorial explosion is a huge cause of our current situation. It is a primary reason why disruptive technologies are moving so fast in the first place.

Here’s an easy example: IBM is re-purposing Watson—the Jeopardy-winning computer—to perform medical diagnosis. So here we see one idea colliding with another in true combinatorial fashion, and what’s the result? Yet another potential threat to jobs, this time in the medical field.

Technologies like Watson can readily be repurposed for a variety of uses.

HYPERSPECIALIZATION AND INFINITE NUMBERS OF MARKETS

Hyperspecialization is the authors’ answer to the problem of superstar economics:

“In principle, tens of millions of people could each be a leading performer—even the top expert—in tens of millions of distinct, value-creating fields.”

In principle maybe. In practice there are huge obstacles. Again, what’s to stop one superstar-machine combo from just dominating multiple fields? Or even just one machine? In the health care industry for example, computers like Watson are going to be able to mine the literature of all fields of medicine. After all, to a computer, what’s a few thousand more documents to read? Machines can rapidly scale up their expertise in ways that humans simply can’t.

More importantly we should examine the term “value-creating fields.” Value under our current system is closely tied to scarcity. Digital abundance directly undermines this source of value. So once again we are confronted with an intellectual property challenge. If we are going to have an economy where everyone is an expert in a different field and produces “bits,” we are going to need a mechanism by which these non-scarce bits translate into an income. The truth is we already have numerous such experts. The Internet is overflowing with amateurs who voluntarily immerse themselves in hyper-specialized tasks purely for enjoyment, not because this path is necessarily a viable strategy for making money.

BUT DON’T WE ALL HAVE SOMETHING UNIQUE TO CONTRIBUTE?

Yes of course. Human creativity is astounding, and everyone has something to offer. But peoples’ output—however unique, interesting, and valuable—will not necessarily be monetizable. Especially in an abundant digital environment.

At this point, I want to return to a stray quote from earlier in the book, because I think it presents the opportunity to make an important point.

“…digital technologies create enormous opportunities for individuals to use their unique and dispersed knowledge for the benefit of the whole economy.”

When I look at the Internet and communications technologies, I see a huge threat to this “dispersed knowledge.” The Internet has a way of destroying information asymmetry, which is another important factor to consider when looking at future employment. Any jobs that depend upon having exclusive access to knowledge that no one else has are potentially at risk in a world where increasingly everyone is connected and data is widely shared.

"Superstar" teacher: Salman Khan

INVESTMENT IN HUMAN CAPITAL

Education seems like the most straightforward solution to our problem. If our skills are falling behind, then we’d better acquire new skills right?

I am highly dubious of education’s ability to solve this problem. For one, the most promising experiments in education right now, those that use technology aggressively, like Khan Academy or Stanford’s online courses, have the potential to create unemployment in the education field. In addition to the long-term promise of fully automated learning environments, superstar economics rears its head once again. After all, Khan Academy is built around a superstar teacher: Khan himself. And Stanford’s recent Artificial Intelligence course allowed one professor to effectively reach 58,000 students.

The authors do present an important counter:

“Local human teachers, tutors, and peer tutoring can easily be incorporated into the system to provide some of the kinds of value that the technology can’t do well, such as emotional support and less-structured instruction and assessment. For instance, creative writing, arts instruction, and other “soft skills” are not always as amenable to rule-based software or distance learning.”

Person-to-person interaction is indeed an important aspect in a lot of teaching, and won’t be vanishing any time soon. However, it arguably becomes less important the further you move up the educational ladder. A fifth grader needs lots of emotional support and hands-on instruction, but a self-directed higher education student may need almost none. College is so expensive right now that I can imagine people increasingly forgoing it in favor of cheaper, more automated learning options.

But even with person-to-person learning, technological advances mean that single tutors or teachers will increasingly be able to meet the needs of more and more students. If the learning software does a halfway decent job, then the necessity of human intervention should decrease with time.

In addition, going back to the idea of digital abundance, such human intervention may be increasingly available for free. Already, it’s stunningly easy to go on the Internet and find volunteers who will provide emotional support and helpful feedback, at zero cost. Online communities around “soft skills” like creative writing are particularly vibrant, and offer the opportunity to develop a craft with a huge support network that easily rivals what you would get from a traditional paid learning experience.

I think there is a cultural bias towards judging online interactions as somehow always less valuable than real space interactions. With every passing year, as the resolution of communications technologies increases, this point of view becomes increasingly absurd. Cultural norms may move slowly, but I suspect they will eventually come around on this issue.

But all of these considerations aside, there is a much bigger problem. One cannot escape the simple truth that humans learn slowly and technology advances quickly. If we take exponential growth seriously, how can education expect to keep up? Are we going to retrain unemployed truck drivers to become app programmers? Chances are by the time such retraining is complete, technology will have moved on. And don’t forget that the machines themselves will increasingly be educating themselves.

One solution might be augmenting human thinking capability. If we could upgrade humans the way we upgrade machines, then “the race” would be over, and racing with machines would make more sense. This may sound far-fetched, but in these futuristic times nothing should be ruled out. In Andrew McAfee’s own words, “Never say never about technology.” The question is when will such technologies arrive? And what societal upheaval might we be in for in the meantime?

Innovation is great but it doesn't necessarily equal job creation.

POLICY RECOMMENDATIONS

The authors make a series of common sense policy recommendations that affect institutions like education, business, and law. Most of these suggestions are great, and might lead to a better society, but it is unclear how any of them will create jobs. Rather the goal of these suggestions seems to be to allow innovation and progress to flourish, which in my opinion may only accelerate the process of job loss, as per my arguments above.

The one exception might be suggestion number 13:

“Make it comparatively more attractive to hire a person than to buy more technology. This can be done by, among other things, decreasing employer payroll taxes and providing subsidies or tax breaks for employing people who have been out of work for a long time. Taxes on congestion and pollution can more than make up for reduced labor taxes.”

I suppose this might help keep some jobs around longer, but at the expense of investment in technology that presumably we would want to encourage. This seems directly at odds with the authors’ other more pro-innovation suggestions. Do we want technological progress or not?

RE-EVALUATING THE DESIRABILITY OF “WORK”

One solution the authors quickly dismiss is wealth redistribution. Their reasoning?

“While redistribution ameliorates the material costs of inequality, and that’s not a bad thing, it doesn’t address the root of the problems our economy is facing. By itself, redistribution does nothing to make unemployed workers productive again. Furthermore, the value of gainful work is far more than the money earned. There is also the psychological value that almost all people place on doing something useful. Forced idleness is not the same as voluntary leisure.”

As a culture we're deeply attached to the idea of jobs, but I suspect many of us wouldn't have too much trouble getting over our attachment.

I think a distinction ought to be made between wage labor and other perfectly meaningful ways of occupying one’s time. Looking ahead, perhaps our cultural reverence for wage labor is misplaced. After all, one way to look at wage labor is it is a mechanism which forces us to spend time on what the short-term market thinks is valuable, rather than on what we as individuals think is valuable. Sure, lots of people love their jobs. But lots of people hate their jobs too. If you liberated all the people who hate their jobs from the constraints of wage labor, chances are a decent portion of them might find something else more productive to spend their time on. And society as a whole might benefit tremendously.

I do not rule out the possibility that eventually we may find a way to gainfully employ everybody while keeping our current system intact. If some human innovator does not crack this problem, then certainly a sufficiently powerful computer might. But I shouldn’t have to point out the absurdity of asking in effect, “Hey Hal, can you figure out what jobs we should be doing?” It seems to me that long before then, we ought to be re-examining whether we even want traditional jobs in the first place. Perhaps we should be working with machines in order to win the race against labor.

The authors repeatedly state that our institutions are losing a race with technology. But they do not consider the possibility that our economy itself might be one of these trailing institutions.

NOT TO OVERSTATE THE LEVEL OF DISAGREEMENT

Near the end of the book, the authors do admit that there are “limits to organizational innovation and human capital investment.” So most likely they would not be too surprised by many of the criticisms I’ve leveled above.

And I would agree with the authors that, excepting the jobs issue, all of these new technologies are unequivocally a good thing. There is clearly a lot of cause for optimism in the general sense.

If technology significantly brings down the cost of goods like health care, unemployment won't be so threatening.

In addition, if we can advance technology quickly enough there are two long term solutions to the unemployment problem. The first, direct intelligence augmentation, I have already mentioned above. The second solution involves cost of living. Specifically, if technology can significantly lower costs of living, then declining income prospects for average individuals will not sting so much. However, to accomplish this we would have to see dramatic drops in the price of essential goods like housing and healthcare, drops which may happen eventually, but may not arrive quickly enough to prevent social unrest.

CONCLUSION

In the final assessment, I think my biggest issue with this book is the way authors fail to effectively distinguish themselves from the “end-of-work” crowd. After stating in the opening chapter that they are “more optimistic” about the future of human labor, they do not present any credible reasons for such optimism. The authors may claim they do not believe in the “end of work,” but their claims will not prevent me from filing them next to Martin Ford and Jeremy Rifkin on my bookshelf.