Just finished reading the Second Machine Age by Erik Brynjolfsonn and Andrew Mcafee last week. I am quite passionate on the general subject covered in the book. The authors pose a lot of good questions on how will the world, and most importantly the human race, cope in this age of profound technological advancements.
Today if we were to predict which set of tasks will never be taken away by machines - at least for the next few decades, we can hardly be confident. Just to drive home the point, a couple of tasks from Levy and Murnane's New Division of Labor (2004) are cited which those authors classified as "unconquerable" by machines - driving cars and complex communications like a question and answer. And within 10 years what do we have? Google's Chauffeur project demonstrated flawless driving by autonomous cars in busy highways and IBM Watson’s victory over humans in Jeopardy! Now add to that the tremendous innovation going in perfecting humanoid robots that are already getting deployed in factories, warehouses, offices, battle zones and so on.
The main argument in the book on why the current environment is so right to spawn the technology advancements rests on 3 pillars –
i) continued exponential improvements in computing: Every critical component in computing like microchip density, storage, speed of internet and so on is improving exponentially since last several decades.
ii) ability to digitize real world things: With explosion in sensors and transmitters technologies, real world things are now easily ‘encoded’ in bits which can be read and processed by computers. The two properties of digital information namely non-rival (can be consumed millions of times without decay) and trivial marginal cost of production make it extremely extensible for re-purposing for a wide variety of applications.
iii) combinatorial nature of current innovations: In the current world, combining existing blocks and coming out with new products is becoming easier. Today economic growth is no more constrained by the number of new ideas coming up. On the contrary, it is more limited by the ability to process the millions of new ideas that are generated. And today’s digital environment (internet) provides the platform to test out most of the new ideas with billions of people.
The traditional GDP measure is hardly relevant in the new economy with zero price digital goods in abundance and the population ‘working’ millions of hours on them completely uncompensated. These activities/transactions do not make into the GDP. We need new measures in this digital age. The most worrisome trend in this new economy is the skill-biased nature of the jobs demanded by the economy. That creates a big inequality. The average income is pulling apart from the median income in the economy and the top 5% - 10% capture most of the wealth.
To understand why incomes are getting more lopsided, we need to appreciate the property of the digital technologies that allows anyone to replicate and sell their work across the globe easily. Think of books, audio, business services and so on. The spread and reach of someone's market have increased manifold today. This allows a small relative advantage in skills to turbo-charge income differences. Second-best performers stand little chance to create local markets as the top performer/provider is able to spread in all markets. This creates winner-takes-all societies as superstars can capture most of the value.
Increasingly income distributions start following power curves where a very small percent – the superstars - earns a lot of money and a significant portion of the population is below average. This is so unlike normal curves that we are used to and have hundreds of models where the distribution is loaded in the middle and describes the typical middle class. The book has a few useful suggestions on how education and policies need to change to keep up. But admittedly it takes decades to mainstream some of the ideas proposed.
We need to be careful as we raise and train our kids to face the world in the next few decades. Horses and oxen were permanently put out of employment with the technological advancements in farm and war fields. We cannot afford to have the coming generations face such consequences – we need to devise ways to exist beside the fantastic machines getting developed.
Today if we were to predict which set of tasks will never be taken away by machines - at least for the next few decades, we can hardly be confident. Just to drive home the point, a couple of tasks from Levy and Murnane's New Division of Labor (2004) are cited which those authors classified as "unconquerable" by machines - driving cars and complex communications like a question and answer. And within 10 years what do we have? Google's Chauffeur project demonstrated flawless driving by autonomous cars in busy highways and IBM Watson’s victory over humans in Jeopardy! Now add to that the tremendous innovation going in perfecting humanoid robots that are already getting deployed in factories, warehouses, offices, battle zones and so on.
The main argument in the book on why the current environment is so right to spawn the technology advancements rests on 3 pillars –
i) continued exponential improvements in computing: Every critical component in computing like microchip density, storage, speed of internet and so on is improving exponentially since last several decades.
ii) ability to digitize real world things: With explosion in sensors and transmitters technologies, real world things are now easily ‘encoded’ in bits which can be read and processed by computers. The two properties of digital information namely non-rival (can be consumed millions of times without decay) and trivial marginal cost of production make it extremely extensible for re-purposing for a wide variety of applications.
iii) combinatorial nature of current innovations: In the current world, combining existing blocks and coming out with new products is becoming easier. Today economic growth is no more constrained by the number of new ideas coming up. On the contrary, it is more limited by the ability to process the millions of new ideas that are generated. And today’s digital environment (internet) provides the platform to test out most of the new ideas with billions of people.
The traditional GDP measure is hardly relevant in the new economy with zero price digital goods in abundance and the population ‘working’ millions of hours on them completely uncompensated. These activities/transactions do not make into the GDP. We need new measures in this digital age. The most worrisome trend in this new economy is the skill-biased nature of the jobs demanded by the economy. That creates a big inequality. The average income is pulling apart from the median income in the economy and the top 5% - 10% capture most of the wealth.
To understand why incomes are getting more lopsided, we need to appreciate the property of the digital technologies that allows anyone to replicate and sell their work across the globe easily. Think of books, audio, business services and so on. The spread and reach of someone's market have increased manifold today. This allows a small relative advantage in skills to turbo-charge income differences. Second-best performers stand little chance to create local markets as the top performer/provider is able to spread in all markets. This creates winner-takes-all societies as superstars can capture most of the value.
Increasingly income distributions start following power curves where a very small percent – the superstars - earns a lot of money and a significant portion of the population is below average. This is so unlike normal curves that we are used to and have hundreds of models where the distribution is loaded in the middle and describes the typical middle class. The book has a few useful suggestions on how education and policies need to change to keep up. But admittedly it takes decades to mainstream some of the ideas proposed.
We need to be careful as we raise and train our kids to face the world in the next few decades. Horses and oxen were permanently put out of employment with the technological advancements in farm and war fields. We cannot afford to have the coming generations face such consequences – we need to devise ways to exist beside the fantastic machines getting developed.
No comments:
Post a Comment