Mini Review: Race Against The Machine

I came about this book in a rather convoluted way. The Amazon page for What Technology Wants recommended a book called Lights at the End of the Tunnel, and when I checked that out there was a link to an article in the New York Times featuring this new e-book about how technology will affect employment and the economy, both now and in the future.

Lights at the End of the Tunnel seems to be the main book on the subject, but I found Race Against the Machine to be a good introduction to the idea.  It’s a straight forward and interesting read, that can be finished in an evening.  A bargain at under £3.

One criticism: the authors finish on a vague positive note, which detracts from the argument that they are making – convincingly – in the rest of the book.  I guess they did not want to be portrayed as unremiting doom-mongers on the subject.

Also see:

• The Observer:  Middle class may see US-style income stagnation, warns White House economist

• The Observer:  What Britain must learn from the misfortunes of middle America

• Washington Post: Cloud centers bring high-tech flash but not many jobs to beaten-down towns

Here are my Kindle highlights / clippings for Race Against The Machine:

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.

And computers (hardware, software, and networks) are only going to get more powerful and capable in the future, and have an ever-bigger impact on jobs, skills, and the economy.

The root of our problems is not that we’re in a Great Recession, or a Great Stagnation, but rather that we are in the early throes of a Great Restructuring. Our technologies are racing ahead but many of our skills and organizations are lagging behind. So it’s urgent that we understand these phenomena, discuss their implications, and come up with strategies that allow human workers to race ahead with machines instead of racing against them.

We can’t win that race, especially as computers continue to become more powerful and capable. But we can learn to better race with machines, using them as allies rather than adversaries.

“Man is the lowest-cost, 150-pound, nonlinear, all-purpose computer system which can be mass-produced by unskilled labor.”

Whatever else computers may be at present, they are not yet convincingly human.

When you consider that the overall population has grown, the lack of job creation is even more troubling.

Lack of hiring, rather than increases in layoffs, is what accounts for most of the current joblessness.

Employers just don’t seem to have the same demand for labor that they once did.

Historically, increased output meant increased employment, but the recent recovery created much less employment than predicted; GDP rebounded but jobs didn’t.

The historically strong relationship between changes in GDP and changes in employment appears to have weakened as digital technology has become more pervasive and powerful.

For over 200 years, the economists were right. Despite massive automation of millions of jobs, more Americans had jobs at the end of each decade up through the end of the 20th century. However, this empirical fact conceals a dirty secret. There is no economic law that says that everyone, or even most people, automatically benefit from technological progress.

…technological progress is not a rising tide that automatically raises all incomes.

…wage divergence accelerated in the digital era.

According to economist Emmanuel Saez, the top 1% of U.S. households got 65% of all the growth in the economy since 2002. In fact, Saez reports that the top 0.01% of households in the United States—that is, the 14,588 families with income above $11,477,000—saw their share of national income double from 3% to 6% between 1995 and 2007.

… corporate profits have easily surpassed their pre-recession levels.

… corporate profits as a share of GDP are at 50-year highs. Meanwhile, compensation to labor in all forms, including wages and benefits, is at a 50-year low.

Technology has advanced rapidly, and the good news is that this has radically increased the economy’s productive capacity. However, technological progress does not automatically benefit everyone in a society.

… humans will eventually lose the head-to-head race against the machine.

Fortunately, humans are strongest exactly where computers are weak, creating a potentially beautiful partnership.

Smart entrepreneurs can, and will, invent ways to create value by employing even less skilled workers.

When significant numbers of people see their standards of living fall despite an ever-growing economic pie, it threatens the social contract of the economy and even the social fabric of society.

As digital technologies make markets and businesses more efficient, they benefit all of us as consumers. As they increase government transparency and accountability and give us new ways to assemble and make our voices heard, they benefit us as citizens. And as they put us in touch with ideas, knowledge, friends, and loved ones, they benefit us as human beings.

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6 comments

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