The Next Industrial Revolution

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Hendricks Dewayne <dewayne () warpspeed com>
> Date: September 29, 2016 at 10:31:22 AM EDT
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] The Next Industrial Revolution
> Reply-To: dewayne-net () warpspeed com
>
> The Next Industrial Revolution 
> An interview with the Economist columnist Ryan Avent on his new book about how technology will change the labor force
> By DEREK THOMPSON
> Sep 6 2016
> <http://www.theatlantic.com/business/archive/2016/09/the-next-industrial-revolution/498779/>
>
> A “crisis of abundance” initially seems like a paradox. After all, abundance is the ultimate goal of technology and 
> economics. But consider the early history of the electric washing machine. In the 1920s, factories churned them out 
> in droves. (With the average output of manufacturing workers rising by a third between 1923 and 1929, making more 
> washing machines was relatively cheap.) But as the decade ended, factories saw they were making many more than 
> American households demanded. Companies cut back their output and laid off workers even before the stock market 
> crashed in 1929. Indeed, some economists have said that the oversupply of consumer goods like washing machines may 
> have been one of the causes of the Great Depression.
>
> What initially looked like abundance was really something more harmful: overproduction. In economics, as in anything, 
> too much of a good thing can be problematic.
>
> That sentiment is one of the central theses of The Wealth of Humans, a new book by the Economist columnist Ryan Avent 
> about how technology is changing the nature of work. In the next few years, self-driving cars, health-care robots, 
> machine learning, and other technology will complement many workers in the office. Counting both humans and machines, 
> the world’s labor force will be able to do more work than ever before. But this abundance of workers—both those made 
> of cells and those made of bits—could create a glut of labor. The machines may render many humans as redundant as so 
> many vintage washing machines.
>
> Once again, what once seems like abundance will instead be over-supply: The machines may invent their makers out of 
> work.
>
> Last week, I spoke with Avent about his book, how his theories might help to explain the 2016 election, and the 
> future of working. The following conversation has been edited for clarity and concision.
>
> Derek Thompson: In classic Economist style, your title, The Wealth of Humans, is doing double or triple duty. First, 
> it’s a play on Adam Smith’s The Wealth of Nations, and indeed there’s a lot of Smith in here. Second, it’s a book 
> about the most common definition of wealth, money, and how it might be earned and distributed in the future. Third, 
> it’s about Merriam-Webster’s second definition of wealth, which is a surfeit, a surplus, and your argument is that we 
> may be entering a world with too many workers. Anything I’m missing?
>
> Ryan Avent: Those were the ones I had in mind. There may be others lurking.
>
> Thompson: There is an ongoing debate about whether technological growth is accelerating, as economists like Erik 
> Brynjolfsson and Andrew McAfee (the authors of The Second Machine Age) insist, or slowing down, as the national 
> productivity numbers indicate. Where do you come down?
>
> Avent: I come down squarely in the Brynjolfsson and McAfee camp and strongly disagree with economists like Robert 
> Gordon, who have said that growth is basically over. I think the digital revolution is probably going to be as 
> important and transformative as the industrial revolution. The main reason is machine intelligence, a general-purpose 
> technology that can be used anywhere, from driving cars to customer service, and it’s getting better very, very 
> quickly. There’s no reason to think that improvement will slow down, whether or not Moore’s Law continues.
>
> I think this transformative revolution will create an abundance of labor. It will create enormous growth in [the 
> supply of workers and machines], automating a lot of industries and boosting productivity. When you have this glut of 
> workers, it plays havoc with existing institutions.
>
> I think we are headed for a really important era in economic history. The Industrial Revolution is a pretty good 
> guide of what that will look like. There will have to be a societal negotiation for how to share the gains from 
> growth. That process will be long and drawn out. It will involve intense ideological conflict, and history suggests 
> that a lot will go wrong.
>
> Thompson: Even I would admit that is a weird time to predict the end of work, considering that the unemployment rate 
> has been at or under 5 percent all year, the private sector in the U.S. has created jobs for record-high 77 
> consecutive months, and wages are actually rising at their fastest rate since the Great Recession.
>
> So what is the best evidence that your prediction is plausible?
>
> Avent: I would say the best evidence comes from the wage growth numbers. I know we’ve experienced an uptick in recent 
> months, but we’re seven years into the recovery and still well short of the level of nominal wage growth we would 
> expect, even compared to recent disappointing recoveries. In the bigger picture, for a lot of middle-skilled workers, 
> especially men, you have stagnating wages for several decades. Apart from the top 1 percent, a lot of people are 
> having a lousy time.
>
> If you look at the experience of rich countries across the world, you see there is a tradeoff between wage growth, 
> productivity, and employment growth. Employment in Britain is at an all-time high, and wage growth there has 
> underperformed America and most of Europe. This suggests that the main way that employers are using people in 
> countries like the U.K. is to use them to do low-productivity work.
>
> Thompson: There is a familiar story of technology and the labor force that one might call the “we used to” story. We 
> used to work on farms, we used to work in textiles, we used to work in factories … What’s the next chapter of the “we 
> used to” story? What sector currently employing a lot of Americans is the lowest-hanging fruit for disruption?
>
> Avent: Driving is certainly an area where we’ve seen more rapid progress than I would have guessed. Truck drivers, 
> bus drivers, and train drivers have pretty good pay and those account for millions of jobs. Most importantly, there 
> seems to be an interest among companies employing those workers to bring [the tech that would replace humans] 
> forward. In the long run, I’m optimistic for technology to transform health care, but that’s a harder sector to 
> disrupt.
>
> Machine intelligence will be applied in ways we cannot imagine yet. One example is talking. Today, if you have a 
> problem with a car company, you might end up conversing with a bot over the phone. Those are conversations that we 
> thought weren’t automatable that are now. We used to employ a lot of people to talk to people and people have those 
> conversations with bots.
>
> [snip]
>
> Dewayne-Net RSS Feed: <http://dewaynenet.wordpress.com/feed/>



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