For much of the twentieth century, the American economy was like an 11-year-old boy: It went from shortest kid in the sixth grade class to tallest fast. Now, some economists are arguing that the growth spurt is over – in other words, we’re in period of economic stagnation – because we’ve been living off the “low hanging fruit” of technological innovation. That after great inventions such as the combustion engine, the computer, and their spinoffs, the economic benefit of innovation gets depleted.
In their new book, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, MIT’s Erik Brynjolfsson and Andrew McAfee put forward a far more optimistic view of the changes that technology will bring to our lives and economy. According to them, with the right policies and infrastructure in place, we needn’t be quite so worried.
1. In the book, you push back against Tyler Cowen’s “low hanging fruit” argument—that we’re in a technological plateau. So why should we expect that digital technologies will continue to bring prosperity?
We don’t like the ‘innovation as fruit’ metaphor, because innovation really isn’t about growing something new from scratch, then consuming it until it’s gone. Instead, it’s about recombining things that are already there into something novel and useful. The internal combustion engine, for example, has recently been combined with a bunch of sensors, lots of map data, and some bandwidth and computing horsepower to yield self-driving cars. The printing press has been combined with stereolithography, laser sintering, and other standard materials science techniques to give us 3D printers. We see countless examples like this. The digital revolution greatly accelerates such ‘recombinant innovation’ for two reasons. First, because hardware and software are often among the ingredients getting combined these days. And second, because the Net is a great way to spread new ideas and to collaborate, so it speeds up the process of putting elements together in new ways.
2. You use Facebook’s purchase of photo sharing app Instagram (for $1 billion in 2012) as an example of the bounty of the “second machine age.” However you also mention that Instagram now employs only 4,600 workers, while the photo film company, Kodak, at its peak employed 145,300 people. The sale of Instagram made a few people millionaires, but can the benefits of this accelerated digital innovation be widely shared?
The main benefit of Instagram is improved ability to take and share digital photos, and since it’s a free app this benefit extends to everyone with a smartphone. So it’s about as widely shared as it could be. It’s essential to keep in mind that not all economic benefits show up as jobs and wages; some of the most important ones appear as more goods and services of higher quality at lower prices. This is what we mean by the ‘bounty’ of technological progress.
We wrote The Second Machine Age in part because we’re concerned about the wage and job implications of the progress we’re seeing, but we’re emphatic that this progress is great news overall. To see if you agree, just ask yourself if you want to go back to a world where there are no digital photos and you had to buy film and get it developed every time you wanted to take a picture.
3. We’re familiar with the idea that machines will replace repetitive, blue-collar jobs. But you write in the book that technology may start to take over “knowledge work” in jobs we thought were safe, like translation, data analysis, or even journalism. Should we all just become personal trainers and priests?
We should all recognize that computers are rapidly getting better at many different types of pattern recognition and also mastering increasingly complex forms of communication. This means that work that relies heavily on those skills will become significantly more automated in the coming years. But we’ve still never seen an innovative or creative computer, or one with compassion or empathy, or one that could negotiate a complex deal or lead a team of people. So we think there will still be demand for many types of people in the economy of the future.
4. A recent study by Carl Benedikt Frey and Michael Osborne suggested that 47 percent of job categories may be open to automation within two decades. What are the skills a worker should develop in the hopes of keeping their job in this new era?
We need to keep in mind that in addition to destroying jobs, technological progress is also constantly creating jobs. And while the two of us are mindful of the job and wage challenges of the second machine age, we’re also optimistic that it will bring new opportunities. These opportunities will come not only to those with the talent and education required to become data scientists, robot creators, and other types of ‘alpha geeks,’ but also to people with creativity, compassion, dexterity, problem-solving ability, skill in negotiation and motivation, and many other abilities that remain uniquely human.
5. Which public policies would best support workers in the “second machine age”?
The U.S. economy is still adding jobs every month, so we’re not yet in the situation where the economy grows but the workforce shrinks. In short, economic growth still brings with it job growth. This means that the best way to help workers is to grow the economy faster. The economists’ playbook for how to do this is pretty well understood, and pretty basic: make sure our infrastructure is world-class and our education system is turning out workers with the right skills, put in place liberal immigration policies, make sure the environment is a welcoming one for entrepreneurship, and support basic research. We’re not doing a great job of following this ‘Econ 101 playbook’ very well at present, which is a shame. Before we worry too much that robots and AI are taking all of our jobs, let’s first follow this playbook earnestly and see what kind of job and wage growth we get as a result.