Technology, the economy and pool cleaning. By Chrystia Freeland. Reuters, February 21, 2013.
Book review: “The Future: Six Drivers of Global Change” by Al Gore. By Chrystia Freeland. Washington Post, February 22, 2013.
Freeland, Technology . . .:
One way
to divide people is into foxes and hedgehogs. Another is into those who think
this time is different and those who believe there is never anything new under
the sun.
The
latter split can be a matter of temperament, of politics or even of religion.
But today it is relevant for another, more urgent reason: It describes how
people think about the most critical economic problem in the industrialized
world today — the dearth of well- paying middle-class jobs.
The
this-time-is-different school attributes a lot of what is happening to the
technology revolution. That makes them an intellectually eclectic bunch. On one
hand, they include wide-eyed enthusiasts who believe in human progress and in
the transformational power of technology. But they also include grim
hand-wringers who fear the unprecedented changes may bring unprecedented woes.
That
combination of Pollyanna and Cassandra is perfectly embodied in the
multifaceted mind of Al Gore. Gore is a longtime fan of the geeks, and in his
post-political life he has very nearly become one of them, with his seat on the
Apple board and senior partnership with Kleiner Perkins Caufield & Byers, a
leading venture capital firm in Silicon Valley.
It thus
comes as no surprise that in his new book, “The Future,” Gore foresees a world
of “hyper-change” in which the technology revolution is “carrying us with it at
a speed beyond our imagining toward ever newer technologically shaped realities
that often appear, in the words of Arthur C. Clarke, ‘indistinguishable from
magic.’”
But
Gore has also always been part Savonarola — remember the campaign of his
estranged wife, Tipper, against music with “profane language” — and his
conviction that this time is different has a sharp edge. In “The Future,” Gore
admits that the Luddites, who feared that the Industrial Revolution would
create structural unemployment, were wrong: “The new jobs that emerged in
factories not only outnumbered those lost on farms but produced higher incomes,
even as farms became far more productive and food prices sharply declined.”
Yet he
warns that there is no guarantee history will repeat itself. In particular,
Gore worries that thanks to the technology revolution, the traditional link
between rising productivity and a rising standard of living for the middle
class has been broken. He fears that severed link may be causing the economic
slowdown in the developed economies: A weakened middle class lacks the spending
power to drive growth.
One of
the smartest academics studying this phenomenon is Erik Brynjolfsson, a
management professor at the Massachusetts Institute of Technology.
Brynjolfsson, who co-wrote the new book “Race Against the Machine,” also
believes the technology revolution is having a powerful and unprecedented
impact.
“Most
of the debate in Washington is really playing small ball and is missing the
tectonic changes in the way the economy works, which are driven by technology,”
he said recently. “This is the big story of our time, and it is going to
accelerate over the next 10 years.”
Like
Gore, Brynjolfsson thinks the canary in the coal mine is the decoupling of
gains in productivity and in wages. “Productivity since 2000 has grown faster
than in the ’70s, ’80s or ’90s,” he said. “But starting in the late 1990s,
we’ve had this decoupling of wages from productivity.”
Brynjolfsson
believes this break is a historic watershed. “There have been big economic
changes in the past, but productivity and jobs tracked each other pretty
closely,” he said. “It is only since 1997 that they decoupled. There is no
economic law that says they go together.”
That is
a change with tremendous social and political implications. As Brynjolfsson put
it: “A lot of economists felt that as long as productivity was growing, things
would take care of themselves. That’s no longer true.”
This is
indeed a watershed moment: Productivity and innovation, the focus of
policymakers and business leaders, no longer guarantee widely shared
prosperity. “Digital technologies are different in that they allow people with
skills to replicate their talents to serve billions,” Mr. Brynjolfsson said.
“There is really a drastic winner-take-all effect because every industry is
becoming like the software industry.”
Classical
economic theory isn’t entirely wrong. The danger isn’t — as it was easy to fear
during the depths of the financial crisis — structural unemployment. The
problem is what kind of jobs, at what kind of salaries, the shiny new
technologically powered economy of the future will generate.
Lawrence
H. Summers, the Harvard professor and former Treasury secretary, has a vivid
way of describing the dystopian possibility. “As economists like to explain,
the system will equilibrate at full employment,” Summers said in a public
interview at the World Economic Forum in Davos, Switzerland, last month. “But
maybe the way it will equilibrate at full employment is there’ll be specialists
at cleaning the shallow end and the deep end of rich people’s swimming pools.
And that’s a problematic way for society to function.”
This is
a personal problem — who wants to prepare their children for a life of deep-
and shallow-end cleaning? It is also a political one. As Brynjolfsson points
out, the technology revolution also has winners. The share they reap from the
increase in productivity is greater than ever, and they might quite like a
world of specialists in various depths of pool cleaning.
