Sunday, October 23, 2011

Race Against the Machine

Andy McAfee and I have just released a short e-book, Race Against the Machine. In it, we try to reconcile two important facts. 1) Technology continues to progress rapidly. In fact, the past decade has seen the fastest productivity growth since the 1960s, but 2) median wages and employment have both stagnated, leaving millions of people worse off than before. This presents a paradox: if technology and productivity are improving so much why are millions being left behind?

In the book, we document remarkable advances in digital technologies in particular. Innovations like IBM’s Watson, Google’s self-driving car, Apple’s Siri are turning science fiction into reality. Machines are doing more and more tasks that once only humans could do.

The good news is that this has radically increased the economy’s productive capacity – productivity is at record highs and increasing at an accelerating rate. The 2000s had faster productivity growth than even the booming 1990s. However, technological progress does not automatically benefit everyone in a society. In particular, incomes have become more uneven, as have employment opportunities. Recent technological advances have favored some skill groups over others, particularly “superstars” in many fields, and probably also increased the overall share of GDP accruing to capital relative to labor. While trillions of dollars of value were created between 2002 and 2007, over 60% of the increase went to the top 1%, as technology made it easier for them to leverage their talents globally.

The stagnation in median income and employment is not because of a lack of technological progress. On the contrary, the problem is that our skills and institutions have not kept up with the rapid changes in technology. In the past, as each successive wave of automation eliminated jobs in some sectors and occupations, entrepreneurs identified new opportunities where labor could be redeployed and workers learned the necessary skills to succeed. In the 19th and 20th centuries, millions of people left agriculture, but an even larger number found employment in manufacturing and services.

In the 21st century, technological change is both faster and more pervasive. While the steam engine, electric motor, and internal combustion engine were each impressive technologies, they were not subject to an ongoing level of continuous improvement anywhere near the pace seen in digital technologies. Already, computers are thousands of times more powerful than they were 30 years ago, and all evidence suggests that this pace will continue for at least another decade, and probably more. Furthermore, computers are, in some sense, the “universal machine” that has applications in almost all industries and tasks. In particular, digital technologies now perform mental tasks that had been the exclusive domain of humans in the past. General purpose computers are directly relevant not only to the 60% of the labor force involved in information processing tasks but also to more and more of the remaining 40%.

As the digital revolution marches on, each successive doubling in power will increase the number of applications where it can affect work and employment. As a result, our skills and institutions will have to improve faster to keep up lest more and more of the labor force faces technological unemployment. We need to invent more ways to race, using machines, not against them.

In the end, Andy and I are optimistic that that we can harness the benefits of accelerating innovation. But addressing the problem starts with a correct diagnosis, and that’s what our e-book sets out to provide.

Do agree with our diagnosis? What is your prescription?


  1. still has a lot to offer. Did you address it?

  2. What we call jobs AKA human rentals are a rather recent concept of mass scale centralized industrial economy. The economy has to evolve into decentralized and peer oriented production.
    The concept of 'corporation', 'employer' and 'employee' will become irrelevant in the new economy.
    The same automation process gives individuals ability to organize and develop swarms to do useful tasks.

  3. Will it be available on iTunes?
    Would really like to read it!

  4. I am legally blind and have an iPhone. This is what an iPhone does for me and how it effects our economy.

    iPhone -- Impact
    Talking/music alarm clock -- no more specialized clock radio
    Internet radio -- no more standard radio
    Calendar -- no more day planner
    iTunes Music Store -- no more physical music store
    Music player -- no more stereo
    App Store -- no mall software store
    Kindle -- no more book store
    ebooks -- no more print books
    ebooks -- no more physical book store
    iPhone reads books to me -- no more human readers required
    iPhone reads books to me – no more audio books bought
    Internet news -- no newspapers
    Internet books for blind -- no more library
    Google -- no more yellow pages
    Internet weather -- no TV weather man
    cell phone -- no more landline company
    email -- no Post Office
    GPS -- no more maps
    Calculator -- no physical calculator
    Voice recorder -- no more tape recorder
    Camera -- no separate camera
    Video camera -- no separate video camera
    Word processing -- no more desktop computer
    On line shopping -- no more mall stores
    Jim Nuttall, East Lansing, Mi

  5. Will it be available in print copy because our library is looking for a copy for our professor?

  6. To address the problem of technological displacement, the government should fund the development of Open Educational Resources to reduce the cost of education (see

    Also, in many cases, technology can obviate the need for large lecture classes (see

    Schools should use these materials and customize them as needed to provide the retraining necessary to help displaced workers.

    Also, employers should be given incentives to hire workers part-time so they work while they are being retrained.

    In general, I think we need to think about how we can use technology to work less and spend more time furthering our education both to make ourselves more employable and to enlighten our outlook on life.

    BTW: a single payer health care system would make it easier for employers to hire part time workers and it would make it easier to start and maintain a small business, too.

    Most economists assume that unemployment is a bad thing.

    And, to my knowledge, no major mainstream economist has suggested that we need to start planning for a future where the average employee spends less time on the job, and more time learning or in leisure pursuits.

    However, if we take futurists such as Ray Kurzweil seriously, the day when machines can out compete unenhanced humans at all jobs is in the offing (perhaps as in 30 years or less).

    Some economists say this won't be a problem because they assume that human wants are infinite.

    So, when machines can do all the work, this won't be a problem: humans will be able to kick back and let machines do all the work.

    But getting from today's economy to that ideal state might be a problem, especially if the richest 1% come to believe that the other 99% are an unnecessary drag on the worlds finite resources.

    We see something like this in countries that have oil or diamonds or some other resource that enables to ruling oligarchy to do without the rest of the population.

    So, in the near term we should be thinking about how displaced workers can be absorbed by letting other workers work less and by retraining displaced workers.

    Finally, if advancing technology enables us to radically extend the human lifespan, we need to consider the demographic effects of this change.

    Ideally, if the human lifespan is radically extended (say to 150 or to an indefinite lifespan) we will also be able to also extend human vitality.

    Of course, transhumanists like Ray Kursweil believes that in the not-too-distant future, humans will be able to upload their consciousness and memories into another substrait, so we can all become ultra-intelligent, immortal cybogs.

    If that happens, then the best case scenario would be if the cyborgs are happy to move off into space, and leave the earth behind to relatively less enhanced humans who let machines do all the work and spend their days studying the great works of humanity and enjoying their abundance of leisure time.

  7. When will a print edition be made available? (Sorry, old technology!) The problem with the current environment of ebooks is that there is no standard for them. So, if I don't have a Kindle (which I don't) I can't read it. So what not either 1) put it on your website as a PDF file and let us pay you to download it; or publish it as a pamphlet which we can order; or (best of all) publish it in more than one file format -- how about EPUB for example. Used to be I could read anything I wanted regardless of who published it. Now I've got to choose either the right reader or get more than one reader. How is this good? It's a decimation of the book market. Not good.

  8. Releasing your "book" only in electronic form is elitist! What are people without e-readers supposed to do?

  9. Great book. I wrote a detailed critique of it on my blog that I'd like to share:

  10. Thanks for taking the time to discuss this, I feel strongly about it and love reading more on this topic. If possible, as you gain knowledge, would you mind updating your blog with extra information? It is extremely helpful for me.

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