The Second Machine Age; Another Look at Things to Come.

The Second Machine Age: Work, Progress and Prosperity In A Time Of Brilliant Technologies, is downright fascinating.  Written by MIT wizards Erik Brynjolfsson and Andrew McAfee, this is a follow-up, in a way, to their previous collaboration Race Against the Machine.  They cram a lot of information into the 300 pages of the text.  The reports and books they cite alone compel the reader to check those out as well.

Let the authors explain their book themselves.

This is a perfect example of what they see happening.  Instead of me writing in-depth about the book, there is a YouTube clip of them at Google Headquarters in Silicon Valley doing the same thing.  Need I write more?  Then again…

YouTube presentation or not, it is worth repeating in good old-fashioned print that the authors drew up three broad conclusions about what’s going on right now and where it will all lead us.  First, new digital technologies, they show why and how the full force of these technologies have been achieved.  Second, The transformations brought by these technologies will be profoundly beneficial ones. Third, digitization will bring some big challenges “Technical progress is going to leave behind some people, perhaps even a lot of people, as it races ahead.”  Just like the steam engine and electricity, science and technology is unleashing forces that could be a boon to humankind; though for the man on the street possibly a mixed bag.

Technology can be a double-edged sword. In a nation with stagnant population growth, like Japan, the increased productivity generated by robots and apps can revive their economy. These new technologies can free up workers for other enterprises but also lower costs for exports which can restore the competitive edge that nation had in the 70’s and 80’s.

However, in developing countries, such as Brazil, the very same technology can eliminate the very jobs that those in the lower-income groups rely on for upward mobility; and a better future for their families.  It’s possible that the second machine age will trigger a Brazilian Miracle exactly like it experienced in the early 70s; annual growth rates reaching 9 percent, the upper classes and multinationals gaining a lion share of the new wealth, and those in the favelas lucky not to have their houses bulldozed.

Chapter 9, The Spread, really is interesting.  What they mean by the spread is the growing differences among people in wealth, income and other major circumstances in life (such as I would argue, education).  As they put it, “Digital technologies can replicate valuable ideas, insights, and innovations at very low-cost.  This creates bounty for society and wealth for innovators, but diminishes the demand for previously important types of labor, which can leave many people with reduced incomes” (Second Machine Age pg. 128).  However, not all jobs people do can be done, at least for the near future, by robots.  They list cooks, repairmen, dentists, home health care workers as occupations that need the human touch (you wouldn’t want your hair cut by a robot for example).  They also cite that wages for such jobs could decline as they become more sought after by people out of work.

They are correct in citing that the income of the median American Worker is lower in real dollars today in 1999 but let’s also compare its’ purchasing power compared to 1972, another benchmark year many studies have ueed.

“Technology is not only creating winners and losers among those with differing amounts of human capital, it is also changing the way national income is divided between the owners of physical capital and labor (people like factory owners and factory workers) the two classical inputs to production,”  (Second Machine Age pg. 142).

What these two men, along with Thomas Piketty, Richard Florida, and even Derek Thompson, show is a future that is elitist in structure with limited mobility.  It also means potentially many more falling through the cracks and just struggling to get by.   Brynjolfsson and McAfee fully understand this.  In Chapter 11, Implication of the Bounty and the Spread, they write that  “Too often, people at the bottom and middle stay where they are over their careers, and families stay locked in across generations.  This is not healthy for an economy or society.” (The Second Machine Age, pg. 171). Even today, at this moment, can one argue that a Second Machine Age might make conditions even worse?

In my opinion, based on what I have read, there will be a lot less winners than losers.  Brynjolfsson and McAfee write as much in a paragraph towards the end of the book, “We agree with our MIT colleague Tom Kochan who thinks of unemployment as a kind of ‘market failure’ or externality. That means that the benefits of increasing unemployment..reduced crime, greater investment, and stronger communities..extend to people throughout society, not just to the employer or employee who are party to the employment contract.  If unemployment creates negative externalities, then we should reward employment instead of taxing it (The Second Machine Age, pg. 239).

The authors do go in-depth discussing possible measures to address these potential problems, and admit that how slim they will be implemented. For example, a negative income tax is an excellent idea, but the odds of that being passed by the current Federal Government is the same as putting more dollars into infrastructure projects. The same goes with paying people via non-profits to do ‘socially beneficial tasks’.  True, Bill Gates and now Mark Zuckerberg donate billions of their tech-generated wealth to genuinely worthy causes, such as eliminating diseases in Third World countries. However, I don’t see any non-profits being set up to get unemployed American workers a job.  On the other hand, restarting startups (or getting the Zuckerbergs of the world to support existing ones like the Youngstown Business Incubator) and, more importantly, retooling our education system, I completely agree with.

The authors do believe that improving education will increase the bounty that needs to be spread among everyone by unleashing their creativity. Derek Thompson in his Atlantic article, and many others, hit on this as well.  The next big idea can be in the head of one high school student as we speak.  A new and improved education system can also dampen the effect the new technology would have on decreasing wages, “reducing the supply of unskilled workers will relieve some of the downward pressure  in their wages, while increasing the shortages in those areas, ” (The Second Machine Age, pg. 213).  In other words, if you take that online class in tech writing, for example, you won’t have to just apply for that customer service job that fifty other people are interviewing for; and possibly earn a little more money.

For those with a Liberal Arts Background like myself, the question is how good are the odds of being on the par with these technocratic wizards in the new age.  I looked up the Topcode website and it was strongly geared towards the computer tech crowd.  However, the idea of MOOC’s (Massive Online Open Courses), which I’ve heard about previously, seems very useful for those trying to continue to improve their skills. The thing is not everyone can be an entrepreneur.

There is also the question of privacy.  We are experiencing this dilemma already. “When information was mostly analog and local, the laws of physics created an automated zone of privacy.  In a digitalized world, privacy requires explicitly designed institutions, incentives, laws, technologies, or norms about which information flows are permitted or prevented and which are encouraged or discouraged,” (The Second Machine Age, pg. 253)

Now, the question is who will be the one responsible to create such institutions, incentives, and laws?  Logically, one would argue, it would be a nation’s government, in our case those folks within the Beltway working for the Federal Government.  Once again, in the political climate of the past few decades, this would be quite impossible to achieve, let alone get Congress to fund.   This fact applies to the other proposals mentioned in the book from a negative income tax to free college education; as the latter has proven to be the case.  They realize it too, but if that is the solution nobody wants to vote on, what are we left with?   Like Climate Change, this is a subject much discussed, and validated by experts but for the most part our politicians bury their heads in the sand over.

How would all this apply to a city like Cleveland?  After all, the First Machine age made Cleveland the 5th largest in the United States a century ago.  Today, not only is the city a shadow if its former glory, but the region as a whole is stagnating as well.  On the other hand, like in many rust belt cities, Cleveland has seen some positive things happen like people moving into downtown or the rise of an innovation district around University Circle.   However, while it appears that the new innovations in technology can in fact make the economic output of a city like Cleveland grow considerably and attract people with advanced degrees for some jobs, one can argue that for the most part, many people who going for retraining at such places as Cuyahoga Community College (Tri-C), might just find themselves back underemployed like they are now.

As Jean Harlow tells Marie Dressler about the book she read the other day in the 1933 movie Dinner at Eight, things like this have been on the our minds for a long time.

They end their book with the following phrase  “Technology is not destiny. We shape our destiny,” (The Second Machine Age, page 257). There are no truer words than that.

Clips courtesy of YouTube, can be removed at any time.


2 thoughts on “The Second Machine Age; Another Look at Things to Come.

  1. Pingback: A Second Machine Age; Another Look at Things to Come. | Mad Man On A Great Lake

  2. Pingback: Shades of Spring: A Quick Little Post | Mad Man On A Great Lake

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