Since the day someone invented a mechanical loom 400 years ago, pessimists have been claiming that technology will destroy jobs. The reality is far more complex. Technology destroys jobs while creating others that no one anticipated or imagined. In our time innovation is not so much eliminating jobs as changing the shape, duration, and rewards of a career. For many, though not all of us, this has been a very positive development.
The authors of “The Second Machine Age” have offered another explanation of how the process of innovation destroys older forms of employment and brings new, better jobs in its wake. From a review in the Washington Post:
The big winners in this new era will be consumers, who will be able to buy a wider range of higher-quality goods and services at lower prices. The other winners will be those who create and finance the new machines or figure out how best to use them to gain competitive advantage. Great wealth will be created in the process.
To illustrate the point, Brynjolfsson and McAfee cite the example of Instagram and Kodak. Instagram is a simple app that has allowed more than 130 million people to share some 16 billion photos. Within 15 months of its founding, Instagram was sold to Facebook — a company with 1 billion users — for $1 billion. It was only a few months later that Kodak, the Instagram of its day, declared bankruptcy. The authors use this little vignette to illustrate two points. The first is to point out that the market value of Facebook/Instagram is now several times the value of Eastman Kodak at its peak, creating, by their calculation, seven billionaires, each of whom has a net worth 10 times greater than George Eastman ever had. Such is the “bounty” of the second machine age.
But the evolution of photography also demonstrates how unevenly that bounty has been divided — what the authors somewhat inelegantly call the “spread.” Not only has it created a new class of super-rich entrepreneurs and investors, but it has done so with a company that employs only 4,600 workers. Compare that with Kodak, which at its peak employed 145,000 workers in mostly middle-class jobs.
And what do these brilliant minds suggest should be done at a political level to adapt our culture to the opportunities and demands of “the spread.” You may have heard this idea mentioned somewhere before:
To deal with what they see as the inevitable increase in income inequality, the MIT duo would turn to a negative income tax, with which the government would assure a minimum income to anyone who works — an old idea now gaining popularity on both the left and the right.
That’s why business-oriented minds on the right are talking about a new approach to the social safety net instead of endorsing the Cruzian notion of burning the whole thing down. The rapid acceleration of technology present us with opportunities which we could easily fumble if we fail to recognize the meaning of this change.