Saturday, August 6, 2011

Professor Jarvis's Homework Assignment: Jobless Future?

I'm glad that Jeff Jarvis is a professor. Nobody gives great homework assignments like his. I'll welcome comments here as always, but follow the link below if you want to join in the real discussion.

Jarvis announced his intention to give the following talk at SXSW on Google+:
The SXSW proposal title is, "Honey, we shrunk the economy."
The proposal: Technology now leads to efficiency over growth. That means that we're not going to have a jobless recovery. We're going to have a jobless future. Pick any industry and see how technology, the internet, global connectedness, and transparent markets are bringing tremendous efficiency. Newspapers have shrunk by hundreds of thousands of jobs and may disappear -- while news expands at less cost. Borders, Circuit City and untold stores are gone, replaced by a new retail supply chain -- aka, Amazon. Construction has imploded and won't reinflate and recreate jobs. We will discuss the implications for business, technology, education, and policy. Instead of bailing out the old institutions -- GM, banks, even governments -- we should enable and invest in the entrepreneurs who will disrupt them. Education must shift to nurturing those entrepreneurs and retraining the jobless. We must invest in efficiency. Help me explore these ideas, this future. 
Questions I propose to address with the room:
Why is technology different now? Why isn't it creating more jobs than it kills?
How are incumbent institutions preventing change and slowing this progress?
How should government help this process? Can it?
How must education change to serve such a world?
Are we headed to an economy no longer built on growth but instead on efficiency?
And that room, I hope, will be filled with he entrepreneurs and technologists who are creating this future, the investors who are funding it, the educators who are supplying it, the government wonks who should be enabling it and the rest of us who are trying to figure it out.
First off, I'm not sure that we're destined for a jobless economy, and I'm not sure Jarvis is either, but he likes to go a bit over-the-top, (it's his shtick) so I won't quibble with the plainness of his statement.

I do have some direct comments to some of his points. Jeff's original text highlighted below:
Education must shift to nurturing those entrepreneurs and retraining the jobless. We must invest in efficiency.
Retraining can soften the blow somewhat, but let's face it--most government jobs programs are largely about digging, and then filling holes. And, not to be tautological, but if efficiency is killing jobs without replacing them, is investing in efficiency going to change that effect, or just speed it up?

On to his questions:

1) Why is technology different now? Why isn't it creating more jobs than it kills?

It may eventually build new markets we didn't know existed. The entire news/entertainement/leisure industry only popped into existence as we gained the leisure time to spend on it (See Shirky's talk about the 5-day work week and cognitive surplus). Filling our leisure time wasn't a viable market until the 20th century, and it was created out of whole cloth thanks to the technologies that enabled efficiency (i.e. the assembly line and agricultural automation). I wonder if these transitions were as smooth as they look from our viewpoint in history. Maybe people asked these exact same questions as they moved from farms to cities?

The unique problem right now is that many people think they've identified this next stage of post-industrial economy as "the knowledge economy" (something you tacitly appear to agree with when you suggest retraining), which is when the second part of the problem kicks in (Shirky's "double whammy" you commented on earlier): if we're increasingly creating and sharing for each other for free, there's going to be an economy there to retrain for? We are starting to use our leisure time to help fill the leisure time of others, thanks to the Internet. This new internet infrastructure is extremely efficient, and maintaining it can't possibly be enough of a need to employ the displaced. We need something new, and it has to be something that we're not really willing to do for free (that's why we get paid, right?)

2) How are incumbent institutions preventing change and slowing this progress?

Short answer "any way they can." The MPAA and RIAA are increasingly defending intellectual property rights in the face of a sea-change of technology that shows us how fragile and impossible it is to keep a business running when you depend on people *not* copying bits.

Software companies are increasingly engaged in ridiculous patent wars that stifle innovation instead of spur it on.

I'm not weighing in on whether intellectual property as a concept is good or bad, (I have my opinions) but I think in the face of technology today, it's simply untenable in the long run. The technology to copy bits will outstrip the technology and cost to enforce their protection. It will be increasingly diificult to impose artificial scarcity, and thus impose market forces on what are essentially ideas and expressions.

And if you think it's bad now, wait until we get 3D printers online, cheap, and ubiquitous.

3) How should government help this process? Can it? 

I divide my answer into two parts. The cynic in me says, flat out, "It won't". In 2006, Yochai Benkler wrote, in _The Wealth of Networks_:
For the most part[...] the state in both the United States and Europe has played a role in supporting the market-based industrial incumbents of the twentieth-century information production system at the expense of the individuals who make up the emerging networked information economy. Most state interventions have been in the form of either captured legislation catering to incumbents, or, at best, well-intentioned but wrongheaded efforts to optimize the institutional ecology for outdated modes of information and cultural production. 
I have found no indication that this trend is going to change.

On the other hand, the pragmatist in me says that, if there was a way that government could help, not the transition itself, but to ease the pain of it, it would be to stop trying to inflate the economy to cope with all of our debt (personal and national), and find a more meaningful way to deleverage ourselves. Many of the benefits people could see from the disruption and efficiency brought about by technology rely on lowering our cost-of-living through it. effectively deflating the economy. We may make less, nominally, but we'd spend less, thanks to efficiency being passed on to us. Let's call this the "Walmart" effect for a moment. The problem we'd have to solve is paying back all of our debts in deflated dollars. In a deflationary economy, you borrow cheap money up front, but then have to pay it back with the same "amount" (nominally) of expensive money down the road. It's a non-starter with all of us leveraged to our eyeballs. I don't see an easy way through this problem.

4) How must education change to serve such a world?

Mostly, I think our expectations of education have to change. Let's leave the skills and knowledge aside we are supposed to get from our education aside for a moment. In the 20th century, the education system was built to teach us certain intrinsic values as well as skills. In k-12, we show up on time, 5 days a week, and have a teacher broadcast accepted knowledge top-down from the front of the room, which we were quietly to consume. Then students regurgitate spoonfed answers back to verify them for quality control. This level of education would largely prepare us for blue-collar jobs.

In college we're taught, in addition, how to navigate a complicated beauracracy, get our paperwork filed the right way, and the top-down model was expanded to show that, if properly trained and credentialed, we may be able to add to that knowledge base in our professional lives. This would prepare us for white-collar jobs.

This education system was built in the 20th century for 20th century work. Entrepreneurs are almost always some form of outcast our outsider to this progression. We trained against entrepreneurship, and instead trained excellent workers. If you jumped through all the hoops the right way, you were rewarded with the reasonable expectation of a career.

We need to teach entrepreneurship, independence, and initiative from the start. I don't know how to achieve this, or if it can even be done, but I think that's the target we need to aim for.

5) Are we headed to an economy no longer built on growth but instead on efficiency?

Efficiency can fuel growth if there's a proper channel for it. When agricultural automation started taking over farms in the 19th and 20th centuries, people started to leave for the cities, to build the machines that would make our food instead of making the food directly. This produced a new set of problems as we coped with managing the needs of city life. Each new practical problem to solve created a market. We need to transport machines to the country and food back to the city. We need to store food in the city instead of consume it on the spot. We need food prepared for us. We need sanitation, advanced construction, a more concentrated police force, etc. We need services and entertainment to soak up our free time on the weekends and cope with our alienation from work that was less connected to the products of our labor (God, I sound like a Marxist). Each of these needs and desires created brand new markets, entrepreneurs, and and ever increasing need for new technology. (Whew, capitalist again.)

As we migrated to cities in the 19th and 20th centuries, for the first time ever, our life wasn't just about working sunup to sundown to put food on the table. Work was part of our lives but not the sum total. I think there's a kernel of insight here into what possibilities are next for us.

The real question is, what are the direct and personal needs of the 21st century that we need to pay people to do, and which will we do for each other for essentailly free thanks to the Internet and intrinsic motivation to create and share? What markets are going to have to spring up out of whole cloth to fill those needs and desires that we won't fill intrinsically?

Hopefully some of the very smart people listening to your talk at SXSW have some ideas.

Friday, August 5, 2011

Jobless Recovery or Jobless Future: A Reply to Jeff Jarvis

 suggests over on a Google+ post, that "We're not going to have a jobless recovery. We're going to have a jobless future. "

Back in 2009, he sent me and others off on this topic, so I thought it deserved a thorough response now that he's announced his intention to focus on the issue again. I wanted to reproduce my response here, but I encourage any readers to carry on the discussion over on his g+ post. 

Here's my response:

Jeff -- you sent me down this rabbit hole back in 2009, and I haven't emerged since. I'm glad to see you've circled back around to it, because I think it's terribly important, and few people could focus attention on it like you can.

I take it as given that disruptive innovation, particularly at present, yeilds efficiency more than it yields growth. (Mike Masnick would probably kick me in the shins for saying this so plainly, as he did here).

In many ways, however, I think Masnick is correct. The post he was responding to was focussed merely on the *threat* side of the equation. We can't forget that the upside of this disruptive efficiency is that consumers reap the benefits of it in terms of lower cost-of-living. 

So the real question becomes: can we reap the benefits at a rate that corresponds to the pain that transitioning the workforce is costing us? 

As I said in the linked post above:
"[Disruptive efficiencies] cost jobs and are not likely to replace them. Too many of these jobs relied on the traditional inefficiencies of their business models--inefficiencies that have been *eliminated*, not just shifted to new markets. The closer the markets are to intellectual property, the faster they fall.
Lastly, all of these displaced professionals are going to go seeking work in still-viable markets, if they can attempt the transition at all. The labor supply will increase as both knowledge markets and traditional markets restructure to take advantage of new efficiencies, and that restructuring will include taking advantage of the aforementioned increase in labor supply. Hours will be cut. Wages will fall. So too will the cost of living fall as these efficiencies are passed on the consumer. *The balance between these two forces will be the key to determining how painful the transition is.*"
Again, is our current economic discomfort a temporary situation, caused by the difficulties in transitioning our workforce, or is it a more permanent restructuring? The same question may have been put to a farmer at the turn of the 20th century, or (closer to home for me) a factory worker in 1980's Detroit. Today, America produces more food than it did 100 years ago, and (contrary to commonly-held belief) manufactures more than it did 25 years ago. But much like you point out in your post, increased production (in those markets) does not equal increased employment when new efficiencies are introduced.

Consumers may reap the benefits of efficiency, but can it make up for the costs in terms of employment? Finding a meaningful measurement of those two rates of change, I think, are key to properly addressing this very important predicament.


Followup questions still to be framed and wrestled with:

1) Unintended consequences of deflation:

Assuming that deflation wouldn't be so terribly if we could capture the benefits of it (i.e. Would you take a 20% pay cut if bread, housing, music, movies, etc. were 20% cheaper?), what other unintended consequences would deflation hold (since public policy at present is trying desperately to use inflation to ease our debt burden)? You see, we've already agreed to past prices for these things (largely mortgages), but would be asked to pay them back in future deflated dollars. This is a huge problem, since we're all in debt up to our ears.

2) In a world of bits. not atoms (your term, which I love, Jeff), we're increasingly creating value for each other without exchanging money. Price can't always capture value. What happens to the supply-and-demand curve when supply is practically infinite? See my post on Scarcity, Abundance, and the Knowledge Economy.


Lastly, you may want to check out this excerpt from Kevin Carson's book as well. It's barking up the same tree. It also rightfully credits you with stirring up this conversation in the first place.