The Economist Book Review - The Second Machine Age

[johnkarls]

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The Economist – 1/25/2014

Learn ‘n’ go
How quickly can people learn new skills?

IN 2012 Erik Brynjolfsson and Andrew McAfee took a ride in one of Google’s driverless cars. The car’s performance, they report, was flawless, boring and, above all, “weird”. Only a few years earlier, “We were sure that computers would not be able to drive cars.” Only humans, they thought, could make sense of the countless, shifting patterns of driving a car—with oncoming traffic, changing lights and wayward jaywalkers.

Machines have mastered driving. And not just driving. In ways that are only now becoming apparent, the authors argue, machines can forecast home prices, design beer bottles, teach at universities, grade exams and do countless other things better and more cheaply than humans.

Mr Brynjolfsson and Mr McAfee, an economist and scientist respectively at the Massachusetts Institute of Technology’s Centre for Digital Business, first described this in 2011 in their self-published e-book “Race Against the Machine”. “The Second Machine Age”, which grew out of that earlier work, is an ambitious, engaging and at times terrifying vision of where modern technology is taking the human race.

Innovation has always driven advances in mankind’s standard of living, from agriculture to electricity. Information technology, the authors argue, is quantitatively and qualitatively different. It is, thanks to Moore’s law, exponential: its effects, barely perceptible for the first few decades, are turning explosive. It is also digital. Formerly complex tasks can be mastered then reproduced and distributed at almost no cost. Finally, it is recombinant, merging separate, existing innovations and innovators through networks and crowdsourcing.

This will have one principal good consequence, and one bad. The good is bounty. Households will spend less on groceries, utilities and clothing; the deaf will be able to hear, the blind to see. The bad is spread. The gap is growing between the lucky few whose abilities and skills are enhanced by technology, and the far more numerous middle-skilled people competing for the remaining jobs that machines cannot do, such as folding towels and waiting at tables.

Economists believe innovation is always good for society because workers displaced in one industry will find jobs supplying new goods and services. The authors acknowledge this but ask, “What if this process takes a decade? What if, by then, the technology has changed again?” Some people, they gloomily predict, will have nothing that employers will want even at a salary of a few dollars per hour, citing the example of horses, put forward by Wassily Leontief, an economist; they were never able “to adjust to the invention of the tractor.”

This has a familiar ring. A few years ago there were credible estimates that a quarter of American jobs could be sent offshore. Those apocalyptic totals seem unlikely ever to be reached. Mr Brynjolfsson and Mr McAfee may be similarly right about the potential for machines to displace middle-class workers, but wrong about the magnitude.

In case they turn out to be right, they offer prescriptions. People should develop skills that complement, rather than compete with computers, such as idea generation and complex communication. Policymakers should improve basic education, pour money into infrastructure and basic research, admit more skilled immigrants, and shift the burden of taxes from wages to consumption. This is sensible, but unsatisfying: it may expand the circle of winners and reshuffle its membership, though it seems unlikely that it will fundamentally alter the growing gap between them and the losers. The authors may not have the solution to growing inequality, but their book marks one of the most effective explanations yet for the origins of the gap.