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Journal of No. 118

December 21st, 2014

Which way to our technological utopia? @ 01:52 pm

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For decades, workers have been worried that automation and robotics would steal their jobs, and although it hasn't happened wholesale, we seem to be edging closer to realizing that future.

And it still remains an open question what the result is:

NF: In a thought experiment, you imagine an android that can do any job a human can. What would the implications be for society?
AM: One far-future scenario is something like a digital Athens, where the citizens are free to pursue their enlightened lives supported not by an army of human slaves but by automated technologies.

But the other scenario is something like dystopian science fiction, where a fairly small core of elites own the capital and the androids, and are walled off from the rest of society where people live without a lot of opportunity.

Recent history seems to be showing the gap between the haves and have-nots widening, which suggests we're headed for the dystopic version.

But while most of the focus has been on, say, robots taking over manufacturing jobs -- and soon, maybe, robots taking over burger-flipping, and other service jobs -- SciAm published an interesting Forum essay that makes me think about the more data economy in the same terms.

Interestingly, the online title is "How to Prevent the End of Economic Growth" while the print version is "The End of Economic Growth?"

Last September e-commerce giant Amazon acquired Twitch, a live-streaming video company, for $970 million. Not long ago a new billion-dollar company would have been a boon to job creation. Yet Twitch employs just 170 workers.


Whereas in 2013 IBM and Dell employed 431,212 and 108,800 workers, respectively, Facebook employed only 8,348 as of last September.

The reason these businesses spin off so few jobs is that they require so little capital to get started. According to a recent survey of 96 mobile app developers, for example, the average cost to develop an app was $6,453. Instant-messaging software firm WhatsApp started with a relatively meager $250,000; it employed just 55 workers at the time Facebook announced it was buying the company for $19 billion.

Just ponder the mismatch in those two numbers.

Again, the trope of yesteryear is that robots and automation increase efficiency, so that a handful of robots and a human overseer can do the job of 20 factory workers, making 19 employees superfluous.

But computer science and the internet have also made the information economy efficient. A few dozen employees can generate a billion dollars of value.

It would be nice to think that this tremendous value was just sort of being created, even better than pulling diamonds out of the ground through mining. To some extent this is probably true, and the pie is getting higher.

But I think there's a limit to that, and these grotesque deals are random lightning strikes that are creating -illionaire haves, and leaving behind relative have-nots. And as the spread continues, how do we navigate the course towards utopia?

Finally, while digital technologies may create fewer jobs than previous innovations, they also substantially reduce the amount of money it takes to start a new digital business—and that will make it possible for more people to become entrepreneurs. Indeed, self-employment might become the new normal. The challenge for economic policy is to create an environment that rewards and encourages more entrepreneurial risk taking. A basic guaranteed income, for instance, would help by capping the downside to entrepreneurial failure while boosting spending and combating inequality.

It might well be the answer, but don't hold your breath.
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Journal of No. 118