Monday, March 30, 2015

William H. David — The Internet Has Been a Colossal Economic Disappointment


This gets it backwards. The purpose of technological innovation is not to create jobs but to increase productivity, which generally means replacing jobs and making space for increased leisure. 

Technological innovation increase makes work obsolete. This has been the historical result of technological innovation. 

If there is a problem, it's with distribution of increasing surplus in order to increase shared prosperity.

Harvard Business Review — HBR Blog Network
The Internet Has Been a Colossal Economic Disappointment
William H. Davidow | Mohr Davidow Ventures

13 comments:

Roger Erickson said...

This is true tragicomedy.

All progress is a disappointment ....

to Luddites.

Ignacio said...

Wait for the (ongoing) AI revolution in a few decades, you can say good bye to ~30% of the jobs. Is the future everybody being in a sucker retail job (as human-looking cyborgs may take a while yet) serving coffees at Starbucks?

Better to start rethinking 'work' unless the oligarchs want to end up hanging on light poles. And the population, smarten up already...

Dan Kervick said...

Increasing productivity can create jobs under the right circumstances (or at least not destroy jobs). It can lower production costs and prices, and lead to increased demand for those products. This sometimes has beneficial side effects for other areas (If more people can afford smart phones, then more people are in need of cell phone carriers, more people can buy apps, etc.) Also, if people have broad access to capital and training, workers freed up by the destruction of old jobs are now available to supply work for new businesses and industries.

Moving from old outdated employment structures to new, more productive and innovative ones - while preserving full employment - requires some strategic government leadership in economic strategy, education, mission-oriented public investment and also maintaining broad access to capital. The Chinese have been destroying old jobs by the millions, but creating many new ones to replace them. When government drops the ball, as it has in the US, and allows capital and opportunity to become excessively concentrated, and allows economic cancers like the Rust belt to continue untreated with no strategic plan for re-allocating labor, you get stagnation. And as a result people also lose faith in progress and innovation, and begin demanding reactionary job-preservation strategies.

Tom Hickey said...

Right, but he is talking about technological innovation not producing jobs directly. But let's simply and assume that those who are replaced by "disruptive technology" choose leisure. Well, contrary to the assumption of many, leisure doesn't mean sitting around doing nothing, or "goin' fishin'."

Those at leisure want to experience interesting things, improve themselves, be creative, etc. and this produced a need for both additional employment to serve new needs and wants, and new types of employment, too. It also results is increased demand for existing products and provides an opportunity to introduce new products.

This has actually been the way it has worked historically. Huge leisure time industries have developed from an increased surpluses over subsistence consequent on innovation and increased productivity.

But this doesn't happen automatically without effective demand and that requires a rethinking of distribution.

The problem is readjustment of thinking about "work" versus "leisure" and realizing how they overlap.

For example, education has been a function of "leisure" historically. The "leisure class" was the elite rentier-ownership class that could not only afford the time but also the associated costs.

A huge step forward was taken by public funding and requirement of universal education. Now in developed countries there is "forced leisure" owing to the educational requirement, but that doesn't make it "work" since it is not paid labor.

The seeds for new thinking about the relationship of work and leisure are already sewn. We just need to water them. Historically, elites have generally reaped the benefits of increased leisure made available by growing surpluses over subsistence made possible by increased productivity owing to technological innovation.

However, over the past century collective bargaining by trade unions resulted in a shorter work week, higher pay, more distributed leisure and effective demand sufficient to create new industries based chiefly or exclusively on the availability of leisure.

Roger Erickson said...

Tom,
Historically, productivity increases allowed people's constrained time to be redirected in yet more innovative directions. That includes new tools/tactics/strategies/policies/milestone-goals and Desired Outcomes.

So it's better to redirect the discussion from "work" to "invention."

What else do we have mandatory education for?

Matt Franko said...

To provide an "educated workforce" to industry Roger...

Dan Kervick said...

Right Tom, but I think all of this is just another way of saying that when displacements are sufficiently massive and/or concentrated government needs to step in with a plan. The reallocation of people to new kinds of work isn't going to happen in any morally reasonable amount of time just by the usual group grope process of private sector entrepreneurialism. Government needs to help build the new sectors and create the path for getting unemployed people into them with the right kinds of training and support.

Anonymous said...

... in a Wallersteinian world (?)

Besides, who said the earth was just a factory?

Tom Hickey said...

I agree with all that, Dan, but that was not the point I was making about the claim that the Internet "failed" to create jobs. Well, technological innovation shifted the work force from 99% agricultural workers to a minuscule number in a relatively short period of time. Similarly, more advanced technology reduced the required number of factory workers to produce the same amount of goods and the digital revolution replaced telephone operators, secretaries, stenographers, etc. The displaced found other work in aggregate and leisure time also increased. Some of those workers found work in jobs related to increased leisure. So it is pretty much a non-issue that the Internet didn't create a raft of new jobs directly, nor did the digital revolution.

What these tech innovations have done is made possible a lot more leisure but so far that has not been distributed. Rather, the gains have gone mostly to those who own and control the technology, not even to much of a degree to the actual inventors if they were employed by corporations that owned their output.

My point is that sharing the prosperity through more equal distribution would not only increase leisure but also services and products and therefore jobs, too, that are leisure related.

Looking to tech innovation to create jobs directly is the wrong way to look at it. The point is to create increased productivity and a greater surplus over subsistence that can be distributed and then to distribute it intelligently. Markets are not set up to do that naturally and they are certainly not set up to do it under current institutional arrangements that are determined by class, power and wealth.

As a society we need to shift point of view and with it the social, political and economic structure of the society to take advantage of the increased and increasing surplus.

It's really about divvying up the surplus rather than "jobs.'

Neil Wilson said...

We're moving rapidly towards an all service economy since that is the only thing that humans can do that robots can't for the most part.

But that leads to a problem where you're going to have people 'of leisure' being serviced by those working ridiculous hours. Which is a Feudal system.

Something active has to share the leisure and 'servicing leisure' around.

Also bear in mind that the creation of 'new jobs' has often involved an awful lot of non-jobs that just eat planetary resources for no net benefit whatsoever. Most of the finance industry for example.

Why are we wasting time with high speed trading when we could be using that talent to explore space? That's far more interesting and useful.

Matt Franko said...

We need tremendous public sector expansion at this time along with a bit earlier retirements...

Ignacio said...

What Matt said summarizes pretty well what we need, but he missed something: we need public servants which are competent and can come up with good programs to put people to work.

The example of space exploration is apporpiate... that's not gonna happen in today paradigm of incompetent rulers and elites.


So what we need is more vision, and it MUST come fast. The lack of vision is the most problematic thing of our current situation, and no, the private sector ISN'T providing vision either. They are ripping benefits from research that was done half a century ago yet, is ridiculous.

Bob said...

I see dead people. And they don't need jobs...

The lack of full employment just brings us back to the need for a JG, a BIG, a negative income tax, or a citizens dividend. But these types of changes won't come about until there's sufficient desperation among the population.