Also see the back channel discussion on Reddit: http://www.reddit.com/r/TrueReddit/comments/w6n9d/its_the_21st_century_why_are_we_working_so_much/
Thanks for the message - I’m just an enthusiast of Post Scarcity econ, and really trying to do my part to make it happen. Do you have contact info?
I’ve been posting a lot about technological unemployment due to the continual boosting of worker productivity across the board, so it’s always nice to see the continued stream of articles that are providing more ammunition to fire at the those who see jobs creating themselves - or even to frame the economy as needing to create jobs as means of wealth allocation. This article talks about a “Second Economy” - seemingly a name for which economy takes the gains that technological unemployment have given up.
A quick Googling of the term leads to the original source of “Second Economy” - a McKinsey Quarterly article - it’s worth reading in full. Of course it’s behind a register wall, but I dug up a PDF here. Also, PasteBin’ed here in case that goes away.
It seems this idea of a Second Economy really just means an “automation economy” - they point out that robots aren’t taking over yet, but that computers have taken over a ton of jobs. They point to the idea of travel agents booking tickets, etc. - which is now fully automated through software. Nothing new - I’ve been talking about this for a while.
However, there are some good points they make that are worth iterating. The first article looks the metric of GDP per capita for the US versus Google (Revenue pre Employee) - the former is a bit over $100K and the latter is over $1.2M. So what he asks is whether this new economy may be creating such huge amounts of value per person, 10x in this case, that we may not be able to get as many new jobs out of the mix. An interesting measure, and this doesn’t even count the destruction of margins from the old to new economies which seems inevitable.
The McKinsey article uses similar logic to extrapolate that by 2025 this second economy will equal the size of the first - by simple extrapolation of a 2.4% productivity increase due to technology compounded over the next 15 years. Maybe they can claim that this 2.4% number counts the GDP losses - I don’t have the data, but I’m doubtful.
They aren’t oblivious to this fact of employment though, and in “Downside” they talk about how, just like farming went from low to very high productivity growth, that the same is happening in manufacturing and services. More production and less jobs. They then conclude that: “the main challenge of the economy is shifting from producing prosperity to distributing prosperity”. This basically means you have to accept a lack of jobs - that’s a pretty strong position for a McKinsey publication… There is a brighter / utopic side to this as well when they say: “if we do solve [the problem of distribution of wealth], we may at last have the freedom to invest our energies in creative acts.”
Overall, I think they’re right on predictions wise, and it’s interesting to see that mainstream business may actually be getting the right reports, but that have no incentive to change their ways.
I thought I’d post this on here if only to show how you can make something like this fairly easily in today’s world. We just don’t have the current pressure to want to.
Anyone could have guessed this, but I’m glad to see that it’s becoming more mainstream, and with good data even, to think that people will trade money for meaning nearly all the time. This "What Programmers Want" research that hit the blogs today shows that working in a company full of good people, with meaningful challenges, and that’s well managed is really what we all want.
Right now, like the myopia that plagues our world, companies are all about the quick fix to morale. They’re all about having cool benefits like on-site chefs, beer on tap, bar games at work, etc. - what I like to call "beer and ping pong tables". No one is more emblematic of this model than the San Francisco “high-tech” scene. Name a company, and it can be described by: a big, open office, big logo on the wall, minimalist IKEA furniture, a big kitchen stocked with snacks and alcohol, etc. It’s got all the ingredients of a frat house - just take away the cleaning crew and add Greek letters.
The one thing that’s curiously missing at these companies is an actual fucking point of existence. Sure the founders of these companies can abstract away their true interests - calling it “value creation” or saying “our users love us”, but we all know that these are just a weak cypher for “it’ll make me a millionaire”.
It’s no wonder such companies exist though. Whenever you talk to the investors behind them - they’re often just as self-denying as the founders. They’re not as bad though - they call it what it is: “wealth creation" - which is why all of their questions are derived from something like "SO WHERE DOES THE MONEY COME OUT?!?!?" I get it, making money is their business, but somehow the Land of Rand is becoming ever more removed from the solving of real problems.
The whole point of the government enforcing private property - i.e. what allows the accumulation of “wealth” from businesses in the first place - is that in the end we should have better allocated resources because all the actors in a system will have contributed their information / decisions that in the end are far better than any centrally planned economy could of hoped for. Modern capitalism did a lot to improve our standard of living, but that doesn’t mean it’s always right or even an end state system.
Conversely, capitalism, especially in it’s modern corporatist form, is actually pretty shitty at thinking about the biggest problems mainly because they’re so focused on short-term thinking and risk management - the latter of which I mean taking full advantage of the moral hazard provided to them.
I think today’s VC world is a harbinger of the decay of this model. It’s easily the most dynamic part of our economy - the most new ideas come through here to get implemented. Startups right now are making great aggregate returns - we’re in middle landrush phase in the internet where tons of critical services and ideas are still yet to be developed. However, money != social value, and these returns are merely the shuffling of deck.
Let’s look at what some would call their “best” company: Zynga - to see how bad this really is. Their idea: take existing games and use psychology to make them more addictive and find clever ways to make money off of them. We’re ignore the fact that this amounts to creating what I call “digital heroin”, and look at their mission: “connecting the world through games” - delusion if I’ve ever heard it. What about their corporate culture? Oh yea, we’ve seen how great that is. You might expect this from BS investors looking to make a quick buck - what makes this even worse is looking at their investors: USV, Foundry Group, Reid Hoffman, Peter Thiel - the very best investors in the business.
So what we’re looking at today is that the best investors funded the most profitable company (makes sense so far…), and that company’s end-user product is, by design, not innovative, not optimized for users, designed to take your time and your money, and is produced by very high pressure culture with high turnover. Ta da! Great use of capitalism guys! Look at all that value creation! Something is rotten in the state of startups…
I think Venkat Rao is correct in saying that, in this new capitalism, startups aren’t the new capitalists - they’re the new labor. These VCs have found a great form of rockstar delusion that makes Silicon Valley the Hollywood of nerds. Look no further for this new labor framing than the top entry point for these new entrepreneurs: YCombinator - they’re now coming out with an idea that you can apply without an idea - what great problems those applicants will solve…
There is hope though - this isn’t all about doom and gloom. There is hope at the end of this tunnel - engineers are now more and more in the driver seat. Getting back to the first study: people want to work on things of meaning taking on big problems. Engineers, in particular, got in to this to work on the next Moon Landing or something - not to code bullshit iOS apps. The employees at a firm I was at recently were equally cynical and openly mocked their user base. This is company you’ve heard and not even full-on BS, and it’s a story I see repeated all over.
What’s the problem then? Why don’t engineers leave these companies? Why don’t they start their own? Both of these questions have the same basic answer: no one is funding meaningful companies. They have a choice between working at a BS job with no fun, or a BS job with fun people and beer - easy choice. Another problem is that there’s not a lot of inspiration in startup world about solving big problems - HN’s front page is generally a mix of programming circlejerk, startup gossip, some tid-bits (link bait) of perhaps sound advice, and the obligatory geek porn about rocketships and flying cars.
One thing you don’t see is really anything about is how to pragmatically solve meaningful problems in the world. There’s the Social Venture scene, but frankly most of the ones I meet are pussies working on the equivalent of BS social-mobile-game-mechanized-iOS-deal-apps that might give 10% to charity or some such - still not much there.
There’s a vacuum in the market of solving meaningful problems - i.e. finding a way around the problems of capitalism by finding business models that give sustainability while at the same time allowing the autonomy and time needed to take on these big problems. On the other end, there’s a tremendous pressure to get engineers and the perk of meaning is what they truly seek. If we’re going to move past this current economy, we need to figure out a way of connecting these two - or else we’re going to keep making more Zyngas…
I bumped into a writer for Fast Company the other day, Michael Coren, and had a great conversation about many of the same topics that I often talk about on here. He told me about an article he wrote that totally intrigued me: "Have We Reached Peak Stuff?". In it, he explores the possibility that there may be a “peak” to overall consumption. The case study that he repeatedly cites is that of Britons reducing consumption: "Why is our consumption falling?. I’ve been hoping for a while that we’d actually see this, so this is quite welcome.
The Yale 300 post on Peak Stuff had a good little nugget about the phenomenon: the environmental Kuznet’s Curve - which I’ve never heard of, but is reminiscent of the income-fertility curve. The overall point is that when an economy gets to a certain maturity of GDP per capita that it stops wasting additional resources, and GDP and material consumption decouple - leading to increasing GDP with less consumption - how welcome! We can see this very much by looking by the EU -> US -> China to see the spectrum of countries in very mature state all the way to emerging for a look at the acceleration of consumption.
I’m not sure what’s going on here though. Wikipedia says that it holds for some things like water / air-quality but not others like landfills. To me, that indicates that while refrigeration, cars, etc. seems comparatively more important at first, that once these needs are met that people start to refine further their quality of life - which leads to wanting better quality of their own habitat. Landfills however aren’t felt in the same way, so it make sense why usage doesn’t decrease.
In looking at Tim Jackson’s report, "Prosperity Without Growth", where he explores the topic exhaustively, we can see that these curves are actually coming up everywhere in Briton, but I’m not sure of the drivers. Some, food consumption, make sense to go down now that everyone knows the health effects of obesity more than a few decades ago, and things like less waste make sense because of the overall increase in green thinking and perhaps good regulation. Even adjusted for imports though, that presumably could come from developing countries that have worse eco-friendly production that Briton wouldn’t “feel”, the effects are still net decreased - quite interesting.
I was really intrigued by his “12 Steps for a Sustainable Economy” (pg. 13) - which lays out his prescription for a sustainable economy. It’s covers three main areas - let’s take them one-by-one.
1.) Develop Sustainable Macro-Economy - This is the least controversial of his points, and reads almost like the standard European viewpoint on such a subject: infrastructure, fiscal responsibility, transparency, etc. Who can disagree with those? It’s too vague though to be very helpful though.
2.) Flourishing - This is where we start getting into the meat of what he wants, and what I really care about with post-scarcity economics. The overall idea seems to be empowering everyone in the economy - which is quite similar to my last post on redistributing (democratizing really) the means of production rather than money directly.
For me, this gets at a core problem of our current economies where we have a bifurcation in the productivity distribution of the workforce. We’ve got some, like programmers, who are able to quickly build very high value software that gives them immense productivity for society, and on the other side you have the 7-11 service jobs that give nothing by cheaper costs that replacement robots - for now.
In the middle used to be the semi-skilled labor in factories, clerks, etc. - however this is being captured by machines and software more and more - leading to this divide. What’s our problem? To me it’s a combo of education of the people, community building and access to the new productive resources that will empower them. I love TechShop for instance because it’s giving the tools, training and community for what I see as a revolution at the scale of the internet. I think my friend Dave Lang is also right to say that people are dissatisfied and overall looking for an accessible way forward - getting a concrete / believable case for what “flourishing” looks like is both essential and currently quite lacking.
3.) Ecological Limits - This is more revealing his environmentalist intentions, so I’m not sure that it’s really causal in bringing about peak stuff - more aided by peak stuff really, but his intention is a “sustainable economy”, so it works. However, even getting a basic cap-trade type policy is going to be hard as hell, so I don’t really see much of a “how” in any of this.
Bottom Line here:
Peak Stuff seems like something that happens due to material abundance and society’s increasing awareness of the problems of overconsumption in their daily life - we’ve got a way to go, but it’s encouraging to see real data in support of this.
If we’ve got peak stuff and GDP still increasing - what’s actually being created? It’s been argued we’re in the “experience economy”, with its decreasing physical goods, and also the “information economy” - with what is essentially near post-scarce knowledge from Wikipedia, to music, etc.
The standard capitalist economy that Jackson, et al. are skeptical of generally requires profit capture for productivity to be registered. An ideal GDP would capture things like volunteering, open source software, etc. The issue is that the real problem is that people still need to eat even though we’ve got them adding all this value. So even if we add that time, we’ve still got to come up with income for these people.
My question is: what kind of productivity is left to add into “ideal GDP” figures that can be realized as profit? It would seem to me that we need a new type of system to emerge that can capture more of these positive externalities as personal income. The concept of “flourishing” to me is directly related to productivity growth at the individual level. This is really what GDP Per Capita is - so this really just means “ideal GDP” or some measure.
This means that we actually do want growth, but in such an ideal GDP measure, not raw “what’s profitable” measure. I don’t buy the zero-growth philosophy - as it seems Malthusian, anti-technology and fatalist. The oft quoted “we need 7 planets to support this level of consumption” is rarely laid out, I’ve not seen it at least, and assumes technology has frozen - which of course it can’t.
Just because we don’t have the resources now, doesn’t mean we won’t be able to find better ways of using them to get the same level - the real thing to me is that flourishing requires a bent against consumerism. In a society so dependent on consumer spending, it seems that making things for yourself is a most subversive act.
I came across an interesting article in the Globe and Mail called: “The World’s Losing its Workers?”). It talks about the consequences of world aging will be on jobs. There’s a few conclusions that look probable, and have interesting conclusions for the post-scarcity.
Overall, what we see is that there will higher healthcare costs due to the aging, less people of working age, and they predict that low-paid jobs won’t exist. The first two I can agree with, but the last strikes me as wrong however - I’ll get to that later.
For the first two though, what this really means is that we need to get much higher productivity in healthcare especially, but really across the board - else we’re have declining living standards. I feel like this plays very well into the ideas of achieving the post-scarcity, and in fact might make the central doctrines therein highly applicable to the general populous - easing adoption.
Look at the situation right now, and how new economics could help us:
- Unions: They want to keep their low-productivity jobs, and not have to train for new industries. Perhaps workers will become sellers market is more than just select jobs. For structurally unemployed workers, if there really are needs for people with high-productive skills - it may lead to educational system reform, more private sector investment in training, etc.
- Low-Wages: We’ve got a lot of jobs that could be fully automated, but people are actually still cheaper than the robots. The falling action of course is there’s mass automation of jobs - not necessarily the easy / lowest paid ones. We talked before about how specialist doctors and accountants are probably on the chopping block next.
- Structural Unemployment: We currently have a ton of people that are poorly trained, and a lot of programming jobs for instance. If it were bad enough, perhaps we’d wake up and get a better education system to try to rescue any people we could. Interesting incentive alignment that’d be.
- Diminishing Capitalist Returns: We’re seeing the capitalist system reaching it’s logical ends. We’ve got market-socialism / state-capitalism coming from Europe and China respectively, but these seem like stop gaps of their regions more than a true 3rd way system. This next system will have to reconcile the trends that are currently plaguing our current one.
All of these point to the trends in the future being more applicable for automation technology and a type of economics that has some type of distributive force (whether consumptive or productive resources) - else people will be dying in the streets. Not everything is rosy though - let’s get to the high-wages part.
They predict higher wages, while this may be true in unadjusted figures, the real income for the lowest paid jobs will probably still assume a low level as people, adjusting for the short-term needs to survive, accept lower and lower pay that eventually stops at a floor made of the lowest costs of living. Moreover, if more education is needed, this will have to be priced into an updated market basket - therefore real incomes are still flat.
I’m not quite sure about this though, it may be that in times of high job openings the real wages to go up, but this it probably only temporary I’d assume. Also, as we know about the post-scarcity, they won’t just compete with other workers, but with robotic systems as well - as they already do, but far fiercer. It is possible then that the system that comes is actually ushered in by such aging, society adapts to this new norm, then further evolves into a post-scarcity structure. Could that be a way of easing us into it?
Great article in The Atlantic: "Making it in America" about the current state of manufacturing, and really does cover a lot of the core issues. Very well researched and written. The conclusions are also quite true: the answer isn’t getting more people on the factory floor - the robots are coming - the real thing is how we can get people educated enough to be able to do the next types of job coming.
Manufacturing really is the next agricultural for a massive transformation. Everyone knows that we’re a “service economy” now, but we still do a ton of manufacturing for it to be a major part of jobs and GDP. With service jobs split between minimum wage jobs without a future and high-end, high-education jobs like lawyers and surgeons - we’ve got a huge gap waiting to be filled by the jobs market. Unfortunately, it’s looking like the current educational system has completely failed us in moving towards this next system.
So what is this system? How can we really imagine what lies in the future of manufacturing, the economy and the American (not to mention everyone else’s) workforce? I was recently asked by some pro-manufacturing groups what I think the future of manufacturing looks like, and as much as I think about these things it was certainly a hard question to even begin to answer.
Being government related groups, they were all about what the “jobs of the future” will look like. It’s hard for me to say because my mission is to turn manufacturing into a commodity that is fully automated and has no need of humans other than to designs the files and specs that are required.
I think the article here is right to say that in the future you’ll need to know about computers, etc. to work in these fields, but they mean to program to CNC machines, etc. I don’t think this will be needed either. Things like tool-setting mentioned in the video are actually quite automatable, and doing live QC certainly is too. Really, we need to have more people able to turn ideas / opportunities into products: engineers, designers, programmers, etc.
Not of all of these require a 4 year degree or technical training, and I’d argue that the future of the workforce probably isn’t using this type of model at all. We’ve seen the commoditization of servers and software already, and the most thriving field right now are 1000’s of startups that were birthed out of these resources. The same can be true of manufacturing and other productive industries.
Just look at some of the indie cottage industries Etsy is helping bring forward. These all have in common that motivated people with regular skills can do them, and the manufacturing can be done in your living room. More complex products still have massive barriers to entry from the design, sourcing, etc. of their parts - hence why few people can make anything very compelling this way.
There are ways around this: Kickstarter can give you the cash for the manufacturing, but rumors are they have a high rate of launch failures due to noobing out on production. Also, you can look at sites like Ponoko and David Mellis' research at the Media Lab that look a cottage industry approach to this type of manufacturing. Instead of trying to compete with Apple on quality and aesthetics, why not turn the laser-cut / simple materials look into it's own kind of post-modern fashion - as compared to Apple's high-modern minimalism.
To me, the trends are pretty clear: manufacturing is becoming faster, more agile, more automated, and cheap (without looking at raw materials). People are no longer useful unless they do something that computers can’t do - which more and more means interacting with the world of engineering / design which is really just the stack of disciplines that gets you from human wants (design) into what machines want (engineering) - it’s translation really. If you can’t do one of these, I don’t really see what you’re going to be doing in manufacturing once we stamp out these inefficiencies, and the task of manufacturing moves into the background as agriculture did in the previous century.
Interesting Mashable article on what people want robots to do: Chores.
Interesting stats that they gathered:
- Top chore: Moving stuff around.
- Pricing: Average max desired price was $999, but some would pay +$15K
- Other tasks: personal assistent, child-/elder-care
It makes a lot of sense that people want to take away bad tasks rather than create new kinds of tasks (i.e. having the robot build stuff for you). As we all know, painkillers sell better than vitamins…