The Rise of the Pollyannas

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In a recently released open letter, a group of scholars and venture capitalists described the digital revolution as, “the best economic news on the planet.” This is the sort of thing likely to elicit hosannas from those whose situations in finance and academia have positioned them to reap the benefits of this revolution.

For those whose economic positions are threatened by the pointy end of these developments, from industrial workers, to service employees, to (increasingly) people further up the chain of skills (teachers, lawyers, even software engineers) the response is likely to be rather more muted.

The list of contributors is led by the MIT professors Erik Brynjolfsson and Andrew McAfee, authors of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (2014), an effusive paean to the capacity of technology to improve human life. The letter itself, a mix of reasonable suggestions and techno-pollyannaish boilerplate, says more about the hopes and dreams of the virtuosi of technology and venture capital than it does about the world as it is likely to exist for the majority of humans in the next two decades.

The letter begins by acknowledging, and summarily dismissing, the (increasingly widespread) concerns that technology will increasingly permit human labor to be dispensed with. Previous waves of technological development increased the demand for labor and brought increases in jobs and wages. Accepting that this is an open letter and not a treatise on economic history, it is still worth noting that this collapses a very complex history.

The benefits of Fordism (such as they were) constituted only one outcome of the industrial revolution, and even in that case the process of transformation was accompanied by wrenching and destructive human consequences. The industrial revolution that began in the mid-18th century did lead to a golden age…lasting for about three decades after the end of the Second World War. For those excluded by time, location, race, or gender from this brief, bountiful era, the results of industrialization were rather more mixed, and often quite devastating.

However that may be, the letter’s signatories do recognize that there is some question as to whether the current technological surge will provide even the circumscribed bounty of its predecessor.

This time around, the evidence is causing some people to wonder if things are different. Or, to paraphrase many recent headlines, will robots eat our jobs?

We think this is the wrong question, because it assumes that we are powerless to alter or shape the effects of technological change on labor.
We reject this idea.

Yes, they reject this idea, and well they might, for it is just their sort of people who do have (at least some) capacity to shape the effects of technological change. Certainly the laborers do not, at least not as things stand. But perhaps a few timely changes undertaken by the elites of the technocracy will have salutary effects.

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A blueprint of some of these changes is contained in a sub-document entitled “A Set of Public Policy Recommendations,” wherein the devil stalks furtively among the details. The proposal on education is a mixed bag. More funding for education is certainly welcome, and the recognition that educational attainment and income correlate directly. But they also manage to rehearse the myth of the skills gap in their call for greater focus on STEM disciplines.

The skills gap is one of those zombie ideas beloved of liberals and conservatives alike. It has been thoroughly debunked elsewhere (cf. Paul Krugman’s repeated assaults here and here,). But  the simplest avenue of approach for those encountering this in the wild is the following question: What happens when the demand for something exceeds supply? Answer: All other things being equal, the price goes up.

Thus, if it was in fact the case that the demand for technologically competent workers the consequence would be rising wages, with the rate of increase being proportionate to the shortage. But earnings in the information sector have been stagnant since (at least) 2006, and median earnings for men holding bachelor’s degrees or higher have been in decline since 2000. How, then, will better education improve the lot of man?

The answer to this question becomes clearer when we look further down the list of policy recommendations. After calling for improvements in infrastructure, certainly desirable on the whole, and for “actively teaching and fostering entrepreneurship,” the favored nostrum of venture capitalists and related bampots throughout the developed world, we come to a brief section on immigration. Thus it runs:

Many of the world’s most talented and ambitious people want to come to America to build their lives and careers, and the evidence is clear that immigrant founded companies have been great job creation engines. Yet our current policies in this area are far too restrictive, and our procedures are nightmarishly bureaucratic.

This has a very positive ring to it, but it needs a bit of translation for optimum clarity. It’s really not so much that our intrepid technologists are wanting to import more entrepreneurs, although it wouldn’t necessarily be a bad thing. No, the subjects of their concern are those skilled workers who need H1B visas to enter the country and assist in resolving the putative skills gap alluded to above. And here we come to the central issue. The question is not one of a lack of properly skilled workers, but rather a lack of such workers at a favorable price point.

A number of recent cases have highlighted the strategy of replacing overly expensive workers with cheaper counterparts from overseas. Cal Edison recently laid off 400 IT workers, replacing them with H1B visa holders. There was a similar transition earlier this month at Disney, with the added twist that the departing workers were compelled as a condition of their severance to train their replacements. “Restrictive” and “nightmarishly bureaucratic” as the process of acquiring H1B visas might be, it has still allowed for the importation of workers whose wage demands are more in line with the needs of the entrepreneur.

The section on policy recommendations departs with a brief wave to the idea that the tax code might need changing in a progressive direction, as well as adverting briefly to the ideas that some greater degree of workplace supervision might be in order so as to prevent what they refer to as “erratic scheduling practices.” This, in a very truncated way, is a reference to the transformation of employment from a continuing relationship to a matter of just-in-time contractual relationships. Given the vicissitudes and propensities of the entrepreneurial spirit, it is a little difficult to know on which basis such oversight would be proposed. Since Smith’s ephemeral invisible hand is the optimum generator of human flourishing, at least so far as the entrepreneurial outlook is concerned, any limitation of the conditions of employment, be its sources democratic or paternalistic, merely distort the optimizing process.

In the second of the letter’s three sections we find a somewhat perplexing call for the development of “new organizational models” for corporations. The goal of such reorganization is “inclusive prosperity,” which is very much in the middle of the fairway in terms of the compact made by liberal capitalism with its mass base. But it is not entirely clear what sort of reorganization of corporate structures could achieve this goal. The text itself provides few clues:

The corporation is itself a powerful innovation, and one that can do far more than just generate profits and provide a competitive return to those who supply capital and take risk. It is both a tool for transforming ideas into products and services that address society’s challenges, and the means by which many people earn their living. Along with current waves of innovation in technology, we also have an opportunity to reinvent the corporation and our business systems.

This suggests that corporations are the way they are, and have the failings that they do, simply due to a lack of imagination rather than to the institutional dictates of processes of capital accumulation. Once again, what seems to be suggested is some sort of corporate capitalism with a human face, a rejigging of the institutions that would knock off some of the rough edges and do more to promote human flourishing. Noble as this proposition might be, it is very much at odds with the calls for a freer entrepreneurial culture found elsewhere in the letter.

The letter’s third prong is very much connected to the second. It is a call for “research on the economic and social implications of the digital revolution.” As with first prong, this one is linked to a laundry list of topics needing to be addressed. These include technological issues (the influence of AI and related technologies on employment of human labor), analysis of employment trends, and broader social questions. Some of the thoughts here are well taken, but as a whole it seems to ignore the fact that a lot of research is already underway.

But, and perhaps this is the most compelling problem that this list illustrates, this doesn’t seem to live up to the promise announced in the beginning of the letter. When, in its early stages, the authors dismiss the worry that robots will eat our jobs, this creates a valid expectation that this dismissal will be substantiated in some significant way. Instead what is being offered is the proposition that the topic is worth researching. This is painfully obvious to anyone confronted with the prospect of being replaced in their job by a robot or an AI, though perhaps not so much to the coterie of academics and venture capitalists behind this document.

The overall thrust of the letter can then be read is that we need to do more to promote technological development. We believe (or want you to believe) that this will not adversely affect your life chances, but the basis of that belief is similar to that in the likelihood of the Chicago Cubs winning this (or any) year’s World Series. Neither one has a great deal of substance. The letter itself says very little of substance about how human life might be improved, or how it is that the vast bulk of humanity are going to confront the technological (to say nothing of the political or environmental) challenges of the next half century.

On the most sympathetic reading possible it is an expression of a sort of technoliberal naïveté with regard to the lives and prospects of people in the bottom 90% of the income distribution. A more cynical reading (or more realistic depending on one’s outlook) is that it is just a sort of holding action meant to keep the hoi polloi onside, while technological and social transformations continue apace.

Whichever of these readings is closer to the truth, it remains the case that this letter is the sort of thing that technologist and entrepreneurs who like to believe that they have retained some shred of social consciousness like to read to warm the cockles of their hearts. For the rest of us, there is only the cold realization that we are in a fight for survival, both with the machines and with those that blithely promote them.

Deutsche Borse advert series, Brussels International. Photographs courtesy of Joel Schalit

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