On Capitalism and the Second Machine Age

 Technological Unemployment  

Andrew McAfee spoke recently at the New America Foundation on capitalism and what people and governments need to do this century to adjust to the new paradigm of technological unemployment.

Andrew McAfee, coauthor of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, spoke recently on capitalism and what people and governments need to do this century to adjust to the new paradigm of technological unemployment.  The talk took place at the New America Foundation.

The New America Foundation is a nonprofit, nonpartisan public policy institute that invests in new thinkers and new ideas to address the next generation of challenges facing the United States.

McAfee talks about what the book, written with Erik Brynjolfsson, The Second Machine Age covers mainly in it's conclusion.

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"It feels to me like we are in a little bit of Charles Dickens world these days," says McAfee. "It's simultaneously the best of times and the worst of times."

The best of times have to do with the extraordinary exponential technological progress in areas like artificial intelligence, robotics, 3D printing and medicine. "We've got computer systems now that can beat any human at chess, Jeopardy!, and soon I believe medical diagnostics," he claims.  McAfee attests that the key technical innovators he deals with tell him that these developments are all just the warm-up act for what is to come.

"I don't think we are heading into a science fiction world," he says.  "I think we are heading into a world that leaves science fiction behind. Keep in mind, George Jetson drove his vehicle to work."

"It feels to me like we are in a little bit of Charles Dickens world these days. It's simultaneously the best of times and the worst of times."

Despite this new wonderful technology, the economic trends point out the Dickensian worst of times for many.  The historically large middle class in America is disappearing, and this process parallels the advancement of technology. Job growth is not getting the country out of the Great Recession at any appreciable rate.

He writes on his blog, "Automation and deindustrialization might be creating a ‘silicon ceiling’ on growth — a situation in which even low wages are no longer an attractive alternative to technology. If so, the global shift away from labor and toward capital will only accelerate."

This impression, states McAfee is correct and it helps him understand broad indicators of disenfranchisement like the Occupy movement and the Tea Party.  McAfee warns about extreme moves to the left or right of the political spectrum to remedy the situation.

"What we need to do is return to two things," he says: innovation and inclusion.  Apart from technical innovation, McAfee suggests that innovation in complementary areas are needed.  Regulations and laws seem to protect the status quo instead of propelling people forward.  For instance, he tells about how in three states it is now illegal to purchase a Tesla vehicle from their showrooms.

"We need to tax differently too," says McAfee, complaining about the barriers that taxes on employment create.  The barriers also exist for new immigrants as well.

In the area of education, he says, "We used to be the world leader at this.  Now it feels like we are doing a pretty good job of turning out the employees we really needed just about a century ago in the era of assembly lines."

McAfee is the associate director of the Center for Digital Business at the MIT Sloan School of Management, studying the ways information technology affects businesses and business as a whole. His research investigates how IT changes the way companies perform, organize themselves, and compete, and at a higher level, how computerization affects competition, society, the economy, and the workforce. He was previously a professor at Harvard Business School and a fellow at Harvard’s Berkman Center for Internet and Society.

What do you think?  What kind of innovation do we really need in the coming years?


SOURCE  New America Foundation

By 33rd Square

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