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The Software Revolution
An anonymous reader writes: Y Combinator president Sam Altman writes about how the third great technological revolution — which he calls the software revolution — is affecting the world economy. He says, "It appears that the software revolution will do what technology usually does—create wealth but destroy jobs. Of course, we will probably find new things to do to satisfy limitless human demand. But we should stop pretending that the software revolution, by itself, is going to be good for median wages.
Trying to hold on to worthless jobs is a terrible but popular idea. Trying to find new jobs for billions of people is a good idea but obviously very hard because whatever the new jobs are, they will probably be so fundamentally different from anything that exists today that meaningful planning is almost impossible. ... The second major challenge of the software revolution is the concentration of power in small groups. ... I think the best strategy is to try to legislate sensible safeguards but work very hard to make sure the edge we get from technology on the good side is stronger than the edge that bad actors get."
Trying to hold on to worthless jobs is a terrible but popular idea. Trying to find new jobs for billions of people is a good idea but obviously very hard because whatever the new jobs are, they will probably be so fundamentally different from anything that exists today that meaningful planning is almost impossible. ... The second major challenge of the software revolution is the concentration of power in small groups. ... I think the best strategy is to try to legislate sensible safeguards but work very hard to make sure the edge we get from technology on the good side is stronger than the edge that bad actors get."
The assumption that "we will probably find new things to do to satisfy limitless human demand" has no substantiation. In fact, the rate of job replacement is now higher than the rate of job creation. Unemployment will be rising inexorably and at an increasing rate.
Actually... the industrial revolution resulted in a severe disruption for workers with many dying homeless, of starvation or exposure.
Then the generation AFTER them did okay and we simply forgot about those who literally died of effects of the industrial revolution.
This could be very similar. A generation of misery and then the one after that has different expectations and training.
The trend has been pretty ugly- lower share of societies benefits for most- higher share of societies benefits for the very few- often related more to their parents success (50%) than their own ability. I mean- a lot of the better jobs are practically inherited these days.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
It appears that the banking sector will do what they usually do—extract wealth and destroy jobs.
The most serious problem our economy faces is the mountain of private debt we have accumulated in the past 50 years. And the huge wealth imbalance this has caused.
The banking sector has successfully transformed most asset markets into heavily leveraged ponzi-like schemes. Each new entrant to the market pushing up prices with borrowed money, so that other people can cash out. This borrowed money caused asset prices to rise, giving the appearance of creating wealth. But debt levels end up rising faster. When the market runs out of greater fools, the bubble collapses, leaving the mountain of accumulated debt mostly intact.
While the bubble is rising, the economy begins to depend on the creation of new debt just to continue functioning. Once the debt gravy train slows down, it doesn't even need to stop, the flow of spending money in the economy dries up. Companies that were pretty much already insolvent go bust, others survive by tightening their belts. It is the workers losing their jobs that suffer the most for the problems that the financial sector created.
We can't repay the debts the financial sector lent out. The only question left is how we choose not to pay them.
We need a huge shift in how we create and manage money. We need to drastically shrink the parasitic financial sector, wipe out the loans that represent most of our money supply. And replace the money created with credit cards and home loans with government fiat currency, given directly to the people.
Managing the flow of money is essential to keeping people employed.
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We need to make full time 32 hours a week or less with forced ot pay maybe at 40 hours and X2 ot at 60+.
The problem is not the technology itself.
The problem is the banks and corporations that siphon off billions by leaving prices artificially high instead of passing along the cost-savings of technology to consumers.
Seriously. What is Apple doing except sitting on billions it's siphoned off? It's not even paying it's fair share of taxes on that money! Or the big banks, who get levied huge fines for their outrageously illegal behaviour, but just bill the consumer for the expense and see none of their executive or board members put behind bars.
Unless and until we resolve those problems, technological advances will just be a convenient red-herring scapegoat for distracting us all from those real problems.
I do not fail; I succeed at finding out what does not work.
No. The last 120 years have seen huge advances in technology, and war, along with steel making, agriculture, power generation; has scaled accordingly.
War itself is not any bigger than it used to be, and might even be a bit less in this day and age. Well, the case could be made.
In any case, the Soviets really and truly scared us into inventing some of that. You can't just say, 'Let there be DARPA'.
Capitalism is not the 'temporary use of another class's capital.' It is a system where property is freely bought and sold.
You're conflating capitalism with a free market. They are not synonyms.
A free market is a system where property is freely bought and sold.
Capitalism is a system where the shape of the market is determined primarily by the prior distribution of capital; loosely put, where having wealth makes it easier to keep and obtain wealth, and lacking it makes it harder to keep or obtain it, automatically perpetuating that wealth disparity and leaving the less-wealthy perpetually subservient to the more-wealthy.
For a trivial example of a free market which is not capitalist, consider any market that deals exclusively in labor services, such as an virtual market online (without copyright interfering to create artificial scarcity) or a hypothetical post-scarcity market in the future; anywhere that capital is either freely and infinitely replicable or else just irrelevant. Because capital is not involved, the market is not shaped by capital distribution, and is thus not capitalist. But it can nevertheless still be a free market, with the prices of the services being traded determined entirely by voluntary agreement with no redistribution of profits or anything.
Less trivially, a real-world market, dealing with goods and services both, that had an even distribution of capital would not, at least initially, be capitalist, as nobody would have a capital advantage over anyone else to exploit. The open question is whether such non-capitalist freedom is sustainable, or whether we're forced to choose between either sacrificing freedom or accepting capitalism.
Free markets are the kind of thing that early liberals (what would now be called "libertarians") like Adam Smith and John Locke advocated.
Capitalism is something that was first identified and named by Marx, who in turn claimed that it was an inevitable consequence of free markets, a claim that the state socialists who followed in his wake accepted and spread further.
Even more distressingly though, their opponents in defense of free markets also tacitly accepted that claim (that free markets inevitably lead to capitalism), and just disagreed on which side of the resulting fork to choose: reject free markets to avoid capitalism, or embrace capitalism to preserve free markets.
Meanwhile, nobody noticed (and today most people can barely even conceive) the libertarian socialists who disagreed with Marx's claim that you can't have free markets without capitalism, who have been to this day discussing (not that anybody else is listening) possible ways to prevent capitalism without sacrificing the free market.
Just thought you'd like to know that when you say things like "[capitalism] is a system where property is freely bought and sold", you are tacitly buying into Marxist rhetoric.
-Forrest Cameranesi, Geek of all Trades
"I am Sam. Sam I am. I do not like trolls, flames, or spam."
>Technology always has a funny way of creating new industries after it kills old ones
I know you think you just made a logical point but you really did not. Extrapolating from past events is inductive logic, not deductive, and one of the main differences between them is that inductive logic has no guarantee of truth.
If all my premises are true, and I follow the rules of deductive logic properly, it's impossible for my conclusion to be false.
With inductive logic that is simply not true - even if I do the same experiment a hundred billion times - I STILL can't be absolutely CERTAIN that it won't fail on the hundred billion and first time.
Inductive logic can be reliable, but it's never guaranteed.
It gets worse, what you did wasn't EVEN inductive logic, it just LOOKS like it - so the above is a best-case scenario you don't qualify for. To have ACTUAL inductive logic absolutely ALL factors must be controlled during each test. Any factor that changes, ANY factor - and the reliability plummets, with every subsequent factor it gets less reliable.
You can't MAKE a statement like "what technology always does" - you're talking about a bunch of events where, at every run, almost EVERY factor was different.
So there is absolutely ZERO reason to believe the pattern you think you spotted will hold true, there is no evidence whatsoever to support your extrapolation.
The last time we had a major technological revolution there was less than half as many people on the planet - so less than half as many people wanting jobs (technically - wanting a way to earn a living, for which "sell your labour" is the only viable option most people have).
Even if next generation automation and software does generate new jobs in other sectors it would need to do so at almost 8 times the rate any previous revolution did to satisfy the demand that now exists, there's no evidence to suggest it would and the data so far suggests the opposite -it's creating far fewer new jobs than previous revolutions did.
Secondly you have to consider the requirements for GETTING those new jobs. This revolution is NOT creating new low-skilled jobs, because it's very essence is to destroy low-skilled jobs from every sector up to and including itself.
All the jobs it IS creating require enormous technical training - robotics designers, electronic engineers and programmers. The simple truth is most people lack the skills to do these jobs and even if that changed - you just don't need a lot of these people even for massive automation.
A 20-man co-op in Texas is one of the largest automation robotics companies on earth - supplying hundreds of industries. That's not new job growth.
So your pattern is already breaking down and this is still the dawn of it, who knows how much worse it will get. It also spells a major problem for the industries automating. They won't feel it YET - but if they automate too much, and enough other companies do it, they'll reach a point where they can make ultra-cheap goods - but nobody can buy them because they've put all their own customers out of work.
Destroying your own demand is bad economics - while fostering it is the path to wealth (as Henry Ford understood - on the other hand he was a Nazi sympathiser so take his ideas with a grain of salt).
Where does that leave the future ? There are many options - but it's fairly obvious that the current concept of "you must earn your right to live by working" is simply not going to be practically feasible much longer (in fact- I would argue it hasn't BEEN feasible for over 3 decades ALREADY - it's just not been bad ENOUGH for most people to figure it out yet). Buckminster-Fuller saw this coming and I've seen no evidence that he was wrong and a lot of evidence he was right.
Either way - whatever the future holds - I'm damn sure it won't resemble 20th-century capitalism much if at all.
The fact that phycisists are saying the ONLY way to maintain economic growth for more than 50 years (assuming we could use 100% of all energy from the sun which we can't) would be for over 90% of the population to be in pure service jobs - which are of course, being automated away.
Unicode killed the ASCII-art *
>so far the trend has been long term increase in both wealth AND welfare
Until 1903 the trend had been that attempts to build heavier-than-air-flight were failures - so much so that one of the greatest mathematicians on the 19th century declared it a law of nature just 5 years before the trend stopped being true !
Until 1776 the trend had been that colonial revolutions failed consistently. Then one country won a revolution and became independent and ever since then the trend has been that they were won consistently - until about 50 years ago when the trend became "that they were given independence by the colonists voluntarily leaving" in most of the remaining cases.
Until the 20th century the trend was that building cities made plagues worse and cities got hit hardest (Black death fatalities in London were massive in every major outbreak England ever had, far more per capita than surrounding rural areas), during the 20th century that trend reversed and now when major plagues happen they mostly kill people in rural areas far from good hospitals (initial spreading patterns haven't changed - but our ability to TREAT disease has - and people close to major hospitals which are common in cities get the best odds - and that combined with quarantine means that lots of people living in close proximity is no longer a guaranteed vector of infection like it once was).
As a result - in West Africa we had thousands killed by Ebola, mostly in rural villages. Meantime in wealthier countries you had maybe one or two infections and few if any deaths.
South Africa - on the same continent, which is only a little wealthier hasn't had a single case - the USA had 3 cases, all non-fatal.
Until 1998 the trend was for every generation to have higher vaccination rates than the one before. Since then the rates have gone ever further down - and that was done by nothing more revolutionary than human stupidity.
Until 1908 the trend was that the Chicago Cubs won the world series more often than not (twice in a row in 1907 and 1908) SINCE 1908 the trend was that the Cubs NEVER win the World Series.
Trends are incredibly fragile things, so fragile that it's almost always safer to bet on "end of trend" than "trend continues" if you have to bet. The sensible and rationalist approach however is to do neither - assume that trends have no bearing on what's likely to happen and does not aid prediction at all - because they don't.
Unicode killed the ASCII-art *
The problem is that very long period where we need a lot less jobs but not no jobs.
Consider, we could wipe out our unemployment problem RIGHT NOW if the average work week was cut to 35 hours a week. But notice how it isn't happening. I'll probably get several replies screeching about how civilization will crumble and we;ll all end up living in caves if we cut back even 1 hour a week.
I would love to get rid of the wealth=income thing, but that darned grocery store keeps wanting money for food. Way up on the high end of the income distribution, it is possible to make a change, but it seems that section is populated mostly by people who think things are good the way they are and might be better if people were twice as desperate for work.
The change is unlikely to be entirely voluntary.