Recent advances in information technologies may be driving people out of work and enriching the already rich, a new book argues. The book challenges the long-held view that new technology displaces workers in the short term but always creates more jobs in the long term.
Erik Brynjolfsson, director of the Center for Digital Business at MIT’s Sloan School of Management, and Andrew McAfee, a principal research scientist at the center, cowrote the new e-book, Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy, which is released today.
Brynjolfsson and McAfee argue that technology seems to be doing three things simultaneously: enabling CEOs and other leaders in some fields to earn outsize incomes; replacing people with software in certain kinds of service jobs; and—as factories automate at a faster pace—benefiting owners at the expense of workers.
Some 60 percent of the wealth created in the United States between 2002 and 2007 went to the top 1 percent of Americans. This is not merely the result of financial deregulation or favorable Bush-era tax breaks; information technology has enabled the far-broader sale of digital goods and expansion of software-aided management, the pair argues.
“Technology lets superstars—whether Mark Zuckerberg or Lady Gaga or a hedge fund manger—leverage their skills and talents across far more assets and customers than they could have done previously,” Brynjolfsson says. “You can distribute bits—costlessly, globally, instantly—in ways you can’t distribute atoms. Anything that is digital, from software to music, can reach a much broader global audience. This is also true for the business processes that you embed in software. CEOs and others are leveraging that.”
This dynamic could help explain how the economy and productivity can grow while jobs shrink. That’s exactly what happened during the first decade of the 2000s, in a striking departure from the previous six decades, each of which saw double-digit job growth. As McAfee put it at Technology Review’s EmTech 2011 conference last week: “Technology grows the overall economic pie, but that’s different than saying it will leave everyone unambiguously better off.”