Review of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson and Andrew McAfee

51n9h6fBSjL__SY344_BO1,204,203,200_Like most avid readers, I enjoy reviewing cover jackets for their short promotional summaries of the books I peruse whenever I get a chance to visit my local bookstore. In the case of The Second Machine Age, I bought the book online after reading an article referencing it and didn’t think about reading the jacket until after I read the book. One sentence from the jacket perfectly sums up my overall reading experience:

“A fundamentally optimistic book, The Second Machine Age will alter how we think about issues of technological, societal, and economic progress.”

 I agree with the second half of the sentence. One’s perspective on the parenthetical descriptor of the sentence most likely depends on whether you think you’ll benefit from the changes predicted by M.I.T. information science professors Brynjolfsson and McAfee.

The authors begin with a short summary of changes that have influenced human history and provide a graph created by Ian Morris (author of Why the West Rules – For Now) based on his theory of social development (“a group’s ability to master its physical and intellectual environment to get things done over time”). Citing Morris’ theory, civilization’s development slowly progressed until the dawn of the Industrial Revolution.

However, since 2000, the progress curve has increased geometrically thanks to digital technology advances. The authors coin this era, “the Second Machine Age.” Three conclusions are proffered from the analysis of technological changes. The first is that we’re currently living during an extraordinary time with the advancement of digital technologies and we’re at an inflection point where computers will be able to perform more and more tasks previously performed by humans. The second conclusion is that the technology-induced transformations will be primarily beneficial. The third conclusion is that rapid and accelerating digitization will bring economic rather than environmental disruption. Ultimately, technology will leave people behind if they only possess ordinary skills and abilities.

According to the authors, gross domestic product (GDP) is inaccurate because it is unable to track the benefits of free goods or services that were unavailable (because of technology) in any previous era. Wikipedia, one million free smartphone apps, and free email and chat services are among the items that we utilize but receive at no cost. As these items continue to increase in quantity and in utilization, GDP will decrease in its value of measuring economic output. In the future, production will depend less on physical equipment and structures, and more on the categories of intellectual property, organizational capital, user-generated content, and human capital. Incremental economic value beyond GDP (bounty) can be measured through the volume, variety, and timeliness of digital data.

The large and growing differences between people’s income, wealth, and other circumstances are defined as “spread.” The authors contrast the large numbers of employees during Kodak’s peak with the relatively small numbers of employees at Instagram and Facebook—two free applications utilizing digital photos taken by the masses to build large social communities. This reallocation of income and wealth is unprecedented. The winners are those who have accumulated significant quantities of the right assets (e.g., intellectual property, financial assets, education, training, and experience).

The way most successful companies utilized technology over the past two decades was not intended to replace an employee with a computer but to use technology to reorganize the process—resulting in a reduction of lower-skilled positions. Demand for college-educated workers increased over the same period. Ultimately, the superstar winners in the ongoing technology shift are individuals who can create businesses that serve millions (and even billions) of customers. The authors cite a statistic that the income of those on the Forbes billionaires list has quadrupled since 2000, while the median income of Americans has decreased.

Technological unemployment is a concept discussed as far back as the 1800s, and the authors further that discussion. The more machines can substitute for human workflow, demand decreases for that job, and wages will fall. At the same time, the authors argue that most machines complement humans rather than replace them. They write that as long as there are unmet needs in the world, unemployment reflects that we are not thinking hard enough about how to utilize people to meet those needs. This may be true, but until the rewards are great enough for entrepreneurs, investors, or the government to take the time to figure out how to utilize unemployed workers—unemployment rates are more likely to increase.

The jacket cover of The Second Machine Age states that the authors are optimistic. However, most of their findings support the ongoing increase in spread between those with assets (intellectual, experience, and capital), and those without assets. Their recommendation that parents insist on a college education for their children as well as ensuring that their children acquire the necessary skills and experience for the Second Machine Age is great advice; but how many can take advantage of it?

Optimistically, the authors cite that the same technology that is causing increased unemployment will also provide vast improvements for learning, leading to increased numbers of educated citizens. I agree that learning technologies are improving rapidly, but there are many other items that influence a person’s ability to learn. According to Brynjolfsson and McAfee, the world will add as much computing power over the next 24 months as it did during all previous history—and over the next 24 years, computing power will increase by a thousand fold. In my opinion, sharp individuals or entrepreneurs and nimble corporations are most likely to react quickly enough to the continuing technology change, and the spread in economic benefits will likely increase—at least in the short run.

The Second Machine Age is a thought-provoking book that provides ideas and concerns for everyone. In order to enhance how we maximize the future for as many of our citizens as possible, I recommend that our policymakers read it as well.

 

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