Brynjolfsson and Mcafee the Second Machine Age Review
Over the by year, there's been a lot of talk in economic circles about the prospect of stagnation. Because of demographics, globalization, long-term global imbalances and a slowdown in technological innovation, the argument goes, advanced economies are trapped in an extended period of slow growth in productivity, income and task creation. Recent proponents of this hypothesis include economists Robert Gordon of Northwestern University and Michael Spence of New York University; former Treasury secretary Lawrence Summers; and Tyler Cowen, my colleague at George Stonemason University, in his latest book, "Average Is Over."
Now come ii professors from MIT with a more optimistic and intriguing hypothesis — namely, that the global economy is on the cusp of a dramatic growth spurt driven past smart machines that finally take total advantage of advances in figurer processing, artificial intelligence, networked communication and the digitization of only about everything.
"The Second Car Age" is largely a reprise of an e-book, "Race Confronting the Machine," that Erik Brynjolfsson and Andrew McAfee self-published 2 years agone. It builds on their work at MIT's Center for Digital Business organization, along with that of "new growth" theorists such equally Paul Romer, Brian Arthur and Martin Weitzman. And while Brynjolfsson and McAfee'southward policy prescriptions reflect the somewhat cocky-referential outlook that you run beyond in technology enclaves such as Silicon Valley and Cambridge, their book offers a timely antidote to the economic cynicism that has taken root in the aftermath of the financial crisis.
Brynjolfsson's and McAfee's optimism springs from the idea of exponential growth — in the computing power of machines, in the amount of digital information that is beingness created and in the number of relatively cheap devices that are continually talking to each other. When these numbers doubled every twelvemonth or two in the early on days of the computer revolution, the results, while impressive, were still inside our ability to imagine. But now that the numbers are and then staggeringly large, the authors fence that machines can finally practice things in one case considered possible merely in the realm of science fiction.
It's not merely that machines can at present vanquish humans in chess or on "Jeopardy." It's that when they are combined with thousands of cheap sensors and huge databases, they tin drive your car up and downwardly a highway in prophylactic and notice the best style to get you where yous want to go — not only considering every road map has been scanned into the database, just also because every cellphone transmitting from every car volition reveal where the traffic jams are. Information technology's that robots tin now scan and identify all the objects in a foreign room, allowing them to perform a series of complex physical tasks. It'due south that a figurer can translate from one language to any other, not because it has learned to speak them only considering it recognizes patterns based on everything that's been written in a language so far. Computers can not only read and grade essays, they can write them.
'The Second Machine Age: Piece of work, Progress, and Prosperity in a Time of Brilliant Technologies' by Erik Brynjolfsson and Andrew McAfee. ( W.Westward. Norton/Courtesy of WW Norton)
What enables these breakthroughs, Brynjolfsson and McAfee argue, is not just the amount of data available and the speed at which it tin can be candy. It's also the ease with which these new capabilities and new ideas can be combined and recombined. Economic historians tell us that it took several decades for earlier breakthrough technologies, such as the steam engine or electricity, to accomplish the bespeak of ubiquity and flexible application at which they fundamentally changed the style people lived and businesses operated. Data applied science and digital communication, they contend, are now simply reaching that same inflection indicate. Rather than budgeted a period of mature decline, equally Gordon and Cowen have suggested, according to the men from MIT, these technologies are virtually to take off.
The large winners in this new era will be consumers, who will be able to buy a wider range of higher-quality goods and services at lower prices. The other winners will be those who create and finance the new machines or figure out how best to apply them to gain competitive reward. Nifty wealth will be created in the process.
To illustrate the indicate, Brynjolfsson and McAfee cite the example of Instagram and Kodak. Instagram is a simple app that has allowed more than 130 million people to share some 16 billion photos. Within 15 months of its founding, Instagram was sold to Facebook — a company with 1 billion users — for $1 billion. It was just a few months subsequently that Kodak, the Instagram of its day, declared bankruptcy. The authors apply this little vignette to illustrate two points. The starting time is to point out that the market value of Facebook/Instagram is now several times the value of Eastman Kodak at its peak, creating, past their adding, seven billionaires, each of whom has a net worth 10 times greater than George Eastman ever had. Such is the "bounty" of the second auto age.
Simply the evolution of photography also demonstrates how unevenly that compensation has been divided — what the authors somewhat inelegantly call the "spread." Non only has it created a new class of super-rich entrepreneurs and investors, but information technology has done then with a company that employs merely 4,600 workers. Compare that with Kodak, which at its peak employed 145,000 workers in mostly eye-grade jobs.
In the outset auto age — the age of Kodak — productivity, employment and median income all rose in tandem. In the second, the growth in productivity has essentially been decoupled from jobs and income. And this divergence has its roots not in labor police or tax codes, Brynjolfsson and McAfee argue, but in the very nature of the digital economy, in which a ready of appurtenances and services can be provided to an space number of additional customers, all at the same time, at a cost that is often close to zero.
Brynjolfsson and McAfee are inappreciably the outset to come upon the idea that new technology can lead to higher unemployment and rise inequality. The British economist John Maynard Keynes coined the term "technological unemployment" dorsum in the 1930s when he predicted that the displacement of workers by machines would usher in an era of shorter workweeks and increased leisure. And in the 1990s, economists Sherwin Rosen and Robert Frank saw that globalization and technology could conspire to create "superstar" or "winner take all" labor markets. Until now, the consensus among economists was that these developments would have just a minor or temporary impact on the economy. Now they are non so sure.
On the issue of jobs and job growth, Brynjolfsson and McAfee turn down the Luddite fear that smart machines must inevitably reduce the overall demand for labor — jobs — arguing that the increased "compensation" that engineering science creates will simply shift demand to unlike kinds of work, equally information technology e'er has. Aye, there volition exist fewer credit analysts and package handlers, only there will exist greater need for high-level programmers and special-needs teachers. The transition, they suggest, could be made smoother if our education arrangement were reoriented from its industrial-era focus on math and reading to a broader set of personal and intellectual skills necessary for working aslope the smart new machines.
To deal with what they see as the inevitable increase in income inequality, the MIT duo would turn to a negative income revenue enhancement, with which the regime would assure a minimum income to anyone who works — an one-time idea now gaining popularity on both the left and the correct.
For a Washington reader, the weakest parts of this book are its many other policy prescriptions, virtually of which are straight from the talking points that tech executives have been peddling for years on their visits to the capital. Individually, the policies are perfectly reasonable — so reasonable, in fact, that they enhance the more of import question of why they haven't been adopted long ago. Only unless the authors have some clever idea for ending the partisan and ideological tong state of war that now passes for the American political process, telling us to spend more on infrastructure, reform the immigration organisation and lower the cost of higher education isn't really adding much to the conversation.
The strength of "The Second Automobile Age" is how it weaves macro- and microeconomics with insights from a wide range of other disciplines into an accessible and convincing story. In some ways, Brynjolfsson and McAfee practice an older style of economics based more than on logic, history and ascertainment than on data and mathematical models. But in other means, they are pioneering a fundamentally new economics, one based not on the old reality of scarcity but on a new reality of abundance that we are only merely outset to comprehend.
Source: https://www.washingtonpost.com/opinions/review-the-second-machine-age-by-erik-brynjolfsson-and-andrew-mcafee/2014/01/17/ace0611a-718c-11e3-8b3f-b1666705ca3b_story.html
0 Response to "Brynjolfsson and Mcafee the Second Machine Age Review"
Post a Comment