Transcripts For CSPAN2 Book Discussion On The Second Machine

There is a reason that they are called the business plan. I just came from a panel there and there were three other economists and they were pointing out some pretty good statistics. As you may know, the Median Income is the 50th percentile is lower now than it was in the 1990s. In the employment to population ratio has plummeted. Some of the members are little bit better recently, but it keeps people dropping out of the labor force and not new job and how can these two groups be a very different perspective with one right and one wrong end if you look deeper there are some impressive numbers that match up with the optimism of the technology and there are record levels of productivity and gdp and all of those numbers are growing quite deeply. And the other statistics about the Median Income are also exactly accurate. And it is happening on the situation simultaneously. And it does create more wealth. And that is that there is no economic law that will help others benefit from the technological example. And warsaw pact other terms. Including manufacturers that were heard by the interruption of the automobile. And there are a much larger group of people even the potential majority of people that are having a harder time making a living than they did before. And this includes the spreading out of the outcome in this includes corporations for society and we are hoping to focus the conversation on this. And especially with technology and research there. And we have described the economic parallels. Both of these technologies have done things that they are not supposed to be able to do. The book started in the fall of 2010 and google has been bribing not google, but no one had been bribing the spirit. And thousands of american roads without mishap had experiences. So we had the chance to do that and even six years earlier in 2004 that eric and i talked about with this strong argument and you will never be able to drive this. So its a pattern matching the process and although we are doing while is pretty easy for a and is precipitously difficult. In 2004 we nodded her head and they are already driving cars. We have seen similar weirdness happening in a few other problems that have been part of this with other people and we are going to do a pop quiz and its going to be really easy. And then we pointed to these conclusions. And here is an even weirder situation the point where you are in this room and they are both correct and we will accept both of them. But my point is that you have to solve one of the funniest slams the simultaneous with localization and what does this mean and where am i in the seo . We are really good at that and that program has precipitated this and if you put a robot in the room where he or she is and we just watch the shenanigans. In 2008 there was literature that said it is just too darn hard to do so we had a problem for a room about the size by waving a microsoft connect around. 150 for this electronic. So we have examples like that in the play go, what is going on here both on the economic side and the Technology Side and eventually led to this book. I think that the first question that we would answer then is how and why this has happened. We are just working on where these things get made. Change the world of Artificial Intelligence and things that are rarely not delivered on. Now in the last four years something seems to have changed. So what is the remap. Theres a twopart answer to that question because that is really what sent us there. There is really a threepart answer. Which are really going to have to give us this. The first part is the role Relentless Improvement that most of us know of and its really easy to underestimate an exponential improvement has been going on long enough. And it really is a different type of thing in kind. Because the smart phone, probably all of us carry around them in our pockets tonight is utterly a computer of a generation ago. And there are some extraordinarily difficult things. Its not orders of magnitude, but it is thousands of billions of times greater than it was five or 10 years ago. But asia is the light load of science and if you want to be smarter about a realworld problem, you have a ton of data. Finally the third part of the threepart answer is the real innovation coming up with something new is not this process but rican talked about how it is a internal Combustion Engine with the gps system and google invented none of those things. They just combined the Building Blocks are already there. And this is a wave of innovation. So the shorthanded answer to your question is about the expotential digital situation. I have one question here which touches a little bit on that. And what does the stagnation not recognize and so there is a great deal of problems on this and in your painting a different picture. And he conspired to have us work on that first book. And there are no more good things or few good things to have left. This guy is looking at the same economy that we are looking at. And that the other hand he has a lot o. Recognition. Just because the Median Income is stagnating, it doesnt mean that innovation is stagnating. Paradox ugly if it speeds up that can lead to a lot of people falling behind if they are not keeping up with their skills or organizations that are not keeping up in this dramatic reorganization of the economy can simultaneous way be a symptom of Great Innovation and Wealth Creation and also lead to stagnating Median Incomes. Its great to a fundamentally injured worldview. Which is that innovations, we dont think of them as the low hanging fruit, that is a metaphor and we have most of the low hanging fruit plucked. But its harder and harder to get new innovation. But as was just explained, innovations dont use up that it that way. And in fact the huge innovations create the Building Blocks for additional innovations. Whether it is the google self driving car or other things. There was an undergraduate student who at one point had 1. 3 million are in users using it. And the reason that his application was able to scale so rapidly was because it was going to be built facebook and facebook was built on top of the worldwide web. There is a networking that could go on and on. But each of those innovation have made it harder for individuals, they have not made it harder but they have made it easier. So the low hanging fruit metaphor is exactly the wrong one that is the nature of innovation we are lucky that it is because that means that we are getting more Building Blocks for additional innovation and potential for additional growth. Just listening to a bunch of questions that is a part of the second part of your book and the specifics that we need to particularly grapple about more generally. Which is that it doesnt appear to be distributed in this way. And getting to the root cause and what it is about. I think that a good example of what is going on is the conversation i have heard after reading about the google self driving car. I was getting on a plane and a person was talking too loud on his cell phone and he was hanged at oh, no, i dont use h r block anymore but i use turbotax or its faster and easier and cheaper and it does things more accurately. And he was right. It does your taxes very accurately and it took a process, used to be done by humans and it has codified it and digitize it. Once it digitizes it, you can make a copy of that. You can make 10 copies or 100 million copies of it and that is what they did. Each of those copies is identical to the original and its a perfect copy. And it can be reproduced at virtually zero cost. And transmitted anywhere in the world almost instantaneously. So this is something that is free and perfect and those are the three characteristics that we have had in the past. And it leads to some very unusual economics in particular the winner take all market or winner take most markets. But each neighborhood or town may have a tax preparer and with the Tax Preparation Program you dont want to have the secondbest program, you just want to buy the best one that is available so that those markets can concentrate. One or maybe a handful of programs in those markets. In the revenue for that industry ends up being much more concentrated. What is more is that it doesnt hire a whole lot people to make copies of this once the basic algorithms have been written. You end up with different economics. You get winners and losers in and theres two groups. One is a small group of winners, people that create that and developers and some of them are billionaires and some of them are millionaires. And theres other very large groups which we shouldnt forget, which is consumers and people have access to amazingly cheap Accurate Software in this category that they didnt have before and they can solve problems more efficiently than they could before. Theyre also people who are worse off who invest a lot of time in learning how to do that profession and skill and go to college and do that. And now in an economy where you compete against a 39 piece of software it doesnt have as much value and is not a coincidence because there are 17 fewer that are under pressure. What i just described is a microcosm of what is happening in lots of other industries and we are seeing it in software and music and media and in manufacturing and retailing and financing and software and digitization becomes the core of more industries and we will see the same kind of economic instances in society. I love that example because it talks about the two main economic consequences that we have talked about in our book and have tried to elaborate. The first one is bouncy and at under and as was said, there are two different flavors of this here and one is the reward for the innovator and the people that came up with this. And the other one, the bigger category as those who have access to higher aldie cheaper tax preparation and we think it is critically important. But the bad news is that whenever i talk about the book, i keep on doing these dorky dance moves and keep on going like this. [laughter] its pretty tightly structured and we are going like this. In the middle is being hollowed out and we have a small group of people who know talent to harness the power and their income goes way up. In the bottom is gradually slipping behind. That is the challenge that we face in our goal should be to keep the boundary while minimizing the negative effects of the stress. What about the standard economic theory that automation may be occurring in some sectors with increased productivity overall and other sectors will pick up the slack and make up for that . Since at least the beginning for 200 years. People like us have been saying that the age of technological unemployment is part of this. It definitely happened during the Industrial Revolution and john king was kind of a intellectual hero in this regard. So the question is knowing that history and the historical pattern should, down a lot. And is this time different . The only honest answer is that we dont know, but the data encourages it and i think there are good reasons to try to understand that this time is different. If you wanted a report in history, you had to involve a person and not work area not anymore. If you wanted to listen to a person and understand what they wanted, you had to involve a human being and not. But not anymore. If you go on and on, diagnose a disease, any of these things, we have always need people for them and we dont anymore. So the digital encroachment is broad and deep and i think irreversible and to me it feels like this time it is different. It is not just the technology difference. The technology also sync just that Something Different is going on. Technology has always been destroying jobs and creating jobs and there has been this Creative Destruction and flow and turnover that has gone from one in this race to another industria. For most of the past couple hundred years, since the Industrial Revolution those have been in balance and if you look at the trends of proto davidian employment and Median Income, they all kind of rose roughly in sync. It started about 15 or 20 years ago when they started diverting. Productivity has continued to grow and profits overall with the gdp continue to grow and Median Income has stagnated. So its not keeping him the way they did the work. And this has also stagnated as well. So there is something new going on in terms of the technology and in terms of the economic specifics and we think the nature of this is at the core of this difference. We dont think those two things are unrelated at all. What is going to happen . What are your views for what has weakened the power of the working class and is the working class doomed economically . We do not think that they are doomed. But we do agree that the Bargaining Power has been weakened and that has left the underlying fundamentals of economics as a ceo or company can make do with robots or software machinery, then its a lot harder for a working man or woman to say give us our share of the revenues of the company and higher wages or else we will go on strike because they can say okay, great, let me replace you with robots. The guy who makes iphones over there. And he says that he will hire a million robots and that is a pretty Severe Threat and it turns out an increasingly realistic one. So the Bargaining Power of the worker goes down with a credible alternative. There are workers in other countries and there is a digital alternative which is already pretty good and only getting better. Derrick story about the robots shows that they appear even in the lowest parts of the world. But to try to get back to the question, it is way too early to say that the working class in america is like this. We dont want to walk away. The last part of our book is about the intervention and makes an in this era of pretty astonishing to logical process. You can jump in that or i can give you a couple of ideas. What do young people need to succeed in this economy, what can we do to increase educational skill levels and lead to more jobs and this is a much more specific question. So what it is based on is the routine information process has been especially hard hit over the past 10 years. It basically means following instructions like a tax preparer that we are talking about or the travel agency you can carry out information and it turns out that a big chunk of the American Economy is devoted to exactly those. But careful research by my colleague and others at mit has found that if you look at the go content of all the occupations in the United States, the more routine Information Processing is involved, the more it takes time for fewer jobs in the categories and the more the wages are under pressure. So if you are looking for it a job to stay away from, it would be Information Processing. If you look at the way that a lot of schools are structured, they are very much set up to get people to sit quietly and rose and learn how to follow instructions carefully. Rather then the skill set were dominant in the second machine age of following instructions. I have one question pushing back a little bit on the emphasis on education. How does increasing the educational and skill level of workers lead to more jobs when job creation is driven by aggregate demand within the domestic economy . There are two good questions in there. The first is even if we can get the educational system ride would that be futile . Absolutely not. When erik and i talk to Business Leaders the most common complaint we hear is i cannot ayn people with the skills i need. All of them down the ladder from my frontline employees to the people at the very top of the company. I cant find people with the skills that i need indicates to us that our educational system is turning out people that are mismatched in the job market. Right now if we could wave a magic wand and fix education we would do a huge amount to help the unemployment and the wage crisis. The second part of your question though is his concept of aggregate demand which economists love to talk about. The way we think about it is captured in a wonderful and hep akrevoe story but a really good story about henry ford who was the head of the Autoworkers Union touring modernized factories. He says hey walter how are you going to get to pay those robots and he says without missing a beat hey hague henry how are you going to get them to buy cars . This large stable prosperous american middle class so we created in the postwar decades is a phenomenal angina demand that bought a lot of stuff to get the economy growing. We continue to polarize if the middle gets hollowed out does that demand dip and a recession like we all know is a natural nasty downward smile of downward demand and we dont want that to happen. The court that question has a worldview that i want to push back a little bit which is its either or. If we have a recession there can be instructional measures. In fact its both. Paul krugman and Larry Summers as far as i can tell arent. If they were we would he hearing about it by now. There and ended to grab tickets for trying to boost aggregate demand and stimulate the economy but that is a Business Cycle issue right now. What we are talking about is more fundamental longterm structural issues and for that matter not unrelated. As andrew was just saying these structural can lead to the drop in demand that we are seeing so you need to address both of them. You can run an economy with a very small group at the top and a holme mass of fairly miserable people at the bottom. Its feasible, its just a lousy society and the smaller economy. Its not where we want to go at all. Certainly it will have political implications. Its going to be on quiet places as well. Speaker2 circle back to henry ford and the robots and we did have two questions here. One is whether given what we are seeing from longterm robot Median Income<\/a> is the 50th percentile is lower now than it was in the 1990s. In the employment to population ratio has plummeted. Some of the members are little bit better recently, but it keeps people dropping out of the labor force and not new job and how can these two groups be a very different perspective with one right and one wrong end if you look deeper there are some impressive numbers that match up with the optimism of the technology and there are record levels of productivity and gdp and all of those numbers are growing quite deeply. And the other statistics about the Median Income<\/a> are also exactly accurate. And it is happening on the situation simultaneously. And it does create more wealth. And that is that there is no economic law that will help others benefit from the technological example. And warsaw pact other terms. Including manufacturers that were heard by the interruption of the automobile. And there are a much larger group of people even the potential majority of people that are having a harder time making a living than they did before. And this includes the spreading out of the outcome in this includes corporations for society and we are hoping to focus the conversation on this. And especially with technology and research there. And we have described the economic parallels. Both of these technologies have done things that they are not supposed to be able to do. The book started in the fall of 2010 and google has been bribing not google, but no one had been bribing the spirit. And thousands of american roads without mishap had experiences. So we had the chance to do that and even six years earlier in 2004 that eric and i talked about with this strong argument and you will never be able to drive this. So its a pattern matching the process and although we are doing while is pretty easy for a and is precipitously difficult. In 2004 we nodded her head and they are already driving cars. We have seen similar weirdness happening in a few other problems that have been part of this with other people and we are going to do a pop quiz and its going to be really easy. And then we pointed to these conclusions. And here is an even weirder situation the point where you are in this room and they are both correct and we will accept both of them. But my point is that you have to solve one of the funniest slams the simultaneous with localization and what does this mean and where am i in the seo . We are really good at that and that program has precipitated this and if you put a robot in the room where he or she is and we just watch the shenanigans. In 2008 there was literature that said it is just too darn hard to do so we had a problem for a room about the size by waving a microsoft connect around. 150 for this electronic. So we have examples like that in the play go, what is going on here both on the economic side and the Technology Side<\/a> and eventually led to this book. I think that the first question that we would answer then is how and why this has happened. We are just working on where these things get made. Change the world of Artificial Intelligence<\/a> and things that are rarely not delivered on. Now in the last four years something seems to have changed. So what is the remap. Theres a twopart answer to that question because that is really what sent us there. There is really a threepart answer. Which are really going to have to give us this. The first part is the role Relentless Improvement<\/a> that most of us know of and its really easy to underestimate an exponential improvement has been going on long enough. And it really is a different type of thing in kind. Because the smart phone, probably all of us carry around them in our pockets tonight is utterly a computer of a generation ago. And there are some extraordinarily difficult things. Its not orders of magnitude, but it is thousands of billions of times greater than it was five or 10 years ago. But asia is the light load of science and if you want to be smarter about a realworld problem, you have a ton of data. Finally the third part of the threepart answer is the real innovation coming up with something new is not this process but rican talked about how it is a internal Combustion Engine<\/a> with the gps system and google invented none of those things. They just combined the Building Blocks<\/a> are already there. And this is a wave of innovation. So the shorthanded answer to your question is about the expotential digital situation. I have one question here which touches a little bit on that. And what does the stagnation not recognize and so there is a great deal of problems on this and in your painting a different picture. And he conspired to have us work on that first book. And there are no more good things or few good things to have left. This guy is looking at the same economy that we are looking at. And that the other hand he has a lot o. Recognition. Just because the Median Income<\/a> is stagnating, it doesnt mean that innovation is stagnating. Paradox ugly if it speeds up that can lead to a lot of people falling behind if they are not keeping up with their skills or organizations that are not keeping up in this dramatic reorganization of the economy can simultaneous way be a symptom of Great Innovation<\/a> and Wealth Creation<\/a> and also lead to stagnating Median Income<\/a>s. Its great to a fundamentally injured worldview. Which is that innovations, we dont think of them as the low hanging fruit, that is a metaphor and we have most of the low hanging fruit plucked. But its harder and harder to get new innovation. But as was just explained, innovations dont use up that it that way. And in fact the huge innovations create the Building Blocks<\/a> for additional innovations. Whether it is the google self driving car or other things. There was an undergraduate student who at one point had 1. 3 million are in users using it. And the reason that his application was able to scale so rapidly was because it was going to be built facebook and facebook was built on top of the worldwide web. There is a networking that could go on and on. But each of those innovation have made it harder for individuals, they have not made it harder but they have made it easier. So the low hanging fruit metaphor is exactly the wrong one that is the nature of innovation we are lucky that it is because that means that we are getting more Building Blocks<\/a> for additional innovation and potential for additional growth. Just listening to a bunch of questions that is a part of the second part of your book and the specifics that we need to particularly grapple about more generally. Which is that it doesnt appear to be distributed in this way. And getting to the root cause and what it is about. I think that a good example of what is going on is the conversation i have heard after reading about the google self driving car. I was getting on a plane and a person was talking too loud on his cell phone and he was hanged at oh, no, i dont use h r block anymore but i use turbotax or its faster and easier and cheaper and it does things more accurately. And he was right. It does your taxes very accurately and it took a process, used to be done by humans and it has codified it and digitize it. Once it digitizes it, you can make a copy of that. You can make 10 copies or 100 million copies of it and that is what they did. Each of those copies is identical to the original and its a perfect copy. And it can be reproduced at virtually zero cost. And transmitted anywhere in the world almost instantaneously. So this is something that is free and perfect and those are the three characteristics that we have had in the past. And it leads to some very unusual economics in particular the winner take all market or winner take most markets. But each neighborhood or town may have a tax preparer and with the Tax Preparation Program<\/a> you dont want to have the secondbest program, you just want to buy the best one that is available so that those markets can concentrate. One or maybe a handful of programs in those markets. In the revenue for that industry ends up being much more concentrated. What is more is that it doesnt hire a whole lot people to make copies of this once the basic algorithms have been written. You end up with different economics. You get winners and losers in and theres two groups. One is a small group of winners, people that create that and developers and some of them are billionaires and some of them are millionaires. And theres other very large groups which we shouldnt forget, which is consumers and people have access to amazingly cheap Accurate Software<\/a> in this category that they didnt have before and they can solve problems more efficiently than they could before. Theyre also people who are worse off who invest a lot of time in learning how to do that profession and skill and go to college and do that. And now in an economy where you compete against a 39 piece of software it doesnt have as much value and is not a coincidence because there are 17 fewer that are under pressure. What i just described is a microcosm of what is happening in lots of other industries and we are seeing it in software and music and media and in manufacturing and retailing and financing and software and digitization becomes the core of more industries and we will see the same kind of economic instances in society. I love that example because it talks about the two main economic consequences that we have talked about in our book and have tried to elaborate. The first one is bouncy and at under and as was said, there are two different flavors of this here and one is the reward for the innovator and the people that came up with this. And the other one, the bigger category as those who have access to higher aldie cheaper tax preparation and we think it is critically important. But the bad news is that whenever i talk about the book, i keep on doing these dorky dance moves and keep on going like this. [laughter] its pretty tightly structured and we are going like this. In the middle is being hollowed out and we have a small group of people who know talent to harness the power and their income goes way up. In the bottom is gradually slipping behind. That is the challenge that we face in our goal should be to keep the boundary while minimizing the negative effects of the stress. What about the standard economic theory that automation may be occurring in some sectors with increased productivity overall and other sectors will pick up the slack and make up for that . Since at least the beginning for 200 years. People like us have been saying that the age of technological unemployment is part of this. It definitely happened during the Industrial Revolution<\/a> and john king was kind of a intellectual hero in this regard. So the question is knowing that history and the historical pattern should, down a lot. And is this time different . The only honest answer is that we dont know, but the data encourages it and i think there are good reasons to try to understand that this time is different. If you wanted a report in history, you had to involve a person and not work area not anymore. If you wanted to listen to a person and understand what they wanted, you had to involve a human being and not. But not anymore. If you go on and on, diagnose a disease, any of these things, we have always need people for them and we dont anymore. So the digital encroachment is broad and deep and i think irreversible and to me it feels like this time it is different. It is not just the technology difference. The technology also sync just that Something Different<\/a> is going on. Technology has always been destroying jobs and creating jobs and there has been this Creative Destruction<\/a> and flow and turnover that has gone from one in this race to another industria. For most of the past couple hundred years, since the Industrial Revolution<\/a> those have been in balance and if you look at the trends of proto davidian employment and Median Income<\/a>, they all kind of rose roughly in sync. It started about 15 or 20 years ago when they started diverting. Productivity has continued to grow and profits overall with the gdp continue to grow and Median Income<\/a> has stagnated. So its not keeping him the way they did the work. And this has also stagnated as well. So there is something new going on in terms of the technology and in terms of the economic specifics and we think the nature of this is at the core of this difference. We dont think those two things are unrelated at all. What is going to happen . What are your views for what has weakened the power of the working class and is the working class doomed economically . We do not think that they are doomed. But we do agree that the Bargaining Power<\/a> has been weakened and that has left the underlying fundamentals of economics as a ceo or company can make do with robots or software machinery, then its a lot harder for a working man or woman to say give us our share of the revenues of the company and higher wages or else we will go on strike because they can say okay, great, let me replace you with robots. The guy who makes iphones over there. And he says that he will hire a million robots and that is a pretty Severe Threat<\/a> and it turns out an increasingly realistic one. So the Bargaining Power<\/a> of the worker goes down with a credible alternative. There are workers in other countries and there is a digital alternative which is already pretty good and only getting better. Derrick story about the robots shows that they appear even in the lowest parts of the world. But to try to get back to the question, it is way too early to say that the working class in america is like this. We dont want to walk away. The last part of our book is about the intervention and makes an in this era of pretty astonishing to logical process. You can jump in that or i can give you a couple of ideas. What do young people need to succeed in this economy, what can we do to increase educational skill levels and lead to more jobs and this is a much more specific question. So what it is based on is the routine information process has been especially hard hit over the past 10 years. It basically means following instructions like a tax preparer that we are talking about or the travel agency you can carry out information and it turns out that a big chunk of the American Economy<\/a> is devoted to exactly those. But careful research by my colleague and others at mit has found that if you look at the go content of all the occupations in the United States<\/a>, the more routine Information Processing<\/a> is involved, the more it takes time for fewer jobs in the categories and the more the wages are under pressure. So if you are looking for it a job to stay away from, it would be Information Processing<\/a>. If you look at the way that a lot of schools are structured, they are very much set up to get people to sit quietly and rose and learn how to follow instructions carefully. Rather then the skill set were dominant in the second machine age of following instructions. I have one question pushing back a little bit on the emphasis on education. How does increasing the educational and skill level of workers lead to more jobs when job creation is driven by aggregate demand within the domestic economy . There are two good questions in there. The first is even if we can get the educational system ride would that be futile . Absolutely not. When erik and i talk to Business Leaders<\/a> the most common complaint we hear is i cannot ayn people with the skills i need. All of them down the ladder from my frontline employees to the people at the very top of the company. I cant find people with the skills that i need indicates to us that our educational system is turning out people that are mismatched in the job market. Right now if we could wave a magic wand and fix education we would do a huge amount to help the unemployment and the wage crisis. The second part of your question though is his concept of aggregate demand which economists love to talk about. The way we think about it is captured in a wonderful and hep akrevoe story but a really good story about henry ford who was the head of the Autoworkers Union<\/a> touring modernized factories. He says hey walter how are you going to get to pay those robots and he says without missing a beat hey hague henry how are you going to get them to buy cars . This large stable prosperous american middle class so we created in the postwar decades is a phenomenal angina demand that bought a lot of stuff to get the economy growing. We continue to polarize if the middle gets hollowed out does that demand dip and a recession like we all know is a natural nasty downward smile of downward demand and we dont want that to happen. The court that question has a worldview that i want to push back a little bit which is its either or. If we have a recession there can be instructional measures. In fact its both. Paul krugman and Larry Summers<\/a> as far as i can tell arent. If they were we would he hearing about it by now. There and ended to grab tickets for trying to boost aggregate demand and stimulate the economy but that is a Business Cycle<\/a> issue right now. What we are talking about is more fundamental longterm structural issues and for that matter not unrelated. As andrew was just saying these structural can lead to the drop in demand that we are seeing so you need to address both of them. You can run an economy with a very small group at the top and a holme mass of fairly miserable people at the bottom. Its feasible, its just a lousy society and the smaller economy. Its not where we want to go at all. Certainly it will have political implications. Its going to be on quiet places as well. Speaker2 circle back to henry ford and the robots and we did have two questions here. One is whether given what we are seeing from longterm robot Android Development<\/a> should these workers be required to pay Social Security<\/a> taxes with android workers . And relatedly henry ford knew he needed the lower classes to consume his products with increased wages. Do you think modern and those the comptroller system see things similarly . Lets dive in a little bit deeper on that question. There has been some great work done by joe stiglitz and others to look at what happened during the Great Depression<\/a> and in even worse downturn than the terrible one we are suffering through and it turns out that his agriculture was mechanized and tractors were introduced there were tens of millions fewer farmworkers needed them before. So absolutely that kind of decline structural change in employment led to a drop in aggregate demand and a downturn and that is because those workers couldnt instantly find new work. Many of them had to physically geographically move and we all heard about the okies going to california and elsewhere and they had to obviously be rescaled for new kinds of activities and that could take years or even a decade or more. One of our concerns is that as people become rescaled and find new industries and people and entrepreneurs help discover those things and we can talk about that little bit later by then the technology will evolve against will evolve again so theres this constant catchup required that could lead to some really ongoing problems with not just structural employment but aggregate demand. Your question asked about the viewpoint of the tech errands these days. Erik and i have talked to a lot of them and i can report they are aware of the situation and the fact that technology is racing ahead and leaving a lot of people behind. One of the most Prominent Technology<\/a> executives in the world today told us just last week that he thinks this is the single most pressing issue that he and his industry and all of those will see in our lifetime. I find that good news. They are not turning a blind eye to what is going on at all. Lets go broad and take more specific. Which policies would you describe to mitigate inequality and increase employment . You asked about tax policy a second ago. We have a chapter on shortterm recommendations. We can get it out of the econ 101 textbook and we have a farther out chapter. Lets say that the robots really are taking over in this digital encroachment is going to continue to be broad deep fast and irreversible, then what . What kind of economy do we want to create and there are a couple of parts to be answered and i want to focus on tax policy because one of the questions was about tax. Economists have a fairly straightforward answer to what to do about this question about what if the pie is not being distributed in any fairway . The answer is lets give people money. Its just very straightforward. Guaranteed income or a guaranteed income plan sounds like a frothing at the mouse social is i say that. My not be too big of a problem here in california but you can have that conversation and a lot of america because it sounds like you are firmly on the far left fringe. Fringe. It turns out that was a cornerstone of nixons and famous socialist like Milton Friedman<\/a> and hayek. Theres a weird bipartisan history to this idea and if this does continue to play out along these trajectories we might revisit that. Thats not our preferred solution. Theres a wrinkle on that advocated by Milton Friedman<\/a> among others that we would like a lot tighter which is a negative income tax which is lets encourage work and make sure people are still working and for every dollar they earn instead of paying 20 cents out of their taxes why dont we give them 20 cents and that 20 cents in that link urged him to keep working. These are some pretty heavy ideas. We think in the more far out future lets ship the conversation around what we are taxing and how and if we need to shifted in this direction. We are at the halfway point. Are you still with us . This is the Commonwealth Club<\/a> of California Program<\/a> and you are talking with Erik Brynjolfsson<\/a> and Andrew Mcafee<\/a> about their new look the second machine, work progress and prosperity in a time of brilliant technologies. Im the moderator Andrew Leonard<\/a> from salon. Com. You can hear Commonwealth Club<\/a> programs on the radio and also see video of the programs on line on our youtube channel. Just jumping off what you just said a couple of questions here asking what you think of a security income as a response to this issue. Which seems to be the opposite of a negative tax. The they are very closely related. Let me build on what andrew was saying. We think you can do a lot to reallocate the way income is divided but the thing that andy and i focus on is something more like an expanded unearned income tax credit and let me explain the reason for the distinction. Both of them are ways of getting into the hands of more people who havent benefited as much from technology but we have been convinced first by a quote we came across from bolts here who actually said work solves three great evils order them, vice in need. The point is its not just about the need its also about a sense of meaning and other values and to be a little bit more scientific about it bob putnam the great sociologist at harvard has provided some very convincing evidence than when work leads to community it doesnt just take money out but it also leads to a whole host of social evils like increased drug use, teen pregnancy the dissolution of the family and increased crime rates so its really damaging when people dont have a way to earn a livelihood even if you replace the money. Thats not sufficient and it earned income tax credit are or other ways of encouraging work we think will help with that problem by making it more economical for businesses to hire people and for people to continue to have gainful employment and for people to have a way to contribute to Society Without<\/a> just having a handout in some way that despite what andy said about it having support from many different perspectives is probably going to be a higher hurdle to get past. Erik and i became convinced that if altairs great evils his thesis want to solve especially in this abundant world we are we are creating thanks in part to take a lot to Technological Progress<\/a> and the boredom is a terrible challenge. Charles murray is another guy with a very different political background but also looking at communities and what happens when work goes away. The stories they tell the faded they share are chilling. Like erik says divorce rates go way up. Children living in singleparent homes goes way up in incarceration rates go way up. Elections voting goes way down. It becomes this really troubled community and almost all the work that we have look looked at says the cause is very clear. Its when work goes away these bad things follow so we are terribly interested in Solutions Like<\/a> in a good earned income tax expansion that preserve work for people. Its really important to do. Its too bad the president is otherwise occupy right now in the state of the union. Somebody needs to get him a copy of this book. This is one question what would you include in president obamas state of the union and the public response giving us a list of things already what do you think of the clinical will to act upon that . We have witnessed for the last, definitely the last six years is a lot of dysfunction and moving forward in addressing these prescient issues. By your description is it going to become more pressing . Its starts with the right diagnosis and understanunderstan ding the issues because there are a lot of people who are angry and they have a right to be angry and we see some of them in San Francisco<\/a> and we see the tea party and the occupy wall street and they are all pointing fingers at different bad actors but they dont understand the powerful trends in the economy that are going to come with the wrong prescriptions. I think ultimately these dont need to be left or right or republican or democratic or other political arguments. The policies and the ideas we put forward in the book we think should and could have widespread support from different groups. There are things that most people agree government has a role in from education and infrastructure and andy pointed out some of the tax policies. Let me point to another category which is that we can encourage more innovation in building new products and services through entrepreneurship. That is not because we think everyone is going to be an entrepreneur and everyone who loses should become an entrepreneur. Its because entrepreneurs in our society are the people in charge of inventing the new industries and the products and services that employ people. If you go back and look at the first machine age the Industrial Resolution<\/a> revolution. At 1. 90 of americans were in agriculture announced 2 . Those people werent unemployed. There are people like Henry Ford Steve<\/a> jobs and bill gates and others that invented entirely new industries that redeployed those people that found new things for those people to do. We need to speed that process up despite a lot of entrepreneurship you hear about a Northern California<\/a> read the data suggests there is actually been less new business creation in the past decade than there was in the 90s or the 80s so we are not creating those new industries fast enough. Government has a role in setting the table to speed that up and for that matter to slow it down and we need to make sure we are making advances on all those fronts education tax policy and an entrepreneurship. You asked about what we would advise the president in the state of the union address. We have a chapter devoted to shortterm recommendations in our book and five really important areas in that chapter are education entrepreneurship infrastructure immigration and basic research. No matter what textbook you grab off the shelf written by a conservative or liberal economist they will say government has a clear role to play in those five areas, very little controversy about that. The optimism i can give give you and this is not a time of great optimism about getting things done in washington but we are close to a comprehensive Immigration Reform<\/a> bill and we came close in 2013 and it might well happen. That would be a great loose. There is broad agreement on both sides of the aisle on entrepreneurship and the importance of increase in it and theres a little bit of optimism about we add that up and are we batting 400 there are . Ted williams got to the hall of fame doing that once. Speaker2 be fair there is a real problem in washington and one of the reasons rewrote the book is to change the conversation. But technologists are doing an amazing job but any realistic assessment that politicians for that matter or Business Leaders<\/a> arent necessarily keeping up with what the technology is demanding. That really sets up the size of the challenge because our ability to come up with policy responses to these kinds of problems is nowhere near as fast as the technology is accelerating and you spend the first one third of your book and at one point you quote an earlier book about the rise of western civilization and the industrial web salute revolution made a mockery of everything that came before and the second machine age will make a mockery of everything that came before. If we are at the cusp of this its going to go even faster. Your playbook of solutions is something we have a hard time getting through in times where change. I know and that is why we think its so urgent to have this conversation and to change it. One time we were all moaning some of the slowness of the response in washington. A friend of mine said the thing you have to remember erik is that washington does not lead on these issues. Ultimately washington are followers. They respond when the people demand is so its only once that all of us start understanding these issues and demanding change that people in congress and the white house are going to want to respond to it. For better or worse it starts with us changing the conversation and understanding these issues and then we can expect action washington andrew you got the central challenge exactly right. Its not a tech a logical challenge. The tech knowledges are doing astonishing work and continue to do amazing work. Thats the one prediction about the future i made with 100 confidence. The central challenge is our other institutions the other elements of our society just arent changing as quick lee. Our organizations and educational system our political process. A lot of the important parts of society arent currently geared up to change as quickly as technology does. We have got to speed up the clock speed of foreign institutions. Let me emphasize that these these things get more misaligned we have problems. The answer is not to dampen down technology or to slow down technology. The answers to speed of our response to it. If we dont do that you can see there will be more and more pressure and neoluddites who want to stop the technology. With the theme of second machine why are we writing questions and collecting them . You dont have to answer that. I didnt write them that way. We have a group of questions wondering where this ands. Do Quantum Computers<\/a> get consciousness and are there areas that humans will be able to hold off the machine . And i see we are just about out of time. [laughter] speaker1 person says computers cant intuit something so that should be safe. Isnt that white they said that baseball they couldnt intuit what a good hitter was . I think we have learned andy and i. T. Never say never. We sometimes play games when we were writing the book point to a job or task for obligation saying thats just something that machines can do and lo and behold we would run into someone in the media lab working on that project. There are certainly areas where they are happening more quickly and more slowly. For that matter fine motor control and picking up a dime is something that most robots cant do and dont have a lot of success doing. Theres a great video by researchers about the towel folding robot. You have to watch it sped up as if you watch it in real time its like watching paint dry. The robot looks at the towel for a really long time. Its minutes to fold the towel but again. I have had a chance to review the lego spot and he built a snake that lunged at your hand like a cobra. Its the generation thats going to develop these. In the area of far out technological trajectory in progress that erik and i spent our time going about the most is this idea of singularity and art digital stuff actually becoming intelligent or fully conscious. Its an idea pop your life spike ray kurzweil who is a prolific guy. Erik and i go back and forth on it a lot. I personally dont see that on the trajectory that we are on right now but i want to echo eriks mantra, never say never. Let me talk about it trajectory that maybe we both can foresee which is one that keynes foresaw which is ultimately solving what you call her economic problem or the problem of extreme poverty in the world. In fact you dont have to be that wildeyed to extrapolate some of the trends that we are already on and see that extreme poverty could be eliminated within 20 years worldwide. Poverty is something we have always had with the same people have struggled with for not centuries but millennia. Our generation we may be within sight of finally dealing with extreme poverty and that is because these technologies are creating so much bounty and so much wealth. The issue is going to be distribution and managing the disruption associated associated with abbott in terms of material progress we are doing impressively. Erik and i were at tech this year but bonna with my warm at warmup act that ted. He gave the knockout presentation about the real potential, the likely trajectory to wipe out extreme poverty in Subsaharan Africa<\/a> and to echo erik that is not independent from Technological Progress<\/a> at all. There is beautiful Research Done<\/a> that shows what happened in the poorest parts of the world when people get cramond of mobile phones for the first time. Their economic lives gone completely different and better trajectory. Its critically important. It started with three deep printers and a whole set of technologies that seem to be Science Fiction<\/a> a few years ago becoming reality now. Do you think these technologies will be applicable to other pressing problems we have here and what they help us deal with our Energy Issues<\/a> and reduce Global Carbon<\/a> dioxide emissions and Greenhouse Gases<\/a> . If we have moores law and all this combinatorial and he and i were talking about beforehand theres a whole set of problems out there and we can only write one book at a time so we are not going to take on all of those at once but i do think is her Technological Capabilities<\/a> grew greater and we had more power to change the world one of the ways we can use the power is to address some of those fundamental needs. In the case of local warming in particular im somewhat optimistic that this can be a big help. Theres a Research Scientist<\/a> at work late john khuzami who looked at the Energy Consumption<\/a> of computers and that is improving faster than moores law so that gives me hope that we can do a lot to reduce or Energy Footprint<\/a> as technologies become more pervasive. Let me take eriks optimism up a level because i think its exactly right. We put a quote in the book and ideas from an economist named julia simon who never gets enough credit for his thinking. He was the antimalfusian. Julianne said you guys dont understand what goes on here. What we humans are extraordinary good at are solving our problems over and over again these things come up where they seem so dire and we find solutions to them. The reason we should be more optimistic these days and i mean is seriously in the next few years not within our lifetimes but in the next few years we are going to for the First Time Ever<\/a> interconnect the worlds population. There will be billions of people fully fledged into community that can access the worlds knowledge talk with each other access huge amounts of power and put their ideas into practice. I am very confident that humanity can meet the challenges. Let me underscore what he said. They will be able to contribute to the worlds knowledge and talk about common editorial innovation this is common editorial innovation on steroids in a good sense. We can say this and you all know we are talking about. What you just said about the issue of global poverty and the impact of some of these technologies in africa and asia relates to a question how much of this problem with income inequality and the developed world is u. S. Centric and wes centric and will it go away once the the rest of the world catches up . Thats a great question. Let me look at other developed countries and the developing countries briefly. If you look at the oecd countries to rich developed countries the pattern is very similar in those other countries in 18 of the 22 countries where we have data inequality has been growing in sweden, germany and france and japan. One of the exceptions was greece but they have a whole other set of issues going on over there. Greece is not the model. They started Different Levels<\/a> of inequality but there are some worldwide trends going on and its not just politics, its not just local conditions. Something more fundamental than that. Then you want to look at it more broadly whats happening in china and other countries in there i think the story is even more striking because we were looking out some of the issues in terms of manufacturing employment and people often think of globalization and technology has been and technology is being the two great forces affecting the economy and the idea of manufacturing moving from the United States<\/a> to china. It turns out that in fact manufacturing employment in china is shrinking. There are 20 million fewer people working in manufacturing today than there were in the 1990s. Its shrinking in the United States<\/a>. Its shrinking and all the places worldwide so its not a matter of jobs moving from one country to another, its jobs moving from both china and the United States<\/a> to robots, to automation. The phrase andy and i used to describe this is that offshoring is just a weigh station on the road to automation and as Technology Accelerates<\/a> it becomes even more important in the next decade than it was in the past decade. So in many ways countries like china that have been historically relying on lowwage labor to compete are more in the bullseye of this automation are made then the American Factory<\/a> workers. Just like bounty is a global phenomenon it appears to be a phenomenon as well. China for example can next to a question that just arrived. You can visit shanghai or beijing right now without a gas mask and have difficulties. Theres the question of whether even very quick technological innovation can keep up with the human impact on the planet as the 7 billion people raise prosperity levels. This question so specifically do you expect technology to solve the problems associated with fast growing population and the dwindling of Natural Resources<\/a> . Can Technology Keep<\/a> up with humans in the long run . Thats a little bit of a different twist. Yes absolutely with the exception, the very big exception for global warming. Most of our environmental indicators move in the right direction rather than the wrong direction. Technology is a huge reason why and im super optimistic that overall again with the exception we are going to learn to live more lightly on the planet. But it is a race thats going to be tight but were generally have countries is countries have been more developed they are in london is cleaner than it was 400 years ago or 200 years ago and it hasnt reached that turning point in beijing or shanghai but i think people are starting to demand it there as well. This is where democracy in the middle class come in handy because we demand these things of the countries we live in. Which brings us right here to San Francisco<\/a> where the democracy is beginning to become irritated at the technology. Thats some nice phrasing, isnt it . Its been one of the unique stories of the last 20 years and one of the birthplaces for so much of the modern digital age is having almost an immune reaction to it. I dont know if the same thing is happening back east but. Its too cold back east. This is why we talk to our technoutopian friends who say look dont worry technology is going to take it care of all of these and you have to grapple with the fact that not everybody is sharing his bounty currently in a feud nor that people are going to get justifiably angry and the reaction of many of them is going to be hey we have got to stop this technology. We have to throw rocks at the google buses or 200 years ago was smashing the looms in england. As we said earlier we dont think that is that all the right solution. That is destroying many of the benefits that we could be having but if youve nor the problem that is a reaction that many people will have and we have to change the conversation and focus on more Realistic Solutions<\/a> that are more inclusive. Can the companies themselves address this directly . What do you think about jaron lemieuxs idea that the means of closing the spread is for companies to pay for the data that they are allowed to mine . Should Facebook Google<\/a> twitter the New York Times<\/a> paid their users for using and interacting with their tools . And she said, look, if you give me a different challenge and build robots work with people instead of be a substitute for them, ill do it instead. I like working on tough problems, you guys specify what you want the problem to be. We have these wonderful online competitions and contests and tournaments that motivate huge amount of effort. One of the favorite why ideas we have come up withlet use these things. Use these motivating tools to point the technologists in the direction, again, put them back in to the economy. Help with the challenges. Were getting close to the end here, so maybe we can try to figure out a way to go out looking for mob lot of parents in here College Age Children<\/a> because im one myself. A lot of people wonder what do i tell my kids to do. Where do i steer them to thrive in this second machine age, you know. A lot of things are out of our power. , you know, getting the political system to address changing the taxation. Theyre things question do individually. What can people do themselves to best position themselves for the future . Well, three pieces of advice. First, look at the skills the machines are not good at. We already touched on some. Creativity, interpersonal relations, caring other humans. Those are areas continue to be in demand. The second piece of advice is dont be too lockerred in to those. The nature Much Technology<\/a> is constantly evolving and we have continued to be surprised as we have been describing about the advantages that advances are happening. Its unlikely any one career or skill set familiar with youll be able to exactly you have to adjust. And the third piece of advice is do what you love and do something you are excited about. Not just because its more fulfilling to yourself but cold hearted economic about it. Those three pieces of advice are the best kind of guidance a child or anybody Going Forward<\/a> in the second machine age. Like you said, it was probably not the most common question get asked. Two pieces of advice. First, hit the damn books. One of the most research we came across is about this gradual slide in the amount of hard work going on at College Campuses<\/a> these days and concurrence in voting. Hang out with drama geeks and the renaissance geeks. Thats awesome but then walk to the other side of campus and hang out with the math geeks and Computer Science<\/a> geeks as well","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia801600.us.archive.org\/25\/items\/CSPAN2_20140210_064900_Book_Discussion_on_The_Second_Machine_Age\/CSPAN2_20140210_064900_Book_Discussion_on_The_Second_Machine_Age.thumbs\/CSPAN2_20140210_064900_Book_Discussion_on_The_Second_Machine_Age_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240619T12:35:10+00:00"}