Is our quality of life better than it was 30 years ago? Will it continue to advance, or will it stagnate and actually decline? These, and many similar philosophical questions have been debated for centuries. Whether in research journals, news stories, books or cocktail party discourse, this topic provokes strong emotions. Understandably, this is a critical issue, underlying the important concepts of human happiness and life satisfaction.
Recently, this issue has received significant coverage and debate, as a variety of thought leaders have argued their particular position. Two notable thinkers have led the charge of the “negative” camp, arguing that the growth in our standard of living has plateaued, with most “low-hanging fruit” already picked.
First, Robert Gordon, a professor of economics at Northwestern University, wrote an influential paper entitled, “Is U.S Economic Growth Over? Faltering Innovation Confronts The Six Headwinds”. In this paper, Gordon posits that innovation, and rapid growth of material progress is a relatively new phenomenon and atypical across recorded history. He primarily uses gross domestic product (GDP) per capita as the main measure of progress.
Gordon describes how prior to 1750 there was a very slow rate of economic growth with very little accumulated innovation. He then tracks three different industrial revolutions occurring over the last 250 years. The first, occurring between 1750 to 1830, involved the harnessing of steam for machinery and the establishment of railroads. These two innovations led to large scale productivity gains in manufacturing and transportation.
Gordon than describes what he believes produced the greatest productivity gains in history, Industrial Revolution #2. This phase, which he believes ran from 1870 to 1900, saw the development of electricity, the internal combustion engine, running water and communications. Additionally, Gordon describes how “spin-off” inventions from Industrial Revolution #2 led to rapid productivity growth between 1890 and 1972. These spin-offs include such developments as airplanes, air conditioning and the interstate highway system.
The Third Industrial Revolution, which spanned 1960-2005, involved the development of computers and the internet. For this era, Gordon focuses on the introduction of commercial computing, word processing and touches briefly on the development of websites and eCommerce.
Gordon feels strongly that this latest revolution did not equal the growth improvements of Industrial Revolution #2. He also feels that most of the innovation of this stage has already been achieved, with little likelihood of dramatic spin-off benefits. He argues that we are likely to return to a pre-1750 pace of economic growth, both slow and unremarkable.
Tyler Cowan, a George Mason University economics professor, posited a similar theory in his 2011 eBook, “The Great Stagnation”. Like Gordon, Cowan argues that we have reached an historical technological plateau in economic growth. He looks at the period between 1880-1940 as a golden age of progress bringing massive improvements in transportation, mass communication, energy and sanitation. As Gordon does, Cowan argues that these are one-time innovations, low hanging fruit that has now been picked.
There is a related group of pundits raising alarms about our future standard of living and quality of life. This group argues that technological innovation is leading us towards a future with high unemployment, massive income disparity and a large disenfranchised class of people. As opposed to the former group, who argues that technological growth has slowed, these pundits see a rapidly accelerating progress, potentially leading to dystopian ends.
A leading proponent of this thinking is Paul Krugman, the Nobel prize winning economist and New York Times columnist. He argues that robotics, big data and artificial intelligence will continue to drive rapid growth in GDP, but the resulting benefits will accrue to the owners of these technologies.
MIT researcher Andrew McAfee raises similar concerns in his book, co-authored with Erik Brynjolfsson, Race Against the Machines. McAfee and Brynjolfsson make two important points in their work. First, technology is starting to eliminate a large number number of jobs at both ends of the skills spectrum. Lower end service jobs, such as cashiers, are being eliminated by self-service kiosks. Warehouse workers are being eliminated by robots. At the highly skilled end of our economy, automation is starting to take the place of analysts, technicians and even journalists. The second, complimentary point that McAfee and Brynjolfsson make concerns the rapid increase in the rate of change. They argue that while past revolutions allowed for workforces to slowly adjust to disruptions, this one may quickly leave a number of people unemployed, without marketable skill-sets.
As a quick point of differentiation, while Krugman has grave concerns about future inequality and standards of living, McAfee is primarily a technology optimist. He believes that the coming job market challenges, while very real, can be dealt with, ultimately leading to a brighter future.
Several prominent thinkers have weighed in with viewpoints in opposition to the thinking of Gordon, Cowan and Krugman. The futurist and entrepreneur Kevin Kelly, the author Matt Ridley and economists Russ Roberts and Don Boudreaux, are all in the optimist camp regarding technology, productivity and growth.
Roberts, a research fellow at Stanford’s Hoover Institution and a prominent blogger, takes issue with the limited way that many pessimists measure growth. As Roberts describes in a recent post, one way that economists, (and the government) measure our standard of living is through changes in the consumer price index (CPI). Plotted against data such as median household income, CPI is often used to provide a sense of “buying power” and a measure of economic progress. But as Roberts argues, CPI is a limited measurement, failing to capture much of the improvements stemming from technological progress.
Roberts’s explains the limitation in the following way. One can think of three different types of progress that CPI measures. First, and most simply, it can measure the decrease in cost of a product due to some improved efficiency. As an example, in 1929, the average American family spent over 23.4% of their disposable income on food. Due to efficiency improvements in farming, food production, shipping and retailing, that percentage dropped to under 10% by the year 2000. Roberts argues that CPI does a good job of measuring this type of improvement.
But things get more complicated! How do we measure the improvement in the quality and capability of the measured products? How do we measure the value of a color TV vs. a black and white set? Roberts argues that the federal agency computing CPI, the Bureau of Labor Statistics (BLS) does merely an “ok” job of measuring this effect.
There’s a final type of measurement that Roberts feels dramatically understates the value of innovation. That measurement involves new types of products or services that don’t really have a historical comparison point. Roberts uses the example of connecting with a child in Europe via Skype. Should it be measured against the cost of a trip to Europe? While it is obviously not a direct replacement, it provides some of the same benefit, at virtually no cost!
Don Boudreaux and Mark Perry, economics professors at George Mason University and the University of Michigan respectively, are in alignment with Roberts. Their recent opinion piece in the Wall St. Journal looked at progress from the standpoint of the middle class. In addition to the measurement problem described by Roberts, they raise a number of other points. First, they look at life expectancy as a key measure of economic progress. An American born today can expect to live to approximately 79. This is a significant rise from 1980 (73.7) or 1970 (70.8).
In addition to living longer lives, Boudreaux and Perry highlight how average Americans are able to lead more “enjoyable” or fulfilling lives. They conclude this by analyzing the way that households spend their income. The Bureau of Economic Analysis looks at a breakdown of spending, by categories. The authors utilize this data to create a consolidated category they call “modern life’s basics” – food at home, automobiles, clothing and footwear, household furnishing and equipment, and housing and utilities. The percentage of household income spent on these basics has dropped from 53% of disposable income in 1950 to 44% in 1970 to 32% today. This, the authors argue, leaves a greater percentage of income for discretionary items related to entertainment, travel, hobbies etc.
The futurist, Kevin Kelly takes issue with the Gordon paper in a recent Wired magazine piece entitled, “Better Than Human: Why Robots Will – And Must- Take Our Jobs”. Kelly has a vision of an advancing world where robots and other forms of digital intelligence take on a greater percentage of human tasks leading to greater economic efficiencies.
To further illustrate his point, Kelly looks at robots replacing jobs across four categories. His use of the term robot goes beyond the conventional definition, including broader forms of intelligent automation.
First, there are jobs that humans currently do, that robots will eventually do better. He highlights a new class of robots exemplified by Baxter (from Rethink Robotics), that are poised to replace humans in assembly line work. The second category involves existing jobs that humans can’t do but robots can. The precision required for the manufacture of computer chips, for example, necessitates the use of robotic machinery. The calculation capabilities required to analyze massive datasets would be another example. Kelly argues that while the “robots replacing humans” story grabs the headlines, the substantial benefits are in category 2.
Kelly then turns his attention to new jobs that we have not yet created. He sees a third category, similar to category 1, where robots eventually replace a job first done by humans. He then sees a last category where robots perform jobs in the future that we currently can’t envision.
Kelly does not see this leading to a dystopian future of unemployment and poverty. He sees these advancements in technology leading to greater opportunities for people. Kelly argues that as robots (and other forms of automation) take over the common tasks of goods production and service delivery, humans will be freed to work in more creative, fulfilling jobs. All told, he expects we will have more interesting and gratifying lives.
As a technologist, optimist and believer in the power of human ingenuity, I am firmly in the camp of those taking a positive view of our future. I believe that Gordon, vastly underestimates the impact of what he calls Industrial Revolution #3 (computers and the internet). His starting point of 1960 highlights an unremarkable period of computer innovation, primarily focused on the automation of clerical processing tasks by large organizations. Even the personal computer revolution of the 1980’s represents a small piece of progress relative to the whole digital phenomenon. It wasn’t until the arrival of the mainstream world wide web in the early to mid-90’s that digital innovation started to rapidly advance. And contrary to his notion of minimal progress after 2005, the last 7 years have seen dramatic innovation, especially in the mobile computing space.
In my opinion, Gordon’s biggest error is to trivialize the “computer era” by saying that since 2000, the focus has been on making entertainment and communication devices that are smaller, smarter and more capable. He is effectively dismissing the innovation of this period as limited to making better mp3 players and cell phones!
One could spend days writing down the endless, meaningful improvements that 21st century computer technology has driven. These innovations have done everything from saving time to saving energy to saving lives. I’ll simply list a few examples, from the mundane to the profound:
- GPS Navigation systems with real-time traffic conditions
- Mobile banking, with remote check deposit
- Free global communication, including video (e.g. Skype and FaceTime)
- Free email with multimedia sharing and virtually unlimited storage
- Wikipedia – a free searchable library in your hand
- Remote Learning – Access to training and education from anywhere on earth (examples include Kahn University, MIT Opencourseware and numerous others)
- Robotic Surgery (while technically used experimentally in the 80’s and 90’s, widespread use didn’t occur until the 2000’s)
Not only do I feel that the naysayers underestimate the value of existing innovations, they fail to recognize how spin-offs of the digital revolution will continue to drive and accelerate the rate of progress. There are two major forces that lead me to this conclusion. First, Moore’s Law will stay in effect, leading to continuous, exponential growth in computing power. Second, the networked nature of the world along with enhanced social collaborative platforms will lead to greater sharing of knowledge, ideas and practices. Combined with ever increasing hardware power, this new world of wikis, forums, crowdsourcing, crowdfunding and open source code is a fertile field, ready to sprout a cornucopia of constant innovation.
I specifically see the following areas of technology moving from their inchoate state, dramatically impacting human life and material progress:
- Autonomous Vehicles
- Artificial Intelligence
- The Internet of Things
I also expect that human ingenuity will continue to bring us innovation that we can hardly imagine today. It’s impossible for even the best futurists to envision tomorrow’s world, without being limited by the features of the world in which they currently inhabit. Futurists of the past have typically overreached on predictions related to human travel (e.g. personal space travel, flying cars, hypersonic jets). At the same time, many failed to imagine the internet, along with its diverse and dramatic benefits. I look forward to being pleasantly surprised by the wondrous and unimaginable innovations we will see in the future.