Brad Feld, a prominent venture capitalist and the co-founder of several VC firms, has posted a review of The Lights in the Tunnel on his blog.
As Brad points out in his review, the book is roughly divided into two parts. The first part argues that automation technology is ultimately going to advance to the point where most average workers will be unable to find employment within their capabilities. Brad found a lot to agree with in this first part of the book:
Ford does a good job of spending the first half of this book making the case for this. He draws nicely from the notion of a technological singularity (which many of us are now calling simple “the singularity” for convenience), explains why mainstream economists (and the notion of econometrics in general) are basically historians rather than effective predictors of the future, does a nice job weaving the Luddite Fallacy into the mix, makes a compelling argument about China’s role in this he calls the “China Fallacy”, and wraps it up by revisiting a variety of conventional views of the future while asking “do we really believe they are going to play out this way?” (answer = no).
The second part of the book proposes some fairly radical ideas about how we might adapt capitalism to the new reality if jobs are in fact going to disappear for most people. Brad found these ideas very difficult to accept, writing “Sometime during reading this stuff my brain exploded and I had to go take the dogs for another walk. ”
I’ve found that to be a fairly common reaction to the book. Many people see the logic in my argument about where automation technology is going to ultimately lead, but very few people are ready to really think about the solutions—because there probably are not any solutions that aren’t fairly radical.
If you accept the basic premise that:
A. At some point in the future, automation technology will advance to the point where MOST people are essentially unemployable.
B. Is it possible to sustain consumer spending, mass market business models, economic growth—and quite possibly democracy and civil order—without some form of radical intervention or reform?
I’ve found that most people who try to address this start by denying the premise: we’ll never have massive unemployment due to technology, so it won’t be a problem. Ok, but can you sustain capitalism without reform if you accept the premise?
Remember that technology would not stop advancing, so we could reasonably expect that over time, a smaller and smaller fraction of the population would have marketable skills. If we take things to the extreme, the advent of genuinely intelligent machines could conceivably vaporize almost the entire job market. Advanced virtual reality technology—perhaps linking directly into your brain—might someday even eliminate opportunities for human celebrities and entertainers. Who could compete with that kind of digital fantasy?
If most people don’t have jobs, where does consumer spending come from? What drives the economy? Why would automated production continue if there is no one to buy the output? Will automation make everything so cheap that it won’t matter if people have virtually no incomes? I don’t buy that argument.
One person who believes everything will work out without any major reform is Robin Hanson, a libertarian economist at George Mason University. Hanson argues that intelligent machines would eliminate nearly all jobs but would also cause productivity and economic growth to increase exponentially—driving up interest rates and returns on productive assets to incredible levels. He brushes aside the obvious reality that most people don’t own much and suggests that the returns would be so high that even people who owned only tiny slices of the pie would have investment incomes sufficient to support themselves.
I think Dr. Hanson must be smoking some really weird and potent libertarian stuff. I pointed this out in a response to his paper on the economics of intelligent machines.
Aside from that idea, is there another way to accept the premise and have a reasonably prosperous and civil society without radical reform (such as some type of guaranteed income funded by taxation)? If you have any ideas please post in the comments….