Monthly Archives: April 2014

Robots for all!

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Yesterday I took part in a fascinating Resolution Foundation discussion, Equity in the Age of the Robot. It was an apt day to be debating the impact of automation on jobs and equity, as the Tube strike probably left half the audience wishing those jobs were already being done by robots and the other half pleased the union is still holding out for the humans.

My contribution was to point out that although we can be concerned about the speed at which automation is going to be able to replace a lot of middling-skill, middling-income jobs, with all the transitional problems that brings, the UK economy needs more robots. That’s the message of the low labour productivity problem. Real wages can’t rise over the long term unless investment in capital and productivity improve. Having said that, we need to worry about

(a) the distribution of the productivity gains, and ensuring these aren’t all extracted by over-paid executives – perhaps thinking about robot ownership; and

(b) equipping people with skills that could be useful and managing the transition in the labour market better than in the past. As Conrad Wolfram pointed out in a recent article, we’re teaching children to be not very good and expensive versions of Siri when it comes to the maths curriculum; they need to understand how to solve quadratic equations but they key skill they need is not memorising and replicating that. Like Professor Alan Manning, I think we should not be resisting the robots but focusing on the institutional and political arrangements that ensure fair outcomes.

I highly commend the work of Michael Osborne, who was presenting new data for the UK showing which jobs are vulnerable to automation by 2020 – mainly in sectors like retailing, logistics, transport. (Here’s the paper he wrote with Carl Benedikt Frey, The Future of Employment: How Susceptible are Jobs to Computerisation?) The whole panel discussion is worth a viewing.

The books cited in the discussion were – of course – Bynjolfsson and McAfee 1 and 2, [amazon_link id=”0984725113″ target=”_blank” ]Race against the machine[/amazon_link], and [amazon_link id=”0393239357″ target=”_blank” ]The Second Machine Age[/amazon_link].

[amazon_image id=”0393239357″ link=”true” target=”_blank” size=”medium” ]The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies[/amazon_image]

The eclipse of capitalism – or maybe not

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Jeremy Rifkin’s new book, [amazon_link id=”1137278463″ target=”_blank” ]The Zero Marginal Cost Society[/amazon_link], covers lots of interesting territory but isn’t my cup of tea. One reason for that is apparent in the subtitle: “The internet of things, the collaborative commons and the collapse of capitalism” – wide-ranging is good, but ranging wide over such a disparate set of topics is a bit of a stretch.

[amazon_image id=”1137278463″ link=”true” target=”_blank” size=”medium” ]The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism[/amazon_image]

Another reason is that near the start of the book there is an anti-economics rant, economics being characterised by “unquestioning acceptance, and refusal to envision alternative explanations, lead[ing] to a festering of inconsistencies that pile up.” While I certainly agree that economics too often sets environmental constraints to one side – which is what Rifkin’s rant builds up to – I always check the references and bibliography at this point to see how much modern economics the ranter has read. And as is always the case with such critics, Rifkin cites next to no work done in the past 25 years.

The main argument of this book is that near-zero marginal cost activities make up a growing proportion of economic activity, and this signals the inevitable decline of capitalism. Capitalist markets are not an efficient way to organize a society in which most things are free, because the socially efficient price is zero when marginal costs are zero. Rifkin draws on his last book [amazon_link id=”0230341977″ target=”_blank” ]The Third Industrial Revolution[/amazon_link] and adds in the effects of the Internet of Things and smart grids in optimising energy use to apply this argument to energy prices. He cites also MOOCs and 3D printing. It is not a new observation to point out that many activities involve high fixed costs and low marginal costs. Digital or digitally-enabled activities are adding to the roster of industries with this structure, shaking up business models in music, publishing, newspapers and – soon – education; but other industries from aerospace to pharma to broadcasting have long experienced increasing returns. These too challenge the model of small, perfectly competitive firms delivering efficient outcomes through the magic of the price mechanism and the market.

Rifkin does not, for my taste, adequately address the question of how the high fixed costs are to be covered in his post-capitalist world. “Within 10 years every building in America and Europe, as well as other countries around the world, will be equipped with smart meters,” he writes. He predicts huge cost as well as energy savings, citing a Cisco forecast that the Internet of Everything will generate $14.4 trillion in cost savings and revenues. So that’s selling smart meters plus the cost savings from using less energy once they are installed, I guess – and wouldn’t Cisco, purveyor of smart devices, say that anyway? The smart meter installation programme in the UK alone is estimated to have a: “positive net present benefit of £6.7 billion over the period to 2030, by delivering total benefits of around £18.8 billion and costs of around £12.1 billion.” (House of Commons Energy Select Committee estimates.) These order of magnitude smaller estimates for a longer period predate the actual existence of technical standards and operational meters, needing to be installed in every home and business in the country. I’m sure it’s worthwhile, but I’m sceptical about this happening within 10 years, all around the world.

The most interesting chapters in the book cover collaborative efforts and the switch “from ownership to access.” There have been interesting articles and stirrings around just this past week on the sharing economy – from The Economist, from Public CEO, this New York petition, John Kay in the FT. (HT to @johnfingleton1 for the links.) Parts 3 and 4 of Rifkin’s book provide an overview of this territory. By this stage, I had gone into irreversibly sceptical mode, and concluded that it is too early to say that none of the new digital businesses will find a viable business model.

This book would be a good airport read. Rifkin is a clever and widely-read writer. I don’t like the way he opts for polemic over analysis, but that’s me. Others might enjoy this high-level canter over a wide territory – but I’d caution you to take the claims with more than a pinch of salt.

Technology, identity and money

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It would be bad form to review Dave Birch’s excellent new book [amazon_link id=”1907994122″ target=”_blank” ]Identity is the New Money[/amazon_link] here, given that I commissioned him to write it. To entice readers, however, here is his argument in a nutshell: “This book argues that not only is identity changing profoundly but that money is changing equally profoundly, because of technological change; and that the two trends are converging so that all we will need for transacting will be our identities.” It’s thought-provoking, informative and entertaining. Anyone interested in any of money, social networks and/or mobiles should read it – after all, there are few experts who know as much as Dave about the overlap between digital technology and money.

[amazon_image id=”1907994122″ link=”true” target=”_blank” size=”medium” ]Identity is the New Money (Perspectives)[/amazon_image]

Trail over, I was interested to read this article by Paul Laity about Penguin’s revival of the Pelican imprint, its series of accessible, reasonably short non-fiction books on a wide range of subjects of contemporary interest. Sound familiar? Our Perspectives series got there a year ago, albeit sadly without Penguin’s marketing budget. Still, I agree with their sense that the ‘thirsty public’ is back – even though non-fiction book sales have apparently been declining. Surely [amazon_link id=”067443000X” target=”_blank” ]the Piketty phenomenon[/amazon_link], if nothing else, will reverse that in 2014’s figures?

One of the first Pelican titles will be Ha Joon Chang’s [amazon_link id=”0718197038″ target=”_blank” ]Economics: A User’s Guide[/amazon_link]. I found the style of his [amazon_link id=”0141047976″ target=”_blank” ]23 Things They Don’t Tell You About Capitalism[/amazon_link] irritating but it was nevertheless well worth reading. I’m sure the new one will be equally valuable.

[amazon_image id=”0718197038″ link=”true” target=”_blank” size=”medium” ]Economics: The User’s Guide: A Pelican Introduction (Pelican Books)[/amazon_image]

Working class heroes

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Sometimes life brings unexpected gifts. On Thursday evening I attended the launch of this year’s BBC Proms season, and had the pleasure of meeting the baritone Roderick Williams, who is singing on the Last Night, and is one of the most life-affirming and delightful people I’ve met. Do listen.

Yesterday the treat was visiting the UK HQ of Vice News. My reaction on walking in: I want to work here. My second: I’m way too old to do so! Just around the corner is the London HQ of the Workers’ Educational Association. Founded in 1903, my mother took some of its courses in the 1990s after she retired: wine appreciation and watercolour painting. It is a sign of progress that working people now have options like those.

The WEA is one of the many organisations featuring in Jonathan Rose’s brilliant book [amazon_link id=”0300153651″ target=”_blank” ]The Intellectual Life of the British Working Classes[/amazon_link]. All of them, and the many autodidacts among working class people, formed part of the social and political innovation that was a response to the profound structural dislocation caused by the industrial revolution. It isn’t yet clear at all what the modern response will be to automation and inequality, although we can be sure there will be one; I found Thomas Piketty disturbingly deterministic about these trends. (Incidentally, there have now been gazillions of reviews of [amazon_link id=”067443000X” target=”_blank” ]Capital in the 21st Century[/amazon_link] including my own, but I found this one by Joshua Gans one of the best, and this by Gillian Tett interesting on the social psychology of Piketty-mania.)

[amazon_image id=”0300153651″ link=”true” target=”_blank” size=”medium” ]The Intellectual Life of the British Working Classes[/amazon_image]

The reason for this ramble is the publication of [amazon_link id=”0747591849″ target=”_blank” ]The Valley: A Hundred Years in the Life of a Family[/amazon_link] by Richard Benson, which has had wonderful reviews – today in the FT, previously in The Guardian and elsewhere. The FT covers several other books – [amazon_link id=”1848548818″ target=”_blank” ]The People: The rise and fall of the working class 1910-2010[/amazon_link] by Selina Todd, [amazon_link id=”1846142784″ target=”_blank” ]Dreams of the Good Life: Flora Thompson and the Creation of Lark Rise to Candleford[/amazon_link] by Richard Mabey, and [amazon_link id=”030018784X” target=”_blank” ]The Gardens of The British Working Class[/amazon_link] by Margaret Wiles.

[amazon_image id=”0747591849″ link=”true” target=”_blank” size=”medium” ]The Valley: A Hundred Years in the Life of a Family[/amazon_image]

It’s interesting to see this batch of books on the subject of the working class. There is an issue here. Lynsey Hanley’s [amazon_link id=”1847087027″ target=”_blank” ]Estates[/amazon_link], Owen Jones’s [amazon_link id=”1844678644″ target=”_blank” ]Chavs[/amazon_link] and [amazon_link id=”1907994165″ target=”_blank” ]Why FIght Poverty?[/amazon_link] by Julia Unwin all address from different perspectives the theme of the fear and loathing among the elites for people with low incomes. The weakening in the public sphere of a once-vibrant working class culture and the rise in inequality are two facets of a significant phenomenon.

[amazon_image id=”1907994165″ link=”true” target=”_blank” size=”medium” ]Why Fight Poverty? (Perspectives)[/amazon_image]

Remembrance

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It’s the 99th anniversary of the Gallipoli landing – there will of course be four years’ worth of World War I centenary commemorations so next year brings the round number for this event. But listening to the reports this morning brought to mind the absolutely brilliant book by Alan Moorehead, just called [amazon_link id=”1853266752″ target=”_blank” ]Gallipoli[/amazon_link], first published in 1956. He’s a terrific writer. There’s the [amazon_link id=”1845133919″ target=”_blank” ]Desert War Trilogy[/amazon_link], and I enjoyed [amazon_link id=”1840246677″ target=”_blank” ]The Villa Diana[/amazon_link] hugely too. The other must-read among old books is Paul Fussell’s [amazon_link id=”0199971951″ target=”_blank” ]The Great War and Modern Memory[/amazon_link]. I’ve not yet read any of the new crop of books but will definitely read Margaret Macmillan’s [amazon_link id=”184668272X” target=”_blank” ]The War That Ended Peace[/amazon_link] this summer.

[amazon_image id=”1853266752″ link=”true” target=”_blank” size=”medium” ]Gallipoli (Wordsworth Military Library)[/amazon_image]   [amazon_image id=”0199971951″ link=”true” target=”_blank” size=”medium” ]The Great War and Modern Memory[/amazon_image]   [amazon_image id=”184668272X” link=”true” target=”_blank” size=”medium” ]The War that Ended Peace: How Europe abandoned peace for the First World War[/amazon_image]