It’s
now possible to sell a new product to hundreds of millions of people
without needing many, if any, workers to produce or distribute it.
At its prime in 1988, Kodak, the iconic American photography company, had
145,000 employees. In 2012, Kodak filed for bankruptcy.
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The same year Kodak went under, Instagram, the world’s newest photo company, had
13 employees serving
30 million customers.
The
ratio of producers to customers continues to plummet. When Facebook
purchased “WhatsApp” (the messaging app) for $19 billion last year,
WhatsApp had
55 employees serving
450 million customers.
A friend, operating from his home in Tucson, recently invented a machine that can find particles of certain elements in the air.
He’s
already sold hundreds of these machines over the Internet to customers
all over the world. He’s manufacturing them in his garage with a 3D
printer.
So far, his entire business depends on just one person — himself.
New technologies aren’t just labor-replacing. They’re also knowledge-replacing.
The
combination of advanced sensors, voice recognition, artificial
intelligence, big data, text-mining, and pattern-recognition algorithms,
is generating smart robots capable of quickly learning human actions,
and even learning from one another.
If you think being a “professional” makes your job safe, think again.
The
two sectors of the economy harboring the most professionals — health
care and education – are under increasing pressure to cut costs. And
expert machines are poised to take over.
We’re on the verge of a wave of
mobile health apps for
measuring everything from your cholesterol to your blood pressure,
along with diagnostic software that tells you what it means and what to
do about it.
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In
coming years, software apps will be doing many of the things
physicians, nurses, and technicians now do (think ultrasound, CT scans,
and electrocardiograms).
Meanwhile, the jobs of many
teachers and university professorswill disappear, replaced by online courses and interactive online textbooks.
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Where will this end?
Imagine
a small box – let’s call it an “iEverything” – capable of producing
everything you could possibly desire, a modern day Aladdin’s lamp.
You simply tell it what you want, and – presto – the object of your desire arrives at your feet.
The
iEverything also does whatever you want. It gives you a massage,
fetches you your slippers, does your laundry and folds and irons it.
The iEverything will be the best machine ever invented.
The
only problem is no one will be able to buy it. That’s because no one
will have any means of earning money, since the iEverything will do it
all.
This is obviously fanciful, but when more and more can be
done by fewer and fewer people, the profits go to an ever-smaller circle
of executives and owner-investors.
One of the young founders of
WhatsApp, CEO Jan Koum, had a 45 percent equity stake in the company
when Facebook purchased it, which yielded him
$6.8 billion.
Cofounder Brian Acton got
$3 billion for his 20 percent stake.
Each of the early employees reportedly had a 1 percent stake, which presumably netted them $160 million each.
Meanwhile,
the rest of us will be left providing the only things technology can’t
provide – person-to-person attention, human touch, and care. But these
sorts of person-to-person jobs pay
very little.
That
means most of us will have less and less money to buy the dazzling
array of products and services spawned by blockbuster technologies –
because those same technologies will be supplanting our jobs and driving
down our pay.
We need a new economic model.
The economic
model that dominated most of the twentieth century was mass production
by the many, for mass consumption by the many.
Workers were
consumers; consumers were workers. As paychecks rose, people had more
money to buy all the things they and others produced — like Kodak
cameras. That resulted in more jobs and even higher pay.
That
virtuous cycle is now falling apart. A future of almost unlimited
production by a handful, for consumption by whoever can afford it, is a
recipe for economic and social collapse.
Our underlying problem won’t be the number of jobs. It will be – it already is — the allocation of income and wealth.
What to do?
“Redistribution” has become a
bad word.
But
the economy toward which we’re hurtling — in which more and more is
generated by fewer and fewer people who reap almost all the rewards,
leaving the rest of us without enough purchasing power – can’t function.
It
may be that a redistribution of income and wealth from the rich owners
of breakthrough technologies to the rest of us becomes the only means of
making the future economy work.
Robert Reich, one of the nation’s leading experts on
work and the economy, is Chancellor’s Professor of Public Policy at the
Goldman School of Public Policy at the University of California at
Berkeley. He has served in three national administrations, most recently
as secretary of labor under President Bill Clinton. Time Magazine has
named him one of the ten most effective cabinet secretaries of the last
century. He has written 13 books, including his latest best-seller,
“Aftershock: The Next Economy and America’s Future;” “The Work of
Nations,” which has been translated into 22 languages; and his newest,
an e-book, “Beyond Outrage.” His syndicated columns, television
appearances, and public radio commentaries reach millions of people each
week. He is also a founding editor of the American Prospect magazine,
and Chairman of the citizen’s group Common Cause. His new movie
"Inequality for All" is in Theaters. His widely-read blog can be found
at
Robert Reich
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