Why the Internet is creating more value than jobs

http://unenumerated.blogspot.com/2011/02/great-stagnation-or-external-growth.html

by zyrobia • 15 years ago

87 20 15 years ago

unenumerated.blogspot.com

dy• 15 years ago

Increased leverage of the individual. The information age (post-industrial) doesn't need the same labor inputs to achieve the same wealth creation as before.

While this is great for individuals on the right side of the digital divide, we'll continue to see the impact this will have on societies for some time to come.

ximeng• 15 years ago

Well-written interesting article, and good links too: e.g. to this site on orbiting data centres:

http://server-sky.com/

prewett• 15 years ago

I would think that orbital data center would have some real problems with heat dissipation, since you can only cool via radiation in space. Terrestrial data centers already have a problem with heat, and they can cool via convection (which is what is ultimately going to cool those air-conditioners). And then there is the cost of lifting thousands of soon to be obsolete computers into orbit...

yakto• 15 years ago

I'm not a scientist, but isn't it super cold in space, just above absolute zero? If you can keep the (direct and hot) sunlight off the boxes with reflectors, I'd think the ambient temperature would be far lower than anything attainable by earth-bound datacenter cooling systems, so therefore radiation would be a most excellent cooling system. In fact, you might have the opposite problem, and have to figure out how to reliably prevent the boxes from freezing when not exposed to sunlight.

joshhepworth• 15 years ago

This article really speaks to some of the ideas presented by Paul Graham in his essay about the future of startups[1]. Combining ideas from them paints a particularly optimistic picture for the future of the individual. When a student can create and run a business in his spare time, it sort of marks the potential for a shift in the way value is measured. The emphasis on the utility or engagement of a service over strict monetary value could enable our growth going forward to be in quality of experiences rather than GDP (as Nick Szabo pointed out already isn't growing that much in developed nations anyway).

Going forward we could see applications that make it really easy for individuals without direct knowledge of HTML, CSS and a server scripting language to create valuable tools (they do exist know, but not really in a way that enable the right audience to create the right things). These, along with the existing social tools, are the things that could change the way an economy works by cutting out large corporations and creating an entire market of "externalities."

[1] http://www.paulgraham.com/webstartups.html

borism3• 15 years ago

"externalities" don't put the food on the table, let alone buy the table.

or will the future economy be "click on this really cool web app and send its' creator a loaf of bread!"?

borism3• 15 years ago

summary: intellectual property is very different from physical property and inevitably wants to escape into wider world, so called developing world in particular.

that's why we find our thesis that we should be selling higher margin products to developing world and leave cheap stuff to be produced by them broken - they get our knowledge essentially for free, leaving us without manufacturing base and without capability to fund innovation further. and there's nothing we can do about it either, in my opinion.

iuygtfrikuj• 15 years ago

See also: Why the water mill is creating lots more value than jobs C14

Why the steam engine is creating a lot more value than jobs C19

Why electricity is creating lots more value than jobs C20

joe_the_user2• 15 years ago

"These pessimistic observations of long-term economic growth are in many ways a much needed splash of cold water in the face for the Kurzweilian "The Singularity is Near" crowd, the people who think nearly everything important has been growing exponentially." [emphasis added]

For the "great stagnation" folks, apparently "everything important" is macro and that indeed, in a documentable way has not been growing exponentially. For the singularity folks "everything important" is micro and has been growing exponentially in a documentable way.

If the article had an argument why micro stuff has suddenly stopped mattering, that would one thing. But the discussion here seems to dismissal through mere trick-language.

cwp2• 15 years ago

Would define your use "macro" and "micro" here?

FD3SA• 15 years ago

I believe he is referring to the exponential increase in computations per dollar which has been ongoing for almost half a century. Furthermore, he refers to the massive industries which have sprung from this growth in computation (personal computing, telecom, entertainment, social networking, etc.).

This being said, there is a large divergence between exponential increase in computation and macroeconomic growth. The gains from computation have been highly consolidated (to a small number of extremely talented entrepreneurs not unlike our own HN community), whereas other major industries have stagnated or declined (housing, finance, manufacturing). I believe Tyler Cowen and his "Great Stagnation" sums it up nicely in that the net loss in those industries has been larger and more relevant macroeconomically than the relatively concentrated gains in Silicon Valley.

tl;dr: computation is fueling rapid new industries which create wealth, but that wealth is highly consolidated as it does not require labor to grow (labor required is replaced by computation). This causes economic stagnation for the great majority of the population (+/- 2 std dev of mean or 95%) who are unable to capitalize on the computational opportunities.

mkramlich• 15 years ago

Because software and the Internet are making it easier to provide more value, more quickly and more cheaply, than ever before. Thus, less jobs needed. Plus more of the jobs that are needed can be done off-shore, or, on-shore but with less office space and commuting, which in turn drives down money that needs to be spent on those sectors as well. Also the increasing popularity of so-called Agile and MVP philosophies is also driving down the cost of testing business ideas and getting to market. And yes, there's an increasing amount of actionable information, quality entertainment and useful functionality available for free on the Internet. So less money (needing to be) spent in those areas, thus less money available for jobs in those areas, for any given unit of product provided. Plus, due to the Internet, an increasing proportion of the revenue that comes into businesses (overall, but most proportionately in the software industries) can be captured by the owners/capitalists/entrepreneurs, rather than labor.

I'm not sure if this is a net win or net lose, overall, for the world. But it's certainly a net win for certain subsets of the population, and a net lose for other subsets. But even for those who it is a net lose, they are not forced to stay in some frozen static configuration or context, there are choices one can make to shift oneself to take better advantage of the new economic landscape, making it more likely to be a net win for them. It may not be easy. But few things in life are easy, and the universe doesn't guarantee anybody a free lunch (outside the more extreme cases of great inherited wealth, etc.)

One thing I'm sure of is that, all other things being equal, we're lucky to be in the field of software and the Internet at a time when this shift is occurring, because we're in a population subset where it can more easily be a net win for us.

longarm• 15 years ago

But it is more than that. In my opinion there is kind of a nasty aversion in start up culture to permanence. Think food trucks vs opening a restaurant, outsourcing vs managing in house, renting a space vs building one, tele-commuting vs a vibrant office. It's not evil or anything, but in the aggregate I think it does lead to less commitment--building the type of foundation that other brick and mortar business do. Kind of a sad example is Amazon and their crazy Amazon Associates schemes to avoid paying taxes. Does it make sense from a maximizing shareholder value sense? Definitely. Does it maybe skirt some ethical obligations as a business and as people? Maybe.

stretchwithme2• 15 years ago

Technology makes a lot of manual work unnecessary. But the salaries that are saved are available to be spent on hiring people for other things.

Which is why mechanizing the farm didn't leave 80% unemployment in its wake.

The market for labor is like any other market. If prices are allowed to fluctuate, supply will continuously adjust to meet demand and vice-versa.

But if prices are kept artificially high, there will be a surplus. More workers will try to get the higher wages and jobs that are unprofitable for employers at the high price will not be filled.

You may not like, you may not even want to understand or acknowledge it, but this is how people behave in any market.

angstrom• 15 years ago

While I agree that it frees up manual labor it raises another specter. The unskilled manual farm-hand labor shifted to unskilled manual manufacturing labor.

We're now telling people well past their prime to switch to more cerebral jobs because we've automated or outsourced the low-skill value added jobs and the pool of what's left drives down wages further due to all the people competing for them.

The problem is that we've increased productivity efficiencies and passed the savings onto the shareholders. A free market is efficient, not perfect.

stretchwithme2• 15 years ago

Frankly, I don't see how it is a problem. It is a continuous process in a developing economy. And its the process that makes capital available for all kinds of human investments.

I can assure you there is job security in a completely stagnant economy. But not very much capital for education, startups or mortgages, or freedom to live your life and take the risks that make it worth living.

kristianp• 15 years ago

The US may be stagnating, but China and the other members of the BRICS aren't. The USA needs to find an industry that will grow quickly and large enough to drive its whole economy. The Internet isn't going be that industry any more, as the greatest part of its growth has already happened.

Why the Internet is creating more value than jobs

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