How to stop geeks becoming the next bankers

What if the jobs crisis we’re seeing across the western world isn’t just because of the financial meltdown, but is also due to technology? That’s the argument Andrew McAfee and Eric Brynjolfsson make in Race Against the Machine. They point out that the last decade was the first since the Great Depression with no net job creation in the US and are in no doubt about where they think the blame should be placed: “The median worker is losing the race against the machine”.

While technology has had massive benefits for our quality of life and overall prosperity, their argument about jobs is pretty compelling. We all know that the world of work has changed over the past two decades and that technology has become almost ubiquitous in developed economies, especially in workplaces. While creativity has become increasingly in demand and skilled manual jobs that machines can’t replace have remained solid, the information based jobs where somebody tells you what to do have gradually disappeared.

McAfee and Brynjolsson also show that while the number of jobs being created has slumped, the profits made by companies have continued to climb. The reason is that technology is creating productivity gains — leading to less money going to workers and more money to executives and investors who control the capital that invested in the technology in the first place. And we’re only just at the beginning of the trend. McAfee and Brynjofsson point to Google’s driverless cars as a sign of further jobs to be erased in the future by technology. How long will it be before the economics make sense for haulage companies to lay off truck drivers? And when will taxi drivers be a thing of the past?

The authors are actually big believers in technology and are pointing out the statistics as a way of getting a debate going before it’s too late. I think they’re right to do so. At some point people will start to look for the underlying cause. Technology could become a tainted industry in the same way that banking is the current pariah. McAfee and Brynjolfsson even raise the spectre of modern luddites — reprising the movement that broke the looms they thought were stealing their jobs in the 19th century. We can’t just say “That’s progress. Tough luck.” The world simply isn’t organised for a society of mass unemployment.

We need to act now and not just in a superficial way by giving more money to charities or pretending that startups all create jobs (as Stian Westlake points out, that’s just not true). Fundamentally we should stop working on the trivial and work on things that create real value. We should work in areas where technology is creating new industries and new jobs, not just sucking up peoples’ time into newer, shinier more pointless things. As a man much wiser than I put it, we should “Work on stuff that matters”.

We also need to look at the way the sector is financed because I’m seeing more an more evidence that it’s just not right. I know and respect some technology investors but there are others who I think are basically stealing money from peoples’ pension funds by creaming off a percentage from VC deals. Over the next five years finance and investment is going to be ripped apart particularly the cosy, secret deals done between founders, investors and acquirers. We should get real about pay and rewards for founders and early stage investors and become hyper transparent about them. Even Reid Hoffman, who I have a great deal of respect for, dodged the question about Airbnb founder dividends (which would effectively be coming from pension funds that are LPs in the funds making the investment) when I saw him speak last week. I think that makes people think the worst about a potentially great company.

Commentators are beginning to look around for people to blame for the current stagnation, and the stakes are too high for us to ignore the threat of technology becoming an industry that talented people want nothing to do with. We need technology to solve the difficult problems we face so it’s time to get the house in order. Technology should be creating new and better institutions rather than just gradually eroding old ones and leaving a vacuum in their place.
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