The Future of Our Economy

This recent Business Week article noted the rapid increase in business expenditures on software rather than hardware to improve business profitability; rather than machines or buildings, the pathway to a more successful venture now lies in algorithms and data mining.  The takeaway of the article is that the Federal Reserve's typical approach to stimulating business activity by lowering interest rates may become less and less effective because the shift in things businesses want to spend money on mean that cheaper money doesn't necessarily matter as much. 

Another takeaway is to look at this trend in terms of future labor markets.  Where I swim geographically and socially, there is a great longing for the glory days of manufacturing's dominance, where a good job could be had with very little formal education or computer knowledge.  Rapid technological advancement has led to what some deem a barbell economy in terms of distribution of jobs: lots of high-paying, high-end jobs, and lots of low-paying, low-end jobs, and not a lot in the middle.  And with this shift has come a huge desire to try to squeeze that barbell on both ends so that there is more in the middle, whether by soaking the rich through taxes or pushing wages up on the low end through a higher minimum wage.

My thoughts today are not on the efficacy or moral rightness of either of those categories of actions, but rather on the blazing computer advancements that have created such a distribution of labor need.  It is not hard to be uncomfortable with how fast technology is moving, whether that discomfort lies in new moral quandaries that didn't exist just decades ago, displacement of jobs from automation, or an overall sense that the way our labor markets exist now seems inherently unjust.

To be sure, economic inequality is a valid concern.  But we have always had richer and poorer, as well as a hard road for anyone poor trying to become rich.  And our glory days weren't so universally glorious when we poke around a little: there was much more discrimination back then, power was much more concentrated, and the poor and marginalized were much more likely to suffer and die back then from ailments that are now exceedingly rare if not completely vanquished.

At any rate, we're not going back to our industrial age or our agricultural age.  We're not even still in the initial era of information technology, when we first sent a man to the moon and started seeing computing power on every desktop.  No, we are now firmly in a brave new world, albeit at the very beginning of the phase, where driverless cars and DNA sequencing and artificial intelligence hold the promise of unimaginable efficiency, medical breakthroughs, and unknowable economic tumult.

This may be scary to some and entirely distasteful for others.  But it is where we are going, for better or worse, no matter how hard we may want to wish it gone or face away from it.  And it's best that we think long and hard about the implications and prepare ourselves and others accordingly.  Because there could be some incredibly good that comes out of all of this.  And that which might be bad, we ought to consider what that is and figure out how to mitigate or stop it. That seems a better use of our energy than closing our eyes and wishing it away, or figuring out how to cripple or stop it in destructive ways.