*The Second Machine Age*

by on December 28, 2013 at 11:20 am in Books, Economics, Science, Web/Tech | Permalink

The authors are Erik Brynjolfsson and Andrew McAfee, and the subtitle is Work, Progress, and Prosperity in a Time of Brilliant Technologies.

I have written enough on related issues that a review seems pointless, but after having read it through I will say a) it will be one of the most important books of the coming year, and b) everyone should read it.  It will be out January 20, 2014.

Here is Pethokoukis on the book, with a handy summary.  Here is a new Tim Harford column citing the book.

Ray Lopez December 28, 2013 at 11:55 am

I recall their first book was a bit light–I don’t recall anything of real value from reading it. Hope their second book is more memorable. The James Pethokoukis review simply highlights certain small incremental changes, and the only public policy recommendation is to “increase government funding for basic research such as that carried out by DARPA and NIH”. Anybody who has ever dealt with NIH or DARPA, as I have, knows this is a bureaucratic boondoggle. Better to offer a prize fund and reform the patent laws to make them stronger. Weaken copyright? Trivial unless you enjoy watching Mickey Mouse cartoons and think this is important to deregulate.

john personna December 28, 2013 at 12:16 pm

Hmm. I wonder if that’s what’s between Tyler’s lines. Perhaps those of us reading on these topics frequently have it covered, and it is an “important book” for those who don’t?

Bill December 28, 2013 at 10:37 pm

Re: “Better to offer a prize fund”

No, because a prize fund, as opposed to grants, limits the number of potential inventors (as opposed to a grant to those who be unable to go forward without it) to the class of those who can support the upfront costs of inventing. Invention may have a high, uncertain, upfront cost. Imagine two types of inventors: those with assets to support the research–say Exxon or Koch Refining; and a microbioligist at a University who needs some seed funding for a project. If there is a prize, Exxon or Koch would have done the research anyway without the prize; if there is a prize, but not a grant, the microbiologist doesn’t go forward.

Under which regime==prize or grant==is there more invention based on the number of actors?

Prizes can work where there are many competing plans and the risk is high, but not if there are few competing plans. Also, private companies in the same field have to consider the effect of invention that will kill its established technology.

Ask Kodak.

Ray Lopez December 29, 2013 at 12:21 am

Well what you say may be true to a degree but keep in mind a lot of really important inventions require large up front expenses. A study I saw once said that, contrary to popular myth, most inventions largely come from S&P 500 companies since they are the only ones that can afford the necessary infrastructure. But I suppose we can do both: offer a prize to ‘big corporations’ and a separate prize to ‘small inventors’.

Ray Lopez December 29, 2013 at 8:28 am

http://www.bbc.co.uk/news/science-environment-25468115
27 December 2013

“When the Nobel Prize was set up by Alfred Nobel 113 years ago, science was done very differently. It was done mostly by individuals, there was very little international collaboration and it was done very cheaply.

“But it has radically changed. A lot of cutting edge science, a lot of work on the most important problems in science is a team effort. It is done by large interdisciplinary teams.”

Phill December 28, 2013 at 1:25 pm

Obviously I’d have to read the book before I start pontificating but the summary of policy prescriptions really turned me off.

Most of them are standard, default libertarian ideas. I agree with some and I’m sure their analysis presents a compelling argument but between the wide range of topics and their ideological consistency I’m immediately skeptical.

Rahul December 28, 2013 at 2:59 pm

“one of the most important books of the coming year” is high praise. I’m itching to bet it won’t be!

Bill December 28, 2013 at 3:07 pm

Bill Clinton and Larry Summers also recommend the book.

Tom December 28, 2013 at 3:42 pm

Meh.

The big force that has dramatically changed developed-world manufacturing in recent decades has of course been globalization.

Globalization exposed the developed-world blue collar to competition and shifted wealth and power from them to developed-world capitalists and emerging markets. Ascribing those affects to automation is wrong and misleading.

Automation meanwhile continued but did not appreciably accelerate. So-called “robots” after all are just further advancements in a process of automating production that has been advancing for centuries already. Eventually we will reach a stage where automation leads to a decline in manufacturing jobs. We aren’t there yet. Manufacturing jobs are still increasing. It’s just that most of them are in emerging markets.

Eliza December 28, 2013 at 5:03 pm

What does that suggest to you?

Tom December 28, 2013 at 7:11 pm

Your question is a bit vague, but I think that automation makes people enough wealthier that the short-term job displacement problems are generally minor. Automation will be felt mainly in Asia and will drive up its wealth relative to the west, which has already offshored a huge amount of the work that could be further automated.

john personna December 29, 2013 at 11:10 am

Coming clean, I gave Eliza your text.

I really think that automation and globalization have been intertwined, to the point where they can’t be separated easily. Neither one can be discounted. The shipping container (as has been mentioned) is both. Chinese factories with armies of pick-and-place machines are both.

Phill December 28, 2013 at 5:05 pm

>Ascribing those affects to automation is wrong and misleading.

I thought we called that the shipping container, which totally transformed how we manufacture, how we shape our cities and how we trade.

Tom December 28, 2013 at 7:19 pm

If your point is that automation technology in the shape of containerized shipping made globalization possible, I agree. Nonetheless manufacturing and other blue collar jobs didn’t disappear, they relocated while continuing to grow and transform.

john personna December 29, 2013 at 11:43 am

Is it actually true that traditional (factory) manufacturing as a percentage of global employment has grown?

An interesting chart here, manufacturing employment and output for the U.S., Sweden, and Japan, going back to 1970, shows the automation effect pretty powerfully. It isn’t just that manufacturing left, it is that fewer workers produced far more value in developed countries.

Max Factor December 28, 2013 at 7:53 pm

The prescriptions mentioned in the Pethokoukis link are the same ones used in the first book – Race Against the Machine. I hope the new book is beefed up – Race Against the Machine was pretty skimpy – a lot of what they covered was already out in the public domain (driverless cars, Watson, etc.). I preferred Martin Ford’s Lights in the Tunnel. A reduction of the mortgage interest deduction will crush home ownership rates and home prices, especially in the high tax areas like NY, NJ and CA. This will hit school budgets hard. It will never happen.

Automation gets lumped into manufacturing but the real job loss carnage in automation is white collar. I recently set up a prescription via a mail order firm and didn’t interact with a person the entire time. It’s doubtful my pills were ever counted or handled by human hands. Automation of accounting systems reduces the need for bookkeepers and clerks. The totalitarian police state makes conducting investigations (my line of work) much easier – there is more physical evidence available. The role of a detective will be diminished once the computers do all the data capturing and mining.

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