Tim O’Reilly on Putting Labor Back Into the Economy

I had the great pleasure of talking with tech titan Tim O’Reilly on stage yesterday in one of the featured sessions of the SXSW Interactive festival. Under the title “Create More Value Than you Capture” he shared his insights on a wide range of topics with the audience. Judging from the tweetstream, they lapped it up.

Courtesy of Ogilvy Notes

His most quoted lines included

 Work on stuff that matters. Work on stuff that you’ll look back on and be proud of.

Investors don’t create jobs. Customers create jobs.

Policy should protect the future from the past, not the past from the future.

No, you don’t. You have to find the right answer for society. (in response to a politician’s statement during the PIPA / SOPA debate that congress “needed to find the right answer for Hollywood”)

There was a lot more, and more than one instance of spontaneous applause. I’ll post video of the whole talk once it’s available.

In this post, I want to highlight what was for me the most interesting exchange of our talk. Tim invited me on stage with him in large part because he wanted to talk about some of the issues Erik Brynjolfsson and I raised in our short book Race Against the Machine. In it, we document how recent tech advances are eating into skills and jobs that used to belong to people (think of all the workforce implications of Google’s autonomous car, Siri’s voice recognition and speech synthesis capability, and IBM’s Jeopardy!-champion Watson supercomputer), and how this amazing digital progress is likely to leave some (many?) workers behind.

Tim agreed that this was going on, but pointed out that the opposite trend is also taking place: some innovators are using technology to put labor into the economy, not take it out. He pointed to Kickstarter, Etsy, and YouTube (via sharing of ad revenues) as new ways for creative people to find audiences and financial support for their work. He also highlighted how Apple retail stores (the physical ones, not their online App store) are highly profitable and labor intensive, in part because the company figured out how to use technology to empower every employee on the floor to act as a roving cashier.

He thinks more of this clever human-centric work will go on, and I agree with him. Some technologists are responding to the 20th century humorist Arnold Glasow’s plea that “What the country needs are a few labor-making inventions.” We highlighted some examples of this in RAtM, and want and expect to see more of it.

The huge question is whether enough of this kind of labor-making technical innovation will take place to offset the labor-saving innovation that’s also going on, and that is (according to me and Erik) only going to accelerate in the near future. Creative destruction is the central dynanic of capitalism —  simultaneous creation and destruction of industries, companies, and jobs.

There is no economic law, however, that says that job creation has to stay slightly ahead of job destruction. As the Wall St. Journal’s Holman W. Jenkins, Jr. says, “Job creation and destruction are both relentless… The small difference between the two is what we call prosperity.” If that small difference turns negative instead of positive, due to technological progress and other factors, we will experience something quite different than prosperity.

How confident are you that the kinds of innovations Tim talked about will keep job creation ahead of destruction, even in an era of ever-more astonishing technical advances? And what evidence supports your view? Leave a comment, please, and let us know.

A final note: as I was doing some Googling around for this post, I learned that there’s now an iPhone app that allows customers in Apple retail stores to do self-checkout – to buy goods and walk out of the store without ever talking to an employee. So that company, which has been so good at putting labor back in to retail environments, is also using technology to take it out.