Tim O’Reilly on Putting Labor Back Into the Economy

by Andrew McAfee on March 14, 2012

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.


Ted Lemon March 15, 2012 at 8:51 pm

I do find the lack of imagination about labor a bit depressing sometimes.   What we need is not more work to do, but two things: a better way of sharing the work that needs to be done but is not desirable, and a way to pay for all the work that needs to be done but is not done, some of which is probably quite fulfilling to do.   It would be really great if some of the things that give Tim his optimism turn out to enable us to work smarter, rather than more.

Mark Lewis March 16, 2012 at 1:26 pm

The thing that causes me angst is that I don’t see how these jobs will be created to are really available to the “average Joe”. The article mentions some highly creative jobs, though I’m not certain things like YouTube will produce enough money for a large number of people to live on. That type of work likely has a decent life expectancy, but it is a creative job that requires certain skills. What is the equivalent of unskilled labor in the future?

When the industrial revolution changed up the way we work and largely automated agricultural production, the US went through a lot of pain in large part because we needed different workers. Education became extremely important and even low skill jobs today generally require literacy. Basically, we were able to educate our way into a new workforce. The people who had dropped out of school in 8th grade to learn how to run a farm in 1910 weren’t incapable of doing 9th grade, they just made the choice to learn the skills of the local jobs instead of academics. There was no fault in doing that. It had been the right way to go for a long time. However, by the 1930s that turned into a bad choice.

The “Occupy” movement, IMO, has a lot of the same flavor. You have kids who have been told that if they go to college they will get jobs. They were told it doesn’t matter so much what you major in. They weren’t lied to, but terrain shifted under them and the people they listened to. Now they aren’t able to find jobs because the skill set they have is not what is needed. That is a problem because the way our society is set up, people need to have jobs to make money so they can buy the things they need to live.

Unlike the 1930s though, pretty much everyone today is going as far as they can in education. One could argue that in the US, more people are going to college than really should be and too many of them really aren’t ready for it or capable of handling it. So what are the new jobs these people are going to move into? What are the jobs that can’t be done by a combination of Watson, Siri, and self-driving cars that these people are capable of training into?

I’m worried that the intersection of what most humans can do and what artificially intelligent automata can’t do is moving toward the empty set. That could be a great thing for humans, but not as long as our society requires people to work to earn money so they can pay for the things they need to live.

Anonymous March 17, 2012 at 1:22 am

The key is not finding the 

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