

Why the Internet is creating more value than jobs - zyrobia
http://unenumerated.blogspot.com/2011/02/great-stagnation-or-external-growth.html

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iuygtfrikuj
See also: Why the water mill is creating lots more value than jobs C14

Why the steam engine is creating a lot more value than jobs C19

Why electricity is creating lots more value than jobs C20

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mkramlich
Because software and the Internet are making it easier to provide more value,
more quickly and more cheaply, than ever before. Thus, less jobs needed. Plus
more of the jobs that are needed can be done off-shore, or, on-shore but with
less office space and commuting, which in turn drives down money that needs to
be spent on those sectors as well. Also the increasing popularity of so-called
Agile and MVP philosophies is also driving down the cost of testing business
ideas and getting to market. And yes, there's an increasing amount of
actionable information, quality entertainment and useful functionality
available for free on the Internet. So less money (needing to be) spent in
those areas, thus less money available for jobs in those areas, for any given
unit of product provided. Plus, due to the Internet, an increasing proportion
of the revenue that comes into businesses (overall, but most proportionately
in the software industries) can be captured by the
owners/capitalists/entrepreneurs, rather than labor.

I'm not sure if this is a net win or net lose, overall, for the world. But
it's certainly a net win for certain subsets of the population, and a net lose
for other subsets. But even for those who it is a net lose, they are not
forced to stay in some frozen static configuration or context, there are
choices one can make to shift oneself to take better advantage of the new
economic landscape, making it more likely to be a net win for them. It may not
be easy. But few things in life are easy, and the universe doesn't guarantee
anybody a free lunch (outside the more extreme cases of great inherited
wealth, etc.)

One thing I'm sure of is that, all other things being equal, we're lucky to be
in the field of software and the Internet at a time when this shift is
occurring, because we're in a population subset where it can more easily be a
net win for us.

~~~
longarm
But it is more than that. In my opinion there is kind of a nasty aversion in
start up culture to permanence. Think food trucks vs opening a restaurant,
outsourcing vs managing in house, renting a space vs building one, tele-
commuting vs a vibrant office. It's not evil or anything, but in the aggregate
I think it does lead to less commitment--building the type of foundation that
other brick and mortar business do. Kind of a sad example is Amazon and their
crazy Amazon Associates schemes to avoid paying taxes. Does it make sense from
a maximizing shareholder value sense? Definitely. Does it maybe skirt some
ethical obligations as a business and as people? Maybe.

------
dy
Increased leverage of the individual. The information age (post-industrial)
doesn't need the same labor inputs to achieve the same wealth creation as
before.

While this is great for individuals on the right side of the digital divide,
we'll continue to see the impact this will have on societies for some time to
come.

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stretchwithme
Technology makes a lot of manual work unnecessary. But the salaries that are
saved are available to be spent on hiring people for other things.

Which is why mechanizing the farm didn't leave 80% unemployment in its wake.

The market for labor is like any other market. If prices are allowed to
fluctuate, supply will continuously adjust to meet demand and vice-versa.

But if prices are kept artificially high, there will be a surplus. More
workers will try to get the higher wages and jobs that are unprofitable for
employers at the high price will not be filled.

You may not like, you may not even want to understand or acknowledge it, but
this is how people behave in any market.

~~~
angstrom
While I agree that it frees up manual labor it raises another specter. The
unskilled manual farm-hand labor shifted to unskilled manual manufacturing
labor.

We're now telling people well past their prime to switch to more cerebral jobs
because we've automated or outsourced the low-skill value added jobs and the
pool of what's left drives down wages further due to all the people competing
for them.

The problem is that we've increased productivity efficiencies and passed the
savings onto the shareholders. A free market is efficient, not perfect.

~~~
stretchwithme
Frankly, I don't see how it is a problem. It is a continuous process in a
developing economy. And its the process that makes capital available for all
kinds of human investments.

I can assure you there is job security in a completely stagnant economy. But
not very much capital for education, startups or mortgages, or freedom to live
your life and take the risks that make it worth living.

------
joshhepworth
This article really speaks to some of the ideas presented by Paul Graham in
his essay about the future of startups[1]. Combining ideas from them paints a
particularly optimistic picture for the future of the individual. When a
student can create and run a business in his spare time, it sort of marks the
potential for a shift in the way value is measured. The emphasis on the
utility or engagement of a service over strict monetary value could enable our
growth going forward to be in quality of experiences rather than GDP (as Nick
Szabo pointed out already isn't growing that much in developed nations
anyway).

Going forward we could see applications that make it really easy for
individuals without direct knowledge of HTML, CSS and a server scripting
language to create valuable tools (they do exist know, but not really in a way
that enable the right audience to create the right things). These, along with
the existing social tools, are the things that could change the way an economy
works by cutting out large corporations and creating an entire market of
"externalities."

[1] <http://www.paulgraham.com/webstartups.html>

~~~
borism
"externalities" don't put the food on the table, let alone buy the table.

or will the future economy be "click on this really cool web app and send its'
creator a loaf of bread!"?

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kristianp
The US may be stagnating, but China and the other members of the BRICS aren't.
The USA needs to find an industry that will grow quickly and large enough to
drive its whole economy. The Internet isn't going be that industry any more,
as the greatest part of its growth has already happened.

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ximeng
Well-written interesting article, and good links too: e.g. to this site on
orbiting data centres:

<http://server-sky.com/>

~~~
prewett
I would think that orbital data center would have some real problems with heat
dissipation, since you can only cool via radiation in space. Terrestrial data
centers already have a problem with heat, and they can cool via convection
(which is what is ultimately going to cool those air-conditioners). And then
there is the cost of lifting thousands of soon to be obsolete computers into
orbit...

~~~
yakto
I'm not a scientist, but isn't it super cold in space, just above absolute
zero? If you can keep the (direct and hot) sunlight off the boxes with
reflectors, I'd think the ambient temperature would be far lower than anything
attainable by earth-bound datacenter cooling systems, so therefore radiation
would be a most excellent cooling system. In fact, you might have the opposite
problem, and have to figure out how to reliably prevent the boxes from
freezing when not exposed to sunlight.

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joe_the_user
"These pessimistic observations of long-term economic growth are in many ways
a much needed splash of cold water in the face for the Kurzweilian "The
Singularity is Near" crowd, the people who think nearly _everything important_
has been growing exponentially." [emphasis added]

For the "great stagnation" folks, apparently "everything important" is macro
and that indeed, in a documentable way has not been growing exponentially. For
the singularity folks "everything important" is micro and has been growing
exponentially in a documentable way.

If the article had an _argument_ why micro stuff has suddenly stopped
mattering, that would one thing. But the discussion here seems to dismissal
through mere trick-language.

~~~
cwp
Would define your use "macro" and "micro" here?

~~~
FD3SA
I believe he is referring to the exponential increase in computations per
dollar which has been ongoing for almost half a century. Furthermore, he
refers to the massive industries which have sprung from this growth in
computation (personal computing, telecom, entertainment, social networking,
etc.).

This being said, there is a large divergence between exponential increase in
computation and macroeconomic growth. The gains from computation have been
highly consolidated (to a small number of extremely talented entrepreneurs not
unlike our own HN community), whereas other major industries have stagnated or
declined (housing, finance, manufacturing). I believe Tyler Cowen and his
"Great Stagnation" sums it up nicely in that the net loss in those industries
has been larger and more relevant macroeconomically than the relatively
concentrated gains in Silicon Valley.

tl;dr: computation is fueling rapid new industries which create wealth, but
that wealth is highly consolidated as it does not require labor to grow (labor
required is replaced by computation). This causes economic stagnation for the
great majority of the population (+/- 2 std dev of mean or 95%) who are unable
to capitalize on the computational opportunities.

~~~
joe_the_user
"computation is fueling rapid new industries which create wealth"

I generally agree with your definition of my terms and your points. I would
note that "Wealth" itself is a poorly defined term even compared other fuzzy
economic terms. Micro-level technology is giving many people more _range of
actions_ than ever before but it's impact on measured economic wealth has been
obscure.

A much larger portion of homeless people have cellphones today than ten years
ago. But larger portion of people are homeless today than ten years ago - at
least if you believe this is a recession.

If tomorrow, a chemical was released into the atmosphere which doubled the
lifespan of everyone on earth, most would agree life would be improved. Yet no
one would have a cent more money and it is actually hard to say what its
impact on the economic system would be.

~~~
borism
_hard to say what its impact on the economic system would be_

if lifespan of everybody doubled it would have devastating effect on world
economy, as one of the most important issues we face today is population aging
(and not just in developed world, but in China as well for example).

------
borism
summary: intellectual property is very different from physical property and
inevitably wants to escape into wider world, so called developing world in
particular.

that's why we find our thesis that we should be selling higher margin products
to developing world and leave cheap stuff to be produced by them broken - they
get our knowledge essentially for free, leaving us without manufacturing base
and without capability to fund innovation further. and there's nothing we can
do about it either, in my opinion.

