Friday, 1 August 2014

Tyler Cowen's future puts everyone at the extremes

If you think there’s a problem with income inequality now, you’re not going to like Tyler Cowen’s future in his latest book Average is Over.

Broadly speaking, he says the coming decades will be characterised primarily by the split between those who can bend technology to their will and those who cannot.

He notices how change is happening so rapidly most people can’t keep up. Those who do ­­– those who can – stand to reap the benefits. Those who cannot perform to the measurements of this new “meritocracy” will experience stagnated or dropping wages.

The effects of this evolution are only just beginning to be felt. The days of a “middle-class” with “middle” jobs are over, Mr Cowen says. In fact, as the book’s title suggests, average everything is over. The developed world is moving into an age of extremes.

Already people with computer skills – even marginal computer literacy – are outperforming the rest of us. Being able to tell a computer to do something is an arcane skill akin to magic for many CEOs, and they’ll pay handsomely for anyone who can do it.

Now imagine a future where every machine doubles in capacity and complexity more often than the Olympic Games comes around. A world like this is going to need people who can keep up, and that pool will inversely shrink.

But it’s simply not clear that machines will force us into a new class inequality any time soon. Mr Cowen finds some – admittedly convincing – data and extrapolates it out uncovering a path no one is really preparing for.

Yet all over the developed world high youth unemployment looks like the proverbial canary down the mineshaft for Mr Cowen’s predictions.

He might not be entirely accurate about the future, and who can be, but he is worryingly clear about our past and present. After all, when was the last time you heard about an invention so radical (the internet and hair–straighteners aside) which truly heralded a seismic shift for human lives?

The motorcar changed everything, as did the railroad, aircraft, antibiotics, and high-yield wheat. But these are all aging technologies.

Mr Cowen says this is the inevitable result of science picking all the “low hanging fruit”. Setting the foundations of technology is the simple task. But cracking the next step seems to prove more difficult each time.

Facebook is a perfect example. The social media website was once touted as a “work of genius”. Creator Mark Zuckerberg learnt complex computer coding in a handful of years and spent another few years studying undergraduate psychology.

He went on to invent an Internet phenomenon. It reached enormous success but probably not because Mr Zuckerberg is a genius. The billion-dollar idea is actually one of those low-hanging fruits.

The key is not the youth of the Harvard graduate himself, but the youth of the Internet. Most people his age are only slightly older than the Internet. So if they can’t make the inevitable “big leaps forward” then no one’s going to.

Mr Cowen’s book points out that aside from the Internet, the West hasn’t created a radical invention in a long time. This lack of serious revolutionary invention is threatening to knock the Western world off its top perch.

If the West doesn’t do it, other countries will put their best minds to the job instead. The balance hasn’t changed appreciably yet, but he warns the shift gets nearer every year.

Average is Over should sit on everyone’s bookshelf (or Kindle shelf?) for years to come. It’s over to us to decide how the future looks, but we’re going to need to start thinking soon.

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