As always, John Naughton’s weekend column was very interesting – this week’s theme was Digital capitalism produces few winners. It contrasts the profit of the digital titans – Apple, Amazon, Google – with the relatively few jobs and poor working conditions they offer. Amazon in the UK (where the digital companies are already in the public stocks over their tax practices) was the subject of an eye-opening FT feature recently, Amazon unpacked.
John Naughton’s column starts: “Need a crash course in digital capitalism? Easy: you just need to understand four concepts – margins, volume, inequality and employment. And if you need more detail, just add the following adjectives: thin, vast, huge and poor.” This is in the same vein as Brynjolfsson and McAfee’s [amazon_link id=”0984725113″ target=”_blank” ]Race Against the Machine[/amazon_link] which argues that the new technologies are economising on human labour, and Paul Krugman’s recent Rise of the robots column, noting that manufacturers are investing in capital-intensive facilities, so productivity is high and the need for labour low.
[amazon_image id=”0984725113″ link=”true” target=”_blank” size=”medium” ]Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy[/amazon_image]
I would sound some notes of caution about this ‘the robots are eating all the jobs’ trope. One, this is the stage of the business cycle when jobs gloom is at its most intense – remember the New York Times special book, [amazon_link id=”0812928504″ target=”_blank” ]The Downsizing of America[/amazon_link], published in 1992 just ahead of the long upturn and employment boom? Two, the only way to assess the impact of new technologies is to look at aggregate data, not just a few firms – the distribution of income data suggest there is indeed something in the story about capital intensity and productivity, but the US employment ratio has been rising gently, albeit well below pre-crisis levels still. Three, there is a question about how informative existing data are – Mike Mandel’s work on the data-driven economy is suggestive of significant gaps in our knowledge.
[amazon_image id=”0812928504″ link=”true” target=”_blank” size=”medium” ]The Downsizing of America[/amazon_image]
Finally, the most productive sectors of the economy are always making jobs disappear, and there is a period of uncomfortable adjustment, including in the wage distribution, until jobs reappear in less productive sectors of the economy. Nobody has yet convinced me there’s anything different about the digital economy in this regard, although Krugman’s second ‘robots’ column on oligopoly power, Robots and Robber Barons, certainly flags up a serious issue. For me, the best book on the impact of digital on jobs remains Levy and Murnane’s [amazon_link id=”0691124027″ target=”_blank” ]The New Division of Labour: How Computers Are Creating the Next Job Market[/amazon_link], although it’s a few years old now.
[amazon_image id=”0691124027″ link=”true” target=”_blank” size=”medium” ]The New Division of Labor: How Computers Are Creating the Next Job Market[/amazon_image]