The Great Decoupling: An Interview with Erik Brynjolfsson and Andrew McAfee

Compared with the Industrial Revolution, digital technologies are more likely to create winner-take-all markets

allowing us to overcome many limitations rapidly and to open up new frontiers with unprecedented speed.

ust as it took decades to improve the steam engine to the point that it could fuel the Industrial Revolution, it’s taking time to refine digital technologies. Computers and robots will keep evolving and will learn to do new things at an amazing pace. That’s why we’re at an inflection point today, at the dawn of what we call the Second Machine Age. 

thanks to digital technologies, we’ll be able to produce more: more health care, more education, more entertainment, and more of all the other material goods and services we value. And we’ll be able to extend this bounty to more and more people around the world while treading lightly on the planet’s resources.

Technologies have decreased the demand for low-skilled information workers but have increased it for highly skilled ones.

Digital technologies can replicate valuable ideas, processes, and innovations at very low cost. This creates abundance for society and wealth for innovators, but it diminishes the demand for some kinds of labor.

Great Decoupling. The two halves of the cycle of prosperity are no longer married: Economic abundance, as exemplified by GDP and productivity, has remained on an upward trajectory, but the income and job prospects for typical workers have faltered.

seems to be a common underlying force that’s affecting all these countries. We think that force is technology. 

big data, analytics, and high-speed communications have enhanced the output of people with engineering, creative, and design skills and made them more valuable. The net effect has been to decrease the demand for low-skilled information workers while increasing the demand for highly skilled ones.

he story becomes even more striking when you consider that the number of people enrolled in college more than doubled from 1960 to 1980—from about 750,000 to over 1.5 million. The flood of graduates should have pushed down their relative wages, but it didn’t. The combination of higher pay and growing supply suggests that the relative demand for skilled labor increased faster than the supply did.

Digital technologies allow you to make copies at almost zero cost. Each copy is a perfect replica, and each copy can be transmitted almost anywhere on the planet nearly instantaneously.

widening wage gap between people with and without a college education has been dwarfed by bigger changes among the highest income brackets. From 2002 to 2007, the top 1% reaped two-thirds of all the gains from the growth in the U.S. economy.

he top 1% earned about 19% of all income in the United States, the top 0.01% saw their share of national income double, from 3% to 6%, from 1995 to 2007

many aspects of digital progress aren’t counted in GDP. For instance, Wikipedia, unlike the old print version of Encyclopaedia Britannica, is free. That means that unlike the Britannica, it isn’t included in GDP calculations, even though it adds value for far more people.

, artificial intelligence systems showed that they could master unfamiliar tasks—such as categorizing images or playing video games—without programmers’ teaching them any rules

break the Second Machine Age into stages. In stage II-A, humans teach machines what we know painstakingly, step-by-step. That’s how traditional software programming works. Stage II-B is when machines learn on their own, developing knowledge and skills that we can’t even explain. Machine learning techniques have had some success doing that in areas as diverse as understanding speech, detecting fraud, and playing video games.

when machines understand emotions and interpersonal reactions, an area where humans still have the edge. If you visit the folks at the MIT Media Lab, though, you’ll find that they’re working on robots that can pick up on emotions, in some cases analyzing facial expressions better than you and I can.

As the Second Machine Age progresses, will there be any jobs for human beings?

 

McAfee: Yes, because humans are still far superior in three skill areas. One is high-end creativity that generates things like great new business ideas, scientific breakthroughs, novels that grip you, and so on. Technology will only amplify the abilities of people who are good at these things.

 

The second category is emotion, interpersonal relations, caring, nurturing, coaching, motivating, leading, and so on. Through millions of years of evolution, we’ve gotten good at deciphering other people’s body language

best way to respond to change is with flexibility, fluidity—to roll with the punches. Instead, we’re seeing this decrease in business dynamism and in labor fluidity. That’s a dire trend, and it will keep us from responding properly to the coming technological surge.