The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

by Erik Brynjolfsson

As the new generation of intelligent devices appears, it will be the stock analysts and petrochemical engineers and parole board members who are in danger of being replaced by machines. The gardeners, receptionists, and cooks are secure in their jobs for decades to come.”

Logarithmic graphs have a wonderful property: they show exponential growth as a perfectly straight line.

That Waze gets more useful to all of its members as it gets more members is a classic example of what economists call a network effect—a situation where the value of a resource for each of its users increases with each additional user.

When combined with political and economic systems that offer people choices instead of locking them in, technological advance is an awe-inspiring engine of betterment and bounty.

In the long run, low wages will be no match for Moore’s Law. Trying to fend off advances in technology by cutting wages is only a temporary protection.

The college premium exists in part because so many types of raw data are getting dramatically cheaper, and as data get cheaper, the bottleneck increasingly is the ability to interpret and use data. This reflects the career advice that Google chief economist Hal Varian frequently gives: seek to be an indispensable complement to something that’s getting cheap and plentiful. Examples include data scientists, writers of mobile phone apps, and genetic counselors, who have come into demand as more people have their genes sequenced.

We favor reducing unnecessary, redundant, and overly burdensome regulation, but recognize that this is likely to be slow and difficult work. First, regulators rarely like giving up authority once it’s granted to them. Second, those companies and industries protected by existing regulations will no doubt lobby strenuously to preserve their privileged positions. And third, separate sets of regulations exist at the federal, state, and municipal levels in America, so comprehensive change cannot be brought about by any single entity.

Many of today’s informed observers conclude that software patents are providing too much protection. The same is probably true for at least some copyrights; it’s not clear what public interest is served by laws that ensure Disney’s 1928 “Steamboat Willie” (precursor to Mickey Mouse) remains under copyright, as does the song “Happy Birthday.”20

Generous immigration policies really are part of the Econ 101 playbook; there is wide agreement among economists that they benefit not only the immigrants themselves but also the economy of the country they move to.

American immigration is a 19th century process in a 21st century world.”

In all likelihood, we could raise more revenue by increasing marginal tax rates on the highest income earners, for instance by introducing new tax brackets at the one-million- and ten-million-dollar levels of annual income. We do not find much evidence supporting the counter-argument that higher taxes on this population will harm economic growth by eroding high earners’ initiative. In fact, research by our MIT colleague and Nobel Prize–winning economist Peter Diamond, in partnership with Clark Medal winner Emmanuel Saez, suggests that optimal tax rates at the very top of the income distribution might be as high as 76 percent.

Capitalism allocates resources, generates innovation, rewards effort, and builds affluence with high efficiency, and these are extraordinarily important things to do well in a society. As a system capitalism is not perfect, but it’s far better than the alternatives. Winston Churchill said that, “Democracy is the worst form of government except for all those others that have been tried.”2 We believe the same about capitalism.

The easiest way to do this would have the government distribute an equal amount of money to everyone in the country each year, without doing any means of testing or other evaluation of who needs the money or who should get more or less. This ‘basic income’ scheme, its proponents argue, is comparatively straightforward to administer, and it preserves the elements of capitalism that work well while addressing the problem that some people can’t make a living by offering their labor.

One of its early proponents was the English-American political activist Thomas Paine, who advocated in his 1797 pamphlet Agrarian Justice that everyone should be given a lump sum of money upon reaching adulthood to compensate for the unjust fact that some people were born into landowning families while others were not.

The president elected that year, Republican Richard Nixon, tried throughout his first term in office to enact it into law. In a 1969 speech he proposed a Family Assistance Plan that had many features of a basic income program.

The Nobel Prize–winning conservative economist Milton Friedman did not advocate many government interventions, but he was in favor of what he termed a ‘negative income tax’ to help the poor.

The EITC is really a subsidy on labor, paying a bonus dollar of labor income. It puts into practice some of the oldest economic advice of all: tax things you want to see less of, and subsidize things you want to see more of.

We think we’ll have human data scientists, conference organizers, divisional managers, nurses, and busboys for some time to come.

IT’S ONE OF HUMANITY’S most ancient fantasies: that someday we can all have our material needs fulfilled without drudgery, freeing us to pursue our true interests, amusements, or passions.

Innovators, entrepreneurs, scientists, tinkerers, and many other types of geeks will take advantage of this cornucopia to build technologies that astonish us, delight us, and work for us. Over and over again, they’ll show how right Arthur C. Clarke was when he observed that a sufficiently advanced technology can be indistinguishable from magic.

When information was mostly analog and local, the laws of physics created an automatic zone of privacy. In a digital world, privacy requires explicitly designed institutions, incentives, laws, technologies, or norms about which information flows are permitted or prevented and which are encouraged or discouraged.

Even seemingly benevolent inventions, like a technology that dramatically increased longevity, would create enormous social upheaval.

Reminds me of the Twlight Zone episode where dead relatives were brought back and people didn't like it.

If the first machine age helped unlock the forces of energy trapped in chemical bonds to reshape the physical world, the real promise of the second machine age is to help unleash the power of human ingenuity.