WTF?: What's the Future and Why It's Up to Us

by Tim O'Reilly

by elevating the single fitness function of increasing share price above all else, they hollowed out our overall economy.

companies are using stock buybacks to create the illusion of growth where real growth is lagging.

Mistaking what is good for financial markets for what is good for jobs, wages, and the lives of actual people is a fatal flaw in so many of the economic choices business leaders, policy makers, and politicians make.

It isn’t Wall Street per se that is becoming hostile to humanity. It is the master algorithm of shareholder capitalism, whose fitness function both motivates and coerces companies to pursue short-term profit above all else. What are humans in that system but a cost to be eliminated?

“The difference between theory and practice is always greater in practice than it is in theory.”

the efficient market hypothesis, so central to much economic thinking, breaks down in the face of asymmetric information.

If the growing complaints of Uber drivers about lower fares, too many competing drivers, and longer wait times between pickups are any indication, Uber is optimizing for passengers and for its own profitability by extracting surplus from drivers.

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

“The Prolific would cease to be Prolific unless the Devourer, as a sea, received the excess of his delights.”

there is a five-player game in which gains (or losses) can be allocated in different proportion to consumers, the company itself, financial markets, workers, or taxpayers. The current rules of our economy have encouraged the allocation of gains to consumers and financial shareholders (now including top company management), and the losses to workers and taxpayers.

It is only our acceptance of the notion that financial efficiency is the primary fitness function for the economy that locks us into the race to the bottom, in which humans are seen as a cost to be eliminated.

technology is being used for cost reduction rather than to empower people and to reach for the stars not because that is what technology wants, but because it is what the legal and financial system we have built demands.

For all its talk of disruption, Silicon Valley too is often in thrall to that system. The ultimate fitness function for too many entrepreneurs is not the change they want to make in the world, but “the exit,” the sale or IPO that will make them and the venture capitalists who funded them a giant pile of money. It’s easy to point fingers at “Wall Street” without realizing our own complicity in the problem or in finding a way to bring it under control.

many of the companies in the technology industry we are part of were playing by very different rules. They were not getting paid by exchanging goods and services with customers, but by persuading investors to give them money.

in the years leading up to the dot-com bust, it seemed that the game had changed. Entrepreneurs were not creating true companies but a kind of specialized financial instrument, a financial bet not that dissimilar to the CDOs that bedeviled the banking industry in the years leading up to the 2008 financial crisis a decade later.

AOL didn’t actually succeed in transforming itself from the dominant company of the dial-up networking era into the leader of the commercial Internet, but the expectation that it would be able to do so made it possible for it to buy Time Warner, a company many times its size in the real market of goods and services.

The ratio between a company’s revenues, cash flow, or profits and its market capitalization is one of many imaginary numbers that make up the world of financial capital.

every technological revolution has been accompanied by a financial bubble, which funds investments in futures that have not yet come into being, investments that can be tolerated only because for every hundred failures there is a breakthrough so large that it pays off all the failed bets.

a huge proportion of the productivity gains we’ve seen in the past decades have increasingly gone to a small group of managers rather than to all workers.

Company financial statements routinely measure and report on the value captured by the company for its owners. Little is routinely done to measure the value that is created for others. That needs to change.

Small businesses are the bedrock of the economy, providing nearly half of all private-sector employment. Policy makers must understand the role of platforms in bringing small business into the twenty-first century, measure their economic impact, and craft tax policies to encourage the creation of broader economic value, not just the value companies extract for themselves.

Sharing rather than hoarding knowledge can also be a powerful lever for competitive advantage. Companies too often assume that the best way to increase their share of the gains from innovation is to keep it proprietary. Yet as the open source pioneers of Linux and the Internet taught us, knowledge compounds when it is shared.

the question of whether the next wave of automation will leave enough jobs for humans is deeply rooted in outdated maps of what counts as paid work, and what we take for granted and expect to be provided for free.

Keynes presciently gave a name to the heart of our current angst: technological unemployment. He defined it as our inability to find new uses for labor as quickly as we are finding ways to eliminate the need for it.

“Prosperity in human societies is best understood as the accumulation of solutions to human problems. We won’t run out of work until we run out of problems.”

“the job” is an artificial construct, in which work is managed and parceled out by corporations and other institutions, to which individuals must apply to participate in doing the work.

Because of the structure of employment, in uncertain times companies are hesitant to take on workers until they are sure of customer demand. And because of pressure from financial markets, companies often find short-term advantage in cutting employment, since driving up the stock price gives owners a better return than actually employing people to get work done.

The drawbacks of these platforms in providing consistent income and a social safety net shouldn’t blind us to what does work about them. We need to improve these platforms so that they truly serve the people who find work through them, not try to turn back the clock to the guaranteed employment structure of jobs in the 1950s.

I believe that climate change will be for our generation, and the next, what World War II was for our parents and grandparents, a challenge that we must rise to meet or will suffer dire consequences from.

good jobs, not just profits, or even great products, are one of the key outputs of a great company.

The generous redistribution of oil profits and a strong social safety net funded by the wealth that is understood to belong to all makes Norway one of the happiest and wealthiest countries in the world.

Design was not just a functional improvement, but a way of making a statement.

Given an income sufficient to the necessities of life, some people will choose to step off the wheel—to spend more time with family and friends, in creative pursuits, or whatever they damn well please. But even if the machines do most of the essential work and everybody gets a stipend to cover the cost of basic living expenses, competition for additional creativity money will likely drive an economy in which some people just get by while others develop solid middle-class incomes and still others amass vast fortunes.

At every price level, there is competition to provide a unique experience.

when one thing becomes a commodity, something adjacent becomes valuable.

“millennials’ definition of quality of life now involves more time and less stuff.” They want to spend their money on experiences, not things.

“he who has built for use till use is supplied must begin to build for vanity,”

Work gives a sense of purpose, and it’s also worth considering how many things people work at that are currently unpaid, or low paid, that are actually far more valuable to them than things we have been mistakenly trained to pay for.

“All of the great advances in our society have come when we have made investments in other people’s children.”

we don’t just need “more” education, or free education. We need a radically different kind of education.

“If the students we are training today are going to live to be 120 years old, and their careers are likely to span 90 years, but their training will only make them competitive for 10 years, then we have a problem,” notes Jeffrey Bleich,

the nature of that education also needs to change. In a connected world where knowledge is available on demand, we need to rethink what people need to know and how they come to know it.

it is not technology itself that is transformative. It is its application to rethinking the way the world works, not inventing something new but applying newly latent capabilities to do an old thing so much better as to change it utterly.

Knowledge sharing goes from the spoken to the written word, to mass production, to electronic dissemination, to embedding knowledge into tools, services, and devices.

This embedding of knowledge into tools isn’t something new. It has always been a critical enabler of the productivity gains that come from mastery over the physical world. And it inevitably leads to massive changes in society.

We are currently at the beginning of the transition from handcrafted machine learning models to tools that will make it possible for workaday developers to produce them.

The future is not just one of “smart stuff,” tools and devices infused with sensors and intelligence, but of new kinds of “dumb stuff” made with smart tools and better processes for making that stuff.

AI is not the machine from the future that is hostile to human values and will put us all out of work. AI is the next step in the spread and usefulness of knowledge, which is the true source of the wealth of nations.

All of our bestselling books were created by finding people who were at the edges of innovation and either getting them to write down what they knew, or pairing experts with writers who could extract their knowledge.

This design pattern, that the future is built before it can be bought, is an important one to recognize. The future is created by people who can make and invent things and those who can tinker and improve and put inventions into practice. These are people who learn by doing.