These articles are part of exploration that started in late 2015 and early 2016. It was a confusing time: autonomous vehicles and Boston Dynamics were frequently in the news and OpenAI was just formed to make sure that the “march towards AGI was safe.” UBI was actively being discussed by Sam Altman and Ray Kurzweil was promoting 10x / exponential thinking. At the same time, economists like Robert Gordon were arguing that we were actually living in a time of low progress.
I tried to develop my own perspective on what was happening, with key conclusions presented below. Greater detail supporting these conclusions can be found in Part I, Part II, and Part III.
2015-2016 - Conflicting narratives in the media
Living in Silicon Valley, it is difficult to not get caught up in techno-optimism. The World Economic Forum, many McKinsey reports, and Ray Kurzweil frequently remind us of the “unique time” we live in and the benefits of increasingly digital tools - the “4th Industrial Revolution.” It is easy to get caught up in the narrative that, collectively, we are building a service-oriented future, one of unprecedented disruption and progress. Is there any reason to call this into question?
The answer is “yes.” As a simple statistic, the 2015 Economic Report of the President noted that if economic productivity growth had continued to grow at its 1948–1973 rate, the average household income in the United States would be $30,000 higher today.
Technology has undoubtedly provided tremendous benefits to our society. With increased globalization in trade, innovation in information and communication technologies (ICT) is the second defining macroeconomic trend of the late 20th Century and early 21st Century. Together, they have raised hundreds of millions out of poverty, have removed countless information asymmetries (redefining the role of intermediaries and brokers in value chains), and have changed how groups organize, communicate, and exert political influence.
But despite their influence, these two sources of growth have not been able to provide comparable growth to historical innovations and trends. Furthermore, looking forward, there are many reasons to believe that this “quest for growth” may be even more difficult in the next few decades than it has been over the past 40 years. Our faith in technology, while directionally correct, may mask the amount of work required to create the future we want for ourselves and our children.
Unclear of what to make of these apparent paradoxes, I spent time researching economic literature, policy papers, and investment recommendations to understand the impact of digital technologies on the economic growth of the United States. My general conclusion was that digital’s anticipated effect on growth may not be enough to overcome weaknesses in a few common markers of a healthy, burgeoning economy: broad innovation, strong labor trends, and general competition.
In the United States, companies leading digital transformations are winning the battle for market share and profit growth; some (but not many) are reshaping entire industries to their own advantage. Workers with the most sophisticated digital skills are in such high demand that they command wages far above the national average. Meanwhile, there is a growing opportunity cost for the organizations and individuals that fall behind—and too many are falling behind.
After this research, I was left with five conclusions for improving future opportunity:
- Due to today’s market structures, digital skills most benefit incumbent firms. Economic shifts will be slow without large shocks to competition.
- Greater investments should be made in basic science R&D, to identify future growth and diversify areas of productivity in the economy.
- A key differentiation for digital technology is the knowledge of how to effectively apply technology. Therefore, job skills and retraining are a particularly important area of public-private partnerships.
- As the value of synthesized data grows, greater attention will need to be given to the administration of data security and privacy.
- For those marginalized by these disruptions in society, greater guardrails and supports may need to be put in place - e.g., reform in active labor policies.
In a later exercise, my hope is to identify caucuses, task forces, and organizations that are working on initiatives aligned with these causes. The research and additional detail that led to these conclusions can be found in a few supporting articles:
- Part I: We are in a time of slow productivity and strong incumbents.
- Part II: Aging & unproven learning models are headwinds to growth.
- Part III: Technology requires deeper integration into our work lives.
My goal in putting this together was to clarify my own thinking - and to present it in a way that can be challenged and deepened by others. I would be grateful to learn what may resonate (or differ) from your personal perspectives and work.