Posts tagged with ‘ephemeralization’
Isaac Asimov, Visit to the World’s Fair of 2014 (1964)
Yeah, except we need to rebuild the entire infrastructure of the country, and the government has abrogated its leadership in that area. So now we can watch our bridges collapse, and our trains running slower than they did in the ’70s. Not to mention high speed rail, solar power, more denser and efficient cities, tearing down the suburbs, and a new generation of local food production.
Artificial intelligence machines are getting so good, so quickly, that they’re poised to replace humans across a wide range of industries. In the next decade, we’ll see machines barge into areas of the economy that we’d never suspected possible—they’ll be diagnosing your diseases, dispensing your medicine, handling your lawsuits, making fundamental scientific discoveries, and even writing stories just like this one. Economic theory holds that as these industries are revolutionized by technology, prices for their services will decline, and society as a whole will benefit. As I conducted my research, I found this argument convincing—robotic lawyers, for instance, will bring cheap legal services to the masses who can’t afford lawyers today. But there’s a dark side, too: Imagine you’ve spent three years in law school, two more years clerking, and the last decade trying to make partner—and now here comes a machine that can do much of your $400-per-hour job faster, and for a fraction of the cost. What do you do now?
There is already some evidence that information technology has done permanent damage to workers in a large sector of the economy. This specifically applies to workers who are considered “middle skilled,” meaning that they need some training, but not much, to do their jobs.
Middle-skilled jobs include many that are generally recognized to be antiquated—secretaries, administrative workers, repairmen, and manufacturing workers, among others. Since the 1980s, across several industrialized nations (including the United States), the number of workers in these job categories has been rapidly declining (the pace of the decline increased greatly during the last recession). Instead, most job growth has been at the poles, in professions that require very high skills and earn high wages, and in the service sector, where most jobs require few skills and pay tiny wages.
David Autor, an economist at MIT who is the leading scholar of this phenomenon, calls it “job polarization.” Autor identifies a number of causes for the decline of middle-skilled work, including the decreasing power of unions and the declining federal minimum wage. He puts one factor above the rest, however: The rise of information technology.
Autor argues that middle-skilled jobs tend to have two factors in common—they are composed of lots of tasks that are both routine and geographically portable. What does a secretary do all day? He files, sorts, organizes, watches for calendar conflicts, and in other ways manipulates information. What does a tax preparer do? He asks you a series of questions, and performs some calculations based on your answers. These are all tasks that can be written in software—and, once there, they can be done faster, and more cheaply, by machines. And even when a computer can’t completely replace these middle-skilled jobs, it can make them easier to transfer to lower-wage humans—you still need a human being to answer tech support questions, but now you can hire someone in Andra Pradesh rather than Alabama. This decimation of middle-skilled work explains another unsettling trend in American business. New companies today are starting up with far fewer workers than in the past, and they’re staying smaller as they grow.
The ephemeralization of work: why a really large number of people will be moving out of work requiring that application of (relatively) simple rules to (relatively) small heaps of data. Like doing taxes or putting pills in a bottle at the pharmacy.
Bernhard Rieder, via 81,498 Words: the Book as Data Object :: The Unbound Book
The sale of DVDs has been falling since 2007, but the Digital Entertainment Group (DEG) reported that physical sales collapsed 19% to $2.2bn (£1.3bn) in the first quarter, while high-street rental also plunged by 36% to $440m, in a period when Blockbuster was in Chapter 11 bankruptcy protection. Online downloads and streaming through services such as Netflix, by contrast, grew quickly, although not enough to avert a 10% decline in the total home entertainment market to $4.2bn.
Ephemeralization of movies will lead to huge swaths of the entertainment marketplace collapsing, like Blockbuster. Redbox and its competitors have a way to go, but they are strictly transitional, too.
Just as big will be the death of DVD/Blu Ray players, as streaming becomes the principal distribution, and then TVs, as more and more of streamed movies and entertainment is watched on mobile devices and PCs.
Sell everything, like Sony, Panasonic, and all the others. They are walking dead.
Timothy Lee looks into the corrosive effect of software’s power to unmake tangible goods by creating software that does the same thing on general purpose devices:
Timothy Lee, The Great Ephemeralization
[…] a couple of years ago, Google waved a magic wand that transformed millions of Android phones into sophisticated navigation devices with turn-by-turn directions. This was functionality that people had previously paid hundreds of dollars for in stand-alone devices. Now it’s just another feature that comes with every Android phone, and the cost of Android phones hasn’t gone up. I haven’t checked, but I bet that this wealth creation was not reflected in GDP statistics. And it’s actually worse than that: as people stop buying stand-alone GPS devices, Google’s innovation will actually show up in the statistics as a reduction in GDP.
Cowen writes that the Internet is producing wealth that “is in our minds and in our laptops and not so much in the revenue-generating sector of the economy.” This isn’t exactly wrong, but it fails to appreciate the extent to which the software industry is entangled with the “revenue-generating sector of the economy.” The digital revolution isn’t just introducing novel ways to amuse ourselves, it’s rapidly displacing a wide variety of “revenue-generating” products and services: typewriters, newspapers, magazines, books, maps, cameras, film development, camcorders, yellow pages, music players, VCRs and DVD players, encyclopedias, landline telephones, television and radio broadcasts, calendars, address books, clocks and watches, calculators, travel agents, travelers checks, and so forth.
Paul Graham and Reihan Salam have been popularizing the term “ephemeralization”, originally coined by Buckminster Fuller, to describe this process whereby special-purpose products are replaced by software running on general-purpose computing devices. As the list above suggests, ephemeralization is affecting a growing fraction of the economy. And with technologies like self-driving cars on the horizon, its importance will only grow in the coming decades.
Ephemeralization offers an alternative explanation for the puzzling growth slowdown of the last decade. Every time the software industry displaces a special purpose device, our standard of living improves but measured GDP falls. If what you care about is government revenue, this point might not matter much—it’s hard to tax something if no one’s paying for it. But the real lesson here may not be that the American economy is stagnating, but rather that the government is bad at measuring improvements in our standard of living that come from the software industry.
The most stark everyday example is the cord cutting going on based on high bandwidth connectivity to the home. The first to fall? Landlines and plain old telephones. Next? Blockbuster, DVDs, cable television networks, movie houses. Billions of dollars in stuff no longer being produced, fees no longer being charged, movie seats no longer being filled.
So how to count the benefits if not in GDP? How can we track the value for the individual who has great movie options on his laptop — maybe he doesn’t have a TV, either — in his apartment? The decrease in fees and goods he no longer pays for!
Here we may be seeing the emergence of the no-growth, no-stuff economy. The web converts the old economy of arranging and transporting atoms into arranging and transporting bits, and with that flipflop we need to measure value based on savings to the user instead of earnings for the manufacturer and distributor.