Technology is not the solution, Bill Gates said in the FT last year. It’s a surprising statement coming from a man who has made his billions pushing Clippy on people, but in the world Gates inhabits now, in terms of the big challenges facing the world, he’s right that technology can only get us so far.
Similarly, Peter Thiel’s VC firm, Founders Fund, famously has as its motto that “We wanted flying cars, instead we got 140 characters”. It’s become a truism to say that most new applications that we get in the world are solving first-world problems, or really a subset of first-world problems, the problems of 20-year males in big cities. Hence, this is why we get new apps like Washio – Uber for laundry.
As much as these apps are easy to make fun of, if we look further ahead in the future, the problem seems set to just become worse. Almost all technological progress we make is creating competition in places where there earlier wasn’t any, is driving returns to capital and is commoditizing what earlier was precious and had value.
The sharing economy is a good example of the latter – commoditizing. On one hand, it seems like a good thing that we are creating value out of earlier unmonetized assets – empty apartments, idle cars, unemployed people. However, given the endless supply of these, the economics are terrible both for the suppliers of the new good and the old one. Looking at e.g. Uber, the supplier of the old good – the taxi driver – gets put out of work due to the cheaper competition that he can’t compete with, and the supplier of the new good – the Uber driver – gets paid very little for his efforts. The only one making additional income is the company, Uber in this case. You therefore end up with a net loss to the economy. For Airbnb, the same logic applies.
Amazon’s Mechanical Turk is a more egregious example. By breaking a task up into tiny pieces, the value put on people’s time can be set extremely low, such as 10 cents/task, regardless of how long it takes.
The other factor of technology is how it creates competition where there was earlier less. Again, this is good in small doses – when breaking up a monopoly, for example. Good examples are Aereo tackling cable companies or Solar City taking on utilities. Certain industries need to be shaken up. But since technology drives returns to capital, and to scale, there is no such thing as a small dose. Globalization, for example, driven by improved communications technology, doesn’t stop until all countries compete for the same resources. Likewise, automation doesn’t stop with blue-collar workers, it is now the white collar workers who face a slow extinction.
I remain an optimist regarding technology futures overall (at least compared to Elon Musk, who now believes we might be summoning the demon with AI), but it’s becoming harder and harder to see how the combination of a growing population, a new economy with less, and less well-paid work, increased competition between and within countries, and governments with unsustainable debts, will work out.