While it seems counter intuitive, there is no doubt that America and the West are living through a period of meager productivity. Factories are becoming automated, software is revolutionizing, and in some instances replacing¸ professional services like accounting and law, and anyone who has been to a grocery store lately has noticed that some of the cashiers have been replaced by self-check-out lanes. It certainly seems like we’re getting more done with fewer labor inputs. And then there is that cultural and economic phenomenon called Silicon Valley, a place teeming with energy, ideas and a passion for creating what are known as “disruptive technologies” that revolutionize the way we work, play and go about our daily business. Just think of how many tasks, from paying bills to arranging a business meeting, can be done from your phone! Yet the data is undeniable. Productivity gains began tapering off in the latter half of the 20th century and have all but disappeared here in the 21st. And so the question of productivity, why we have less of it and how to get more, becomes one of paramount importance. And that brings us to an article we saw this week in the New York Review of Books. Written by Edmund S. Phelps, a Nobel Prize-winning economist, it addresses the social and cultural impediments to increasing productivity. The crux of Mr. Phelps’ argument is that Western economies have lost their dynamism because innovation is confined to an ever-narrowing coterie of elites. In the 19th and 20th centuries you could find people from all walks of life solving problems and creating new technologies. He uses as examples George Stephenson, inventor of the steam engine, who was illiterate. John Deere, inventor of the cast-steel plow that “broke the plains” was a blacksmith. Isaac Singer, developer of the sewing machine, was a machinist with no formal education and Thomas Edison, who also had no formal education. There… | Read More »
Author: Christian Peterson
“Sharing economy” is becoming increasingly profitable
As we parse the latest employment figures, looking for signs that the job market will recover to its pre-recession levels and lift more people into the middle-class, we’re forced to recognize how the nature of work has changed. That manufacturing jobs of the kind that built the middle class in the mid-20th century are gone, with little hope of ever coming back, is something we’ve known for decades now. How we will replace those jobs remains an ongoing concern. Technological advancements have had the greatest impact on both the kinds of jobs that are available and the way people approach the job market. Economists use the term “information economy” to describe the current conditions in which computers, robotics and interconnectivity affect everything we do, from building airplanes to scheduling a doctor’s appointment. Technological changes have not only affected the number and quality of jobs available, they also have changed the relationship between employers and employees. The rapid changes brought about through technological innovations have caused companies to reinvent themselves on a continual basis, or face obsolescence. This constant change in the organizational structure of a company has frayed the traditional symbiotic relationship of employer and employee. The rise of free-lance and “contract” workers is one result of this change. Contract workers are indistinguishable from any other worker in the firm except in their employment “status.” With contract workers, the company gets the same productivity benefits with fewer liability and “human resource” issues. But, where technological innovations have reduced stability and security among the workforce of medium to large sized companies, it also has created opportunities outside of the traditional workplace. Over the past few years we have seen the rise of what is being called the “sharing economy.” The most well-known examples of the sharing economy are Uber, (a taxicab-like service that uses mobile phones to match people who are looking for a ride with private citizens who are willing… | Read More »