If it’s free, you’re the product. If it’s extremely subsidized, you’re probably the product, too. Facebook is free. You’re the product. Google and Gmail are free. You’re the product. Mechanical Turk is cheap, you’re the product. Uber is cheap, you’re the product. Tesla self driving cars are add on features. You’re the product. Snapchat is free. You’re helping them build the best facial recognition database out there. They’re “paying” you with access to use their service.
Tesla needs a few billion miles of driving data to train its computer program to react to all situations. How does Tesla get this data? By tracking all car trips and adding it to the database. Once they have enough data, cars can react to nearly all situations. They’ve used massive amounts of each persons’ data to train the program.
All of the companies I listed above are using free or highly subsidized products to train their algorthims to further automate away humans. Is this bargain fair? That everyone who uses free and subsidized services are contributing to training the AI? The AI that will later run that market and create massive benefits for the company that captured all of this data that people freely gave it? (more…)
We know we’re going through massive change. And that things are moving faster than ever. Our politics are harming those who they claim to protect. One potential savior is the on demand economy. On demand economy proponents claim people will be Uber drivers, freelance writers, freelance attorneys, accountants, video editors, programmers. People won’t buy things, they’ll just lease them (and they’ll be happy). It’s true, some people will live like this and be happy. But the on demand economy is just a bandaid on a wound that requires an emergency room visit. And it might be worse. It might be like giving adrenelline to someone who’s already bleading out.
The labels “on demand economy” or “sharing economy” don’t accurately characterize these new business models and work arrangements. One of the new “jobs” rates airbnb accommodations based on cleanliness, if the photos are real etc. Their job is to make sure it doesn’t smell bad. They’re on demand airbnb smellers. While that’s a new job that maybe be needed, it’s not a job that will pay living wages and give people dignity.
We have similar problems in most other “sharing economy” companies. It’s like making people into code, shuttling them from place to place and only paying them when they can work. It’s many a business owners’ dream: pay workers only when they can work, don’t pay benefits and make workers compete against each other. Look at Amazon’s Mechanical Turk, where workers are paid pennies to complete mundane tasks and train the AI. Turkers are already protesting that they’re people, not algorithms. Contrast the sharing economy with Henry Ford’s dream of paying his workers so that they could afford his product. We’ve come a long way.
This competition structures incentives to create a massive race to the bottom. These companies make economic sense for the first people who use them, but don’t make sense for workers in the long term. Just look at Uber driver income in any new city. Uber pays big bonuses when they come into a new market where there are few drivers. Drivers earn $100k+ in places like Philly and LA. But as soon as more drivers get on the platform, wages go to as close to zero as possible as Uber lowers fares and ups its commission.
For on demand services like design, programming, creative writing etc, the developing world will always win these price wars. Just look at Upwork…there’s $2/hour video editors that do a great job. As Seth Godin put it, “we can’t out obedience the competition.” It’s a race to the bottom.
On demand economy websites will help some people go through the transition from stable jobs to our new AI enabled future, but competition that drives compensation, working conditions and best practices to the lowest common denominator will be the norm. Airbnb smellers are a new job, but not something that’s going to give satisfaction or a wage that supports a family in the near future.
Photo credit: synx508
The half life of a skill is 10 years and rapidly falling. AI is here. Government policies of low interest rates, threats of tariffs and burying our heads in the sand are incentivizing automation and job destruction as fast as possible. That’s the story in the developed world.
What about the developing world? In places like Latin America, most industries are unchanged. Amazon hasn’t disrupted most markets, and big, old, incumbents are still in control. Retailers see little need to compete. Banks have little online competition. Most large companies are way behind US companies in efficiency and implementation of AI/Automation technology. Business owners don’t feel threatened from competitors, so they see little need to innovate.
Many publicly traded companies’ inventory control system is still minimum wage workers taking notes on a clipboard and then calling in the numbers from the warehouse. Some companies are becoming more efficient because of the commodity bust of 2014-2016, but most are way behind. Things are changing in the developing world, but not nearly at the pace of the US. Because the pace of change is slower, it will be better to live in developing world than in the US or Europe for a higher percentage of the population. (more…)
President Elect Trump ran on anti-tech platform designed to get US jobs back that have been sent overseas. Although our tax and trade policies have hurt developed country workers, especially in the US, the vast majority of job losses are because of technology, not outsourcing.
Trump’s talked about putting tarrifs and fining companies that outsource. He’s “succeeded” in getting a few companies to stay. But these companies are staying grudgingly, and demanding massive tax breaks to do so. Trump is using the power of the presidency to influence markets and potentially pick winners and losers. He’s sending the message that you have to play ball, or risk losing government contracts or being made uncompetitive.
Trump’s policies are going to make US companies think twice about outsourcing and moving factories. But they won’t go back to hiring US workers like they did in the 70s and 80s. An example in the West Virginia coal industry: (more…)