By Robert Reich
It’s now possible to sell a new product to hundreds of millions of people without needing many, if any, workers to produce or distribute it.
At its prime in 1988, Kodak, the iconic American photography
company, had 145,000 employees. In 2012, Kodak filed for bankruptcy.
The same year Kodak went under, Instagram, the world’s newest
photo company, had 13 employees serving 30 million customers.
The ratio of producers to customers continues to plummet. When
Facebook purchased “WhatsApp” (the messaging app) for $19 billion last year,
WhatsApp had 55 employees serving 450 million customers.
A friend, operating from his home in Tucson, recently invented a machine that can find particles of certain elements in the air.
He’s already sold hundreds of these machines over the Internet
to customers all over the world. He’s manufacturing them in his garage with a
3D printer.
So far, his entire business depends on just one person —
himself.
New technologies aren’t just labor-replacing. They’re also
knowledge-replacing.
The combination of advanced sensors, voice recognition,
artificial intelligence, big data, text-mining, and pattern-recognition algorithms,
is generating smart robots capable of quickly learning human actions, and even
learning from one another.
If you think being a “professional” makes your job safe, think
again.
The two sectors of the economy harboring the most professionals
— health care and education – are under increasing pressure to cut costs. And
expert machines are poised to take over.
We’re on the verge of a wave of mobile health apps for measuring everything from
your cholesterol to your blood pressure, along with diagnostic software that
tells you what it means and what to do about it.
In coming years, software apps will be doing many of the things
physicians, nurses, and technicians now do (think ultrasound, CT scans, and
electrocardiograms).
Meanwhile, the jobs of many teachers and university professorswill disappear,
replaced by online courses and interactive online textbooks.
Where will this end?
Imagine a small box – let’s call it an “iEverything” – capable
of producing everything you could possibly desire, a modern day Aladdin’s lamp.
You simply tell it what you want, and – presto – the object of
your desire arrives at your feet.
The iEverything also does whatever you want. It gives you a
massage, fetches you your slippers, does your laundry and folds and irons it.
The iEverything will be the best machine ever invented.
The only problem is no one will be able to buy it. That’s
because no one will have any means of earning money, since the iEverything will
do it all.
This is obviously fanciful, but when more and more can be done
by fewer and fewer people, the profits go to an ever-smaller circle of
executives and owner-investors.
One of the young founders of WhatsApp, CEO Jan Koum, had a 45
percent equity stake in the company when Facebook purchased it, which yielded
him $6.8 billion.
Each of the early employees reportedly had a 1 percent stake,
which presumably netted them $160 million each.
Meanwhile, the rest of us will be left providing the only things
technology can’t provide – person-to-person attention, human touch, and care.
But these sorts of person-to-person jobs payvery little.
That means most of us will have less and less money to buy the
dazzling array of products and services spawned by blockbuster technologies –
because those same technologies will be supplanting our jobs and driving down
our pay.
We need a new economic model.
The economic model that dominated most of the twentieth century
was mass production by the many, for mass consumption by the many.
Workers were consumers; consumers were workers. As paychecks
rose, people had more money to buy all the things they and others produced —
like Kodak cameras. That resulted in more jobs and even higher pay.
That virtuous cycle is now falling apart. A future of almost
unlimited production by a handful, for consumption by whoever can afford it, is
a recipe for economic and social collapse.
Our underlying problem won’t be the number of jobs. It will be –
it already is — the allocation of income and wealth.
What to do?
But the economy toward which we’re hurtling — in which more and
more is generated by fewer and fewer people who reap almost all the rewards,
leaving the rest of us without enough purchasing power – can’t function.
It may be that a redistribution of income and wealth from the
rich owners of breakthrough technologies to the rest of us becomes the only
means of making the future economy work.
ROBERT B. REICH, Chancellor’s Professor of
Public Policy at the University of California at Berkeley and Senior Fellow at
the Blum Center for Developing Economies, was Secretary of Labor in the Clinton
administration. Time Magazine named him one of the ten most effective cabinet
secretaries of the twentieth century. He has written thirteen books, including
the best sellers “Aftershock" and “The Work of Nations." His latest,
"Beyond Outrage," is now out in paperback. He is also a founding
editor of the American Prospect magazine and chairman of Common Cause. His new
film, "Inequality for All," is now available on Netflix, iTunes, DVD,
and On Demand.