SPEAKER 1: So,
welcome, everybody.
Thanks very much for
joining us today.
We are lucky to have two
distinguished co-authors
of the great, recent book
coming out very shortly,
"Machine, Platform, Crowd."
Let me introduce Andy McAfee
and Erik Brynjolfsson-- who
are both distinguished
professors at the Sloan School
at MIT, and co-directors
of the MIT initiative
on the digital economy.
I thought we'd start off
by asking them to tee up
the thesis and main themes of
their books for a few minutes.
I've got a few questions
to ask about both this book
and their prior book,
"The Second Machine Age,"
and we'd love to open
it up to all of you--
both in the room, and in
offices around the country.
So with that, let me
turn it over to you
guys for a quick
overview of the book.
We've known each
other for some years,
in a variety of
different sessions,
and my favorite description
of all of the wonderful things
that could be said
about Andy and Erik
is that the FT Review
called them the pinup
boys for the Davos crowd.
I'm not sure if
you can outdo that.
But with that intro--
ANDY McAFEE: Think
about what that
says about the rest
of the Davos crowd.
Just ponder that for a second.
ERIK BRYNJOLFSSON: Yeah.
Grading on a curve.
But we would only be talking
for this session, though.
Just to get your
expectations set properly.
SPEAKER 1: So tell us a
little bit about the book.
Coming off "The
Second Machine Age,"
which is a lot about
the economic transitions
of the United States,
what's the next chapter
in that story that you wanted
to tell with this book?
ERIK BRYNJOLFSSON: So,
coming off the last book,
I think we heard a
lot of people saying,
OK, we get what you're
saying-- the world is changing,
there are these things
happening with technology,
and the economy's
being affected.
What now?
What should we be doing
to take advantage?
And a little bit more about
how businesses can react.
And we saw, really, three
big rebalancings happening.
One of them was between
mind and machine.
One of them was between
product and platform.
And the third one was between
the core and the crowd.
First we thought we'd put
all those words in the title,
but then our names wouldn't
fit in 18-point type.
So we had to reduce the
number of words a little bit.
So the first one is
one you guys are all
very familiar with-- this
rebalancing between mind
and machine.
That machines, first off,
are helping a lot of humans
make better decisions.
Data-driven decision making--
whether it's helping the Golden
State Warriors use
analytics to understand
that three-point shots are
worth more than two-point shots.
Other things like that.
Or--
SPEAKER 1: You wouldn't think
you'd need analytics for that.
But--
ERIK BRYNJOLFSSON:
Well, apparently, it
wasn't well-understood
until recently.
And there may have been
some more subtle things
that they pulled out, as well.
And of course, before that,
it was their neighbors,
the Oakland A's,
and the Boston Red
Sox-- who won a
series of three world
championships between them.
And then it's coming to
more and more businesses.
We've got about a
three times increase
in the use of
data-driven decision
making-- that, by the
way, we measured it
across American plants.
And even in our own
industry-- tenure analytics.
We're using analytics
to try to predict
who is going to get tenure
at top universities, who's
going to get prizes.
And it turns out that it
can out-predict the tenure
committees, in terms of who
does better performance.
But that's just the
first part of that.
More and more, as you guys
know, artificial intelligence
is making decisions
on their own.
And I won't even
go into all that,
because you guys are
very familiar with that.
The second big rebalancing is
between products and platforms.
Five of the biggest
companies by market cap
are platform companies--
Google Alphabet, here, Facebook,
Amazon, Apple, and Microsoft.
But there's lots of
smaller companies
that are coming up and
growing-- sometimes,
almost out of nowhere,
becoming multibillion dollar
companies--
leveraging platforms,
and trying to understand that
trade-off between products
and platforms, and why those
are so much more powerful now.
And thirdly, between
the core and the crowd.
Tapping into the millions--
actually, billions--
of brains around the planet.
It's something
that we can do now,
because we have a global,
interconnected digital network
that allows people to
communicate that way-- in a way
they couldn't have previously.
And not just to
access information,
but to contribute to it.
So this helps us to
make sense of some
of the weird things that are
happening in the economy--
the companies that
are being destroyed,
new companies being created.
And there's some underlying
economic principles
in each of these areas of
"Machine, Platform, and Crowd."
And laying out
the phenomena that
are happening with
lots of case studies,
and then the
economic principles.
In each case, it
turns out, there
are some Nobel
Prize-winning economics that
drive each of these changes.
And that can help us
make sense of that.
So that was the basic
strategy of what
we were trying to do with
"Machine, Platform, and Crowd."
And we're hoping
that we continue
to have this kind of dialogue.
We're looking forward to
some questions and comments
from all of you, to see what
the challenges are that you're
facing, the opportunities
you're facing,
and see how well we can map
them into the frameworks we've
developed.
Andy?
ANDY McAFEE: Yeah.
What he said.
First of all, Ken, thank
you for hosting us.
It's a pleasure and a real
privilege to come back.
We've learned a lot from
Google over the years.
It's always a pleasure to come
back and talk with you all.
I want to also thank Andrew
and your team at Google.org.
Google.org is a supporter of our
Inclusive Innovation Challenge
back at MIT, where we're
trying to reward innovators
and entrepreneurs
who are improving
economic prospects for average
income and below-average income
workers.
A lot of us in this room know
that the narrative, these days,
is that technology
is killing jobs.
And it's not too far
from that narrative to,
"therefore, technology
is a bad thing."
We think that's a really
harmful road to go down.
So with the IIC, we're trying
to celebrate organizations
that are using technology to
bring economic opportunity.
We're really happy to have
Google.org on board with us
for that.
And then, finally, thank you
all for showing up today.
I know you probably have
a lot of things to do.
It's a pleasure
to have you here.
I want to tell the origin
story of this book.
Because Erik and I wrote "The
Second Machine Age" together.
And, you know, we
kind of thought maybe
we were done writing books
about this period of crazy tech
progress that we were in.
And we noticed, as soon
as we finished that book,
that people who run companies
kept on approaching us
in the hallways-- honestly--
of places like Davos,
and they kept on
saying, essentially,
"I believe your story--
now what do I do?"
And in some cases,
I got the impression
that there was actually some
desperation behind the question
that they were asking.
These people were successful.
They were running large,
successful organizations.
And I started to
get the impression
that they were at sea-- they
were really floundering,
or foundering, about
this technology surge.
That they understood,
at some level,
they didn't have a
great way to think
about what this was going
to do to their business,
to their organization,
or to their industry.
And that became this recurring
conversation that we had.
And I found it
profoundly interesting,
because I didn't understand, at
first, why they were so lost.
These were smart, successful,
experienced, well-educated
executives-- and
they felt, really,
just "deer in headlights"
with what was coming at them.
And then as Erik
and I did the work,
I realized that I should have
been less surprised by that.
Because the mantra
about technology
that I'm repeating to
myself, these days,
is that tech progress rewrites
the business playbook.
And we're in one of those
stages right now-- where,
the two of us believe,
the playbook for how
you run a successful business
is being substantially
rewritten by the kinds of new
technologies that we're seeing.
The last time I
think this happened
was just about a
century ago, when
manufacturing went from
being steam-powered to being
electric-powered.
And there was a naive way
to think about that-- which
was take out the big steam
engine in the basement
of the factory, and replace
it with a big electric motor
in the basement of the factory.
And a lot of companies did that.
That was kind of a no-brainer.
What we've learned
from business history
is that the companies
and business leaders who
grew up in the era of steam--
it's not that they were
unwilling to invest
in electricity.
It's not that they thought
electricity sucked.
It's that, honestly,
they could not--
their minds did not
admit the possibility
of an overhead crane, or a
conveyor belt, or an assembly
line.
These things did not
make sense if you
had a factory powered by
belts, and shafts, and pulleys,
and steam in the basement.
This was just crazy talk.
And you can go back
and read the literature
from those early decades
of the 20th century,
and there were these
vicious debates about,
"should we put a motor on
every machine in the factory?"
That was nutty, for decades--
even though it's completely
obvious in retrospect.
So the homework
that Erik and I had
for ourselves was to
think of, these days,
what are the equivalents of
overhead cranes, and assembly
lines, and conveyor belts, that
forward-thinking companies are
on top of, and that the
ones who are trapped
in previous mindsets and
previous ways of thinking
are just not going to see?
And that led to our
three-part answer--
I see a lot of companies
underestimating
the power of machines, a lot
of companies underestimating
the power platforms,
and a lot of companies
not doing a great job of tapping
into the crowd out there.
SPEAKER 1: So, for a
company like ours--
we feel very much in the middle
of a lot of these phenomena.
You start your book with
examples of AlphaGo,
with DeepMind.
The platform-- obviously, we
have a number of different
things that have platform-like
characteristics--
Android, and a lot of others.
And even on crowd, you can
argue that Google search is
the greatest man-machine
collaboration in history,
as people use our systems
and improve the systems
through their clicks.
So what would be your
advice for Google?
What do you think
we're getting wrong?
What do you think we should
be doing differently?
And I see we're just
about out of time.
Thank you all for coming in.
[LAUGHTER]
ERIK BRYNJOLFSSON: You're
doing a lot of things right.
And so I think that one of
the risks is that, in a way,
you may become too successful.
And I think one of the things
that we don't talk that much
about in the book, but I think
we're going to see, is that,
as we get more of a
winner-take-most economy,
and very successful companies
are able to use these
technologies to dominate
market after market--
because they
understand those three,
and other companies are
just beginning to get them--
then there can be a backlash,
and a push-back against that.
And one of the questions is,
what kind of economy are we in,
going forward?
Is it one where there
is monopoly capitalism?
Or is it what we've
talked about in the book--
more of a Schumpeterian
creative destruction,
where there's always a
risk of one platform being
displaced by another?
But understanding
that economics are
a little bit different in a
world where there are very
strong network effects, or
even two-sided network effects,
and there are some big scale
economies, and very rapid
technological change.
And that's something
that I know that you're
very much on top of--
understanding those
kinds of dynamics.
And, relatedly-- something we
touched on in the last book--
is this winner-take-all or
winner-take-most dynamic
doesn't just apply to companies.
It can apply to
individuals, as well.
So we're seeing
growing inequality
on a lot of
different dimensions.
And it's great-- as Andy
mentioned-- that Google.org
is helping to identify business
models that can create more
broadly-shared prosperity
as another counterweight
against a world where all
of the wealth, and perhaps
political power, gets
more concentrated.
ANDY McAFEE: Ken, I think
this is a great question.
I want to answer, not
specifically about Google,
but about companies
full of smart people.
And at the risk of flattering
people in this room,
and watching us--
OK, there are a lot of smart
people working at Google.
The single biggest
failure mode that I've
observed, related to the
content of the book, when
I talk to audiences
of very smart people,
is that smart
people tend to have
an exaggerated version
of a failure mode
that everybody has--
which is to be too fond, and
too confident, and too reliant
on their own intuition,
judgment, experience,
intelligence.
And they are very
often guilty of some
of these cognitive biases--
Erik mentioned Nobel Prizes--
that Daniel Kahneman got
a Nobel Prize for figuring out.
The failure mode among
really smart people
is to trust themselves too much.
And one of the points we
make-- the broad point we make
in the first section
of the book is, look,
your intuition is awesome.
It is demonstrably buggy
and failure-ridden,
and it's got all kinds of
really powerful, pretty bad-news
failure modes.
The fact that your IQ is
well above the average
does not insulate you from that.
And in some ways, it can make
that worse-- overconfidence
bias tends to be worse
among really smart people.
So the point we make in the
first section of the book
is to hammer that point
home, and make people
feel bad about themselves.
But then, to say, look-- we have
these awesome colleagues, now,
called machines, that have
very different failure modes
than people do.
They're not inconsistent.
They're not overconfident.
But they're really
stupid about the world.
There's are a wonderful
concept from linguistics.
It's called the intuition
of the native speaker.
I can recognize a grammatically
faulty English sentence
[SNAPS FINGERS] just
in the blink of an eye.
Immediately.
And people who don't speak
English as a first language
can't do that.
Reason I bring that up--
we have native speaker
intuition about the world.
Even with all the work
you guys are doing,
our machines don't
have that yet.
So one of the broad
points we try to make
is, let's bring
together the strengths
of minds and machines.
If we do that correctly,
I think we can cancel out
each other's failure modes.
The big homework,
especially for smart people,
is to become more aware of
the failure modes of humanity.
And more willing to
question yourself,
second guess yourself.
Use data, use machines
to buttress the mistakes
that our wetware has.
ERIK BRYNJOLFSSON: And there
are lessons from the other two
sections of the book, as well.
I mean, you guys know
Joy's Law-- that no matter
what company you work for,
most of the smart people
in the world don't
work for your company.
And it's probably
even true for Google.
That may be the edge case.
And so it's great that
Google-- we were just,
last night, with
Anthony Goldbloom,
co-founder of Kaggle.
And it's great to
see Google tapping
into the power of the crowd,
and all of those smart people
elsewhere that are contributing.
And the AI initiatives
that are allowing people
to contribute in
different ways--
use TensorFlow,
and other things,
to tap into that
crowd knowledge.
And on platforms--
I mean, yes, Google
has not just one, but
multiple great platforms.
But as we describe in the book,
those are constantly evolving.
As the technology
changes, there's always
a risk of them being displaced.
And of course, there's
new ones rising up.
As you go from--
as Sundar Pichai said--
a mobile-first to
an AI-first world,
that kind of
transition-- you know,
Microsoft kind of bobbled that.
Going from desktops to mobile.
And there's these
constant risks.
So because of the rapid
change that we were just
talking about, you can't
sit back and feel like,
OK, we've got the problem
solved, et cetera.
We can just relax.
I think the lessons in all
three sections of the book
apply to Google.
SPEAKER 1: Let's talk a
little bit about time scale.
We get very excited about this.
We feel it.
It's the ocean we swim in.
And yet-- Andy, your example
about electrification--
it took 50 years to disseminate
the effects of electrification
through society in a broad way.
If you look at something
like the cell phone--
it was conceived of in 1947,
demoed in 1973, sold in '83.
And it really wasn't until the
turn of the century, or later,
until it became widely adopted.
So are we overestimating
how quickly
all this is coming along?
Or do you think this is
right around the corner?
ANDY McAFEE: I think
especially the geekier set is
overestimating how quickly these
things are going to happen--
how quickly the cars are
going to drive themselves,
and we talk to AI in our
homes and everything happens,
and the drones deliver stuff.
I think we are
overestimating that.
However, I do think
that a lot of people
are underestimating that.
And in the communities that
Erik and I try to be part of,
there's a super active
debate about how soon
is x going to happen.
And a lot of people rely on
those historical examples
that you just brought
up, and say, look, this
is a decades-long process.
My favorite counter to that is--
how old is Facebook?
2004-ish?
ERIK BRYNJOLFSSON: Yeah.
Five, yeah.
ANDY McAFEE: Facebook has 1.9
billion users around the world.
Close to a third of humanity
has adopted this technology,
in the space of 15 years.
We have never, ever
seen this before.
So in a world that
is interconnected
with pretty powerful devices,
and where the cloud is
available on demand
almost everywhere,
and where really powerful
tools are being put up
into the cloud,
the time scales can
be quicker than we're used to.
ERIK BRYNJOLFSSON:
And I would make
a distinction between those
two examples you gave.
I think Andy is exactly
right, that the technology is
evolving a lot faster
than the cell phone did.
But what doesn't seem to
be moving a lot faster
is our ability to adapt the
business process to change.
And that's what held
back electricity.
Electricity was-- the
technology was there
for a good several decades
before the factories reinvented
their business processes and
reinvented their organizations.
And there are some
technologies that
can be adopted without a whole
lot of business process change,
like a consumer-facing
product, like Facebook.
But a lot of the
ones that really
have big societal
changes are going
to require a lot
more adjustment.
And self-driving
cars-- it's going
to be not just a
matter of having
to navigate the vehicles.
There's a whole set of
laws, ethics, customs that
are going to have to evolve.
SPEAKER 1: This must
keep you up at night,
thinking about all the
barriers that come up.
ERIK BRYNJOLFSSON:
And those don't evolve
at Moore's Law types of speeds.
One of the big reasons
we wrote this book--
SPEAKER 1: Lawyers
like geologic time.
ERIK BRYNJOLFSSON: Yeah.
More like geological time.
ANDY McAFEE: They
go backwards slowly.
ERIK BRYNJOLFSSON: And
that's why we wrote the book.
But hopefully that we can move
the dial a little bit on that.
I think if people understand
how to take advantage
of these technologies,
and they understand
the process of change
that's necessary,
we can make it happen
a little bit faster--
once we give them a bit of
a playbook about what works
and what doesn't work.
ANDY McAFEE: And it's also true
that the progress is really
going to be piecemeal.
So nationwide,
fully-autonomous cars--
that might be a bit off.
We were talking to
Vinod Khosla yesterday,
and he brought up that one
company that he's aware of
is trying to just think about
automating driving trucks
between-- what was it, Dallas?
ERIK BRYNJOLFSSON:
Phoenix and LA, I think.
ANDY McAFEE: Dallas and LA.
He said, let's just do that.
There's a billion
dollars of commerce--
that's a billion dollar
market, just driving trucks
back and forth between
those two cities.
Can we get regulatory approval
from the states on the route?
And can we-- that's one route.
We know how to map
that pretty easily.
So that can happen
pretty quickly.
ERIK BRYNJOLFSSON:
And part of it
was not to do all the little
side streets at each city.
Get it onto the
highway, and boom.
And they go.
ANDY McAFEE: And then text some
person to show up and drive it.
It's going to take a while
to completely rewire and put
sensors all over
the electric grid,
and get the efficiencies that
we were hoping for with that.
At the same time, the
thought experiment that I run
is, how much work would
it be for some kind
of industrial facility to
slap sensors on everything,
give it to TensorFlow, and maybe
get the kind of 15-ish percent
step change improvement that
the Google data center saw when
they turned over operations
to a cousin of the AlphaGo
technology?
So there are going to
be relatively quick
big wins happening all
over the economy, I think.
SPEAKER 1: Now
let's talk a little
about the social
implications of that.
And it's something you covered
in depth in "The Second Machine
Age," but continues
to be very relevant.
When you talk about
driverless cars,
immediately there's concern
about employment transition
and displacement.
The standard response
is, more training,
and perhaps either
earned income tax credit
or universal basic income.
Yet, training has been kind
of a mixed success rate.
There are not a lot of
great case studies there.
People trying to do new things--
online training, and the like.
Interested in your
thoughts on that.
And, more generally, on the
balance between our need
for growing productivity
as our workforce ages,
and potential impacts on social
structures and employment.
ERIK BRYNJOLFSSON: There's
no silver bullet here.
And I think there
are a lot of people--
and Vinod was one of them--
if you look far enough ahead,
it's going to be very hard
for education to keep up.
But I think where we
are right now, in 2017--
and as far as I can tell, for
the next five, 10 more years--
training and education is
probably at the top of my list.
I think most economists lists--
ANDY McAFEE:
[WHISPERS] Not mine.
ERIK BRYNJOLFSSON: OK.
ANDY McAFEE: Not mine.
ERIK BRYNJOLFSSON: So
Andy can weigh in on that.
But there's different kinds
of training education.
So some of them give
very specific tasks.
You know, what Sebastian Thrun's
company are doing at Udacity.
You can learn some
skills quite rapidly,
and add a great deal of value.
Tom Kalil described
something that DARPA did,
called the Education Dominance
Program, that in 90 or 120 days
would give people some very
concrete skills that massively
increased their value.
The more lasting
skills are going
to be the ones around
interpersonal skills,
creativity, teamwork,
persuasion-- some of the softer
skills that machines
aren't very good at.
I don't think our
schools are doing
a very good job of teaching
those-- or, worse yet,
I think many of
them are actually
crushing them, and
making them less salient.
So if--
ANDY McAFEE: How many
of us feel like we
had some of the love
of learning crushed out
of us by our education?
Just-- honestly, show of hands.
Yeah.
Way up in the air, please.
Look around the room.
This is a crime.
ERIK BRYNJOLFSSON:
This is a crime.
Because, I think, most
kids, actually, they
love being creative.
You put a pile of
blocks in front
of a three-year-old, the
first thing they'll do
is start building something.
Or crayons.
Kids-- humans-- love creating.
And if we can nurture
that, let that flourish,
that is what machines
are not very good at.
Playing and interacting
with other people, teamwork.
That's what machines
aren't very good at.
So it's not just a matter of
spending more on education--
though I don't think
that would hurt.
I think that would help.
But it's a matter of more
fundamentally reinventing
education.
There are so many
tasks in our economy,
still, that only humans can do.
And that's the way it's
going to be for a while.
So I'm not ready to
write off human skills.
I think we should
invest, and make
people ready to do all
those different kinds
of human tasks--
health care, education
child care, creative works.
And that's going to be,
I think, one of the ways
to create more
shared prosperity.
But you may disagree, Andy.
ANDY McAFEE: I agree with
everything you just said.
Here's why I disagree with
an "education reform first"
approach to fixing things.
My thought experiment is, let's
say there's a pot of money
available, and you can do
only one thing with it.
And I have three prime
candidates in my mind.
Number one is reform education.
And let's say it's going
to cost something--
ERIK BRYNJOLFSSON: Wait.
What number was that?
ANDY McAFEE: What?
The amount of money?
ERIK BRYNJOLFSSON: No.
What number was that?
That was number one?
ANDY McAFEE: Not in
descending order.
ERIK BRYNJOLFSSON: Oh, OK.
All right.
ANDY McAFEE: Option A
is to reform education.
Option B is to figure out why
entrepreneurship in America
has been on a long, slow, steady
decline, and reverse that.
Option C is to bring our
infrastructure up from a grade
of D+ to, maybe, a solid B.
I would actually take either
option B or C over option A.
I'm not saying that I'm right.
And I'm not saying
it's a no-brainer.
But I would love to solve either
of those latter two problems
first.
I fall back on something
that Larry Summers
says, in his inimitable fashion,
whenever somebody brings up
education.
He said, "education
reform is kind of a dodge.
And unless we grow
the economy faster,
we're not going to be doing
a lot for jobs and wages."
That's a very strong
way to say it.
But to grow the
economy faster, I
would love to figure out why
entrepreneurship is sucking
in America and I would love to
fix our infrastructure-- which
is just the biggest
no-brainer out there.
ERIK BRYNJOLFSSON:
But the good news
is, we don't have to
choose just one of those.
I think that there is no
silver bullet, like I said.
We should be doing all of
these things simultaneously.
And some of them,
government can help with.
A lot of things we can do
without having government
involved.
It may be-- depending on which
way the winds are blowing--
it may be that we have to
take more responsibility
as individuals,
or organizations,
to step up some of
these other dimensions.
ANDY McAFEE: Yeah.
I completely agree with that,
without reservation this time.
And one of the really
encouraging things-- sorry--
one of the really encouraging
things in education
is the rise of these
really alternative ways
to get really powerful
skills, to get credentials,
and to signal how
good you are at stuff.
That's a case where the
government has been lagging,
in many cases.
And, in fact, because
student loans are only
given to accredited
institutions, in some ways
the government is impeding
progress in these areas.
Now, I don't think I'm
a frothing-at-the-mouth
libertarian, but I would like
to see that situation change.
SPEAKER 1: So let me
ask one more question,
then open it up to
questions from all of you.
We don't have mics
around the room,
so please just shout
out the question.
We'll repeat it back so
we catch it on the mic,
and for people remotely.
ERIK BRYNJOLFSSON: And
can people at the desks
ask questions, too?
Is there a way to get--
SPEAKER 1: Yes.
I was going to say, so Andrew
has the Dory available,
which is running a constant
number of questions,
and actually voting
on those questions.
ANDY McAFEE: Oh.
And you have a
retinal implant that
is giving you access to this.
SPEAKER 1: Exactly.
We're tracking them.
It's all in TensorFlow.
The best questions will
surface to the top.
But let me step back, before
we open it up to everybody,
and ask about the global
implications of this.
There have been some who
have argued that the growing
use of robots and
industrialization
is blocking paths to development
that have traditionally
been available for
evolving countries.
Daron Acemoglu argues that
every time you employ a robot,
you don't employ
three to five people.
What's your take on that?
How do you see this
playing out globally?
ERIK BRYNJOLFSSON: Well, let's
touch on the global one first.
Andy and I, along with Michael
Spence-- one of our friendly,
Nobel Prize-winning colleagues--
wrote an article about
some of those implications
of globalization.
And that was a couple of
years ago, in foreign affairs.
And we talked about
this challenge
that, in many ways--
although technology's
been one of the best things
that has happened globally,
and as you probably know,
there are a lot fewer people
in poverty now than
there were 20 years ago,
and a lot of the
trends are very good--
but if you look a little
further into the future,
there are some storm clouds.
And in particular, countries
that are, right now, depending
on manufacturing to be that
engine to lift them out
of poverty, are very
much in the bullseye
of a lot of the automation.
You go visit China, and you
see thousands of people working
side by side, doing very
routine, simple tasks--
tasks that a lot of you guys
could probably write up some
code to get--
ANDY McAFEE: In
about 20 minutes.
ERIK BRYNJOLFSSON: --a
robot to do those tasks.
And, you know,
those workers were
able to compete very effectively
against American or German or
Swiss workers at lower wages.
But you don't want to be
competing on the basis of wages
against a robot.
And so that means that
that middle class that's
been created in a lot
of developing countries
is now going to have
to compete with robots
that can work for $4, $2,
$1 an hour equivalent.
And that's not a
good place to be.
They need to leapfrog
to a situation
where they're doing more of
that creative and interpersonal
work.
You know, for better
or worse, there's
not that many manufacturing
workers in American factories
anymore.
I mean, it's less than
10% of the workforce.
You go to most factories,
it's kind of lights out.
So we are, in some
ways, going to be
less affected by that kind
of automation of factory work
than those developing countries.
And it may make it harder for
them to make that transition.
Some countries, like China, they
have a very sophisticated tech
economy, as well.
So they've got a
big chunk of people
on the other side of that curve.
Other countries, like
Vietnam and the Philippines,
are going to have a harder
time making that transition.
ANDY McAFEE: The way I look
at your question-- there
are two unmistakable, big,
big global trends related
to the things that
we're talking about.
One is betterment-- improvement
of the human condition.
We've had the largest
declines in dire poverty
we've ever seen
around the world.
We've had the biggest
increases in human health,
in recent decades, that we've
ever seen around the world.
Do you all know the
site Our World In Data?
This is my favorite site.
Because you walk away
just happy after you
look at almost any aspect of it.
So the first one is
that the world, almost
without exception, is
getting better in the areas
that we care about.
That's the first trend.
The second one is concentration.
And when it gets to
this notion that we
are doing more and more
manufacturing in a smaller
and smaller geographic
footprint, a smaller
and smaller
employment footprint,
a smaller and smaller number
of companies footprint.
Wealth is getting
more concentrated,
income is getting
more concentrated.
It almost doesn't
matter where you look.
This trend is really pronounced.
Now, I don't know if
those two trends are
going to continue
to interact happily,
or if there's kind of
a clash of the Titans
that's coming, when these cost
declines implicit in Moore's
law meet rising wages
in Bangladesh and China,
and places like that.
Those two trends could run
headlong into each other.
I don't know that's
what's going to happen,
but that's something
to keep our eyes on.
SPEAKER 1: OK.
So let's open it up the room.
And Andrew's ready, if
we don't have questions.
But first--
ERIK BRYNJOLFSSON:
So the question
has to do with, on
one hand, we see
increasing returns to scale,
and perhaps more concentration
of wealth.
Certainly we have seen that.
And on the other hand, we see
this decline in productivity.
And are those two--
not a decline of productivity.
Let me be more precise.
A slower rate of
productivity growth.
It's still growing.
And are these
possibly connected.
And I think there
are some people who
are making that case--
Joe Stiglitz, and
others-- that there's
this big rise of
a rentier economy.
People rent seeking.
I don't see it quite yet.
It's something I'd like
to keep my eyes open,
and take a look at.
I think that some of
the areas where you're
seeing these increasing
returns to scale
are actually some of the more
dynamic parts of the economy.
So I would look elsewhere.
If you look at the
part where there's
been less entrepreneurship,
where there
are fewer young
new firms, they're
not in those parts
of the economy where
we're seeing the network
effects, and so forth.
So I would look to other things.
There's issues around
occupational licensing.
There's just the aging
of the workforce.
And I see everyone
here is pretty young,
but sadly, when
people get older,
they don't get to be
as entrepreneurial.
ANDY McAFEE: Trust us, there are
old people working in America.
I know that's weird
for you all to believe.
ERIK BRYNJOLFSSON:
And most of them
are not starting companies.
So that's part of it.
It is, obviously, a
little bit of a mystery
to people who study this, like
John Haltiwanger and others.
They're not quite sure
what's going on there,
in terms of that effect.
In terms of the other drivers
of productivity I think we see,
we've been talking about
these wondrous things.
The other thing we have to bear
in mind is that most of them
haven't really hit
the marketplace yet.
You know, Andy and I rode in a
self-driving car in the first
book, and again more recently--
which is a lot of fun.
But there aren't a whole lot of
them out there on the highways.
Or most of the other
amazing technologies.
We're excited, and I think
folks in Silicon Valley
are excited, because we can
see what's in the pipeline.
But in terms of measurable
effects on productivity?
Right now, we are
really harvesting
more what happened in the
1990s in terms of technology.
I mean, back in 1997, the
same Silicon Valley folks
were excited about e-commerce.
But did it really make a dent
on traditional retailing?
Not until 2017.
And you know, the
past couple of weeks,
you've been reading
a lot about that.
So there's a pretty
significant lag
between when you see these
wondrous technologies,
and when they're
going to show up
in the productivity statistics.
And that, I think,
is probably more
of the explanation behind
some of those two trends
you describe.
ANDY McAFEE: We have a rock
star colleague back at MIT,
named John Van Reenen, who
dove into exactly the question
that you're asking.
And he documented that, in
industry after industry,
there are these superstar
firms that are appearing--
a small number of them.
They're sucking up a
lot of the revenue.
Lots and lots of the
profits in industry
after industry-- not
just in high tech.
And he says that might
explain some of the trends
that you brought up.
So the interesting
thought experiment--
is Amazon good or bad for
overall retail productivity?
And my initial answer is,
it's got to be awesome for it.
Well, if all the other
companies in retail
are seeing slowly
eroding revenue,
and they're not laying
off people in droves yet,
then overall productivity
from that sector
could actually be slowing down
or declining because of Amazon
sucking all the energy up into
one really concentrated place.
So the data-- we've got
to dive deeper into it.
Because it's a fundamentally
important question.
And there are a couple of
different promising lines
of research, here.
ERIK BRYNJOLFSSON: And one
more, to just touch on briefly--
that the Amazon
one reminds me of--
is there's a measurement
issue, as well.
That our GDP statistics
are just horrifically
bad at capturing the
value of free goods,
like Google, Facebook,
and a lot of others.
ANDY McAFEE: Right.
You all shrink GDP.
Did you realize that?
Stop it.
ERIK BRYNJOLFSSON: When you
take Brittanica and turn it
into Wikipedia, GDP goes down.
But welfare goes up.
And Amazon is providing a lot
more product variety, choice,
timeliness--
and none of those show up in
the GDP statistics, either.
So we have a bit of a mismatch.
If you go back to Simon
Kuznets, who invented the GDP--
one of the great inventions
of the 20th century,
Paul Samuelson said--
one of the first things he
said was, please, please
do not use this as a
measure of welfare.
It is a measure of production.
It's not a measure of
how well we're doing.
But of course, the
first thing everybody
started doing was assuming
GDP equals welfare.
And that's just
mathematically wrong.
ANDY McAFEE: Yeah.
SPEAKER 1: We should cut
over to the Putin-ese model
of gross national happiness.
ERIK BRYNJOLFSSON: Well,
that may be going too far.
I mean, I think
one of the problems
is that the nice
thing about GDP is
you can measure it to, like,
nine significant digits.
And it's very, very
satisfying to be able to,
each quarter, say--
ANDY McAFEE: And
you can decompose it
into four other things.
ERIK BRYNJOLFSSON: Yeah.
It went up two-- no, sorry.
It was 2.4%.
ANDY McAFEE: Woo-hoo!
ERIK BRYNJOLFSSON:
And, you know--
gross national happiness?
I'd be lucky to get the first
significant digit right.
SPEAKER 1: Your comment
about the aging population
and productivity reminds me of
a most astonishing statistic
I've seen, perhaps, this year--
that within three
decades, taking out
Africa and population
growth there-- for the rest
of the world, within
three decades,
the average age of humans
on the planet Earth
will be 60 years old.
ANDY McAFEE: Wow.
ERIK BRYNJOLFSSON: Wow.
SPEAKER 1: That is
a dramatic change
in the ratio of productive
people in the workforce.
Unless the useful-- your
time in the workforce
changes dramatically,
and requires
an awful lot more productivity
to help adjust for it.
ERIK BRYNJOLFSSON: Well, yeah.
And there may be a good thing--
Rod Brooks, and others, have
really emphasized this--
let's bring on the
robots as fast as we can,
so they can help take
care of us in our old age.
SPEAKER 1: So Andrew,
question from the Dory?
ANDREW: All right.
So we have a question from
Miguel, who's in New York.
And he asks, given your
research on the rates
of technological change,
what are your thoughts
on universal basic income?
Reeducating everyone
should be the goal.
But if this can take
years, or not happen,
given the emergence
of multiple pilots,
do you think of UBI as
a potential solution?
ANDY McAFEE: Absolutely.
People should be
researching UBI.
I think the experiments that
are happening in Finland
are really interesting.
I think what Y Combinator is
doing is pretty interesting.
By all means, let's
do the research.
Let me tell you why I'm
skeptical about a Universal
Basic Income.
And it's extremely
straightforward-- a UBI,
in its most classic
form, provides
no direct incentive, no
direct encouragement, to work.
And as Erik and I have
gone on with our work,
I've become a
fanatic about work--
about the value, the importance,
of something like a job.
Not for some kind of
old-fashioned, Protestant work
ethic reason, I don't think.
But because the
evidence is overwhelming
that, when work leaves a
community, bad things happen.
Not good things.
The research is just
overwhelming on this.
You see marriages fall apart.
You see couples not
getting married.
You see kids not being
raised in nuclear homes.
You can think, so what?
You see crime going up.
That's pretty unambiguous.
So what?
A lot of us know that
Angus Deaton and Anne
Case highlighted this crazy
phenomenon, that we were
unaware of, until recently--
that death rates,
mortality rates
among white,
middle-aged Americans,
are actually increasing
instead of decreasing.
And the reason
they're increasing
is because of what they
call "deaths of despair"--
suicide, chronic liver disease,
alcoholism, and drug overdoses.
I can't tell a happy
story about that.
Those deaths of
despair are really
strongly concentrated
in exactly the kinds
of communities and
demographics that
are least likely to be working.
So I think about
that, and I think,
which of those
social problems will
be fixed by a magical check
from the government showing up
every month?
And my answer, in that thought
experiment, is basically, none.
ERIK BRYNJOLFSSON: And our
friend Bob Putnam really helped
educate us about these issues.
But I want to underscore
the first thing Andy said.
You know, we're all
for experiments.
And let's try some
different things.
Because we can sit here
in our chairs, and say,
hey, this is what we
think motivates people.
But the truth is, there haven't
been that many real tests
of some of these theories.
And it could be done
in different ways.
Norway has been fabulously
successful with their oil
wealth-- giving people longer
vacations, a lot of childcare,
taking care of people, and
maintaining a pretty high level
of satisfaction.
Other oil-rich
countries have not
been successful in navigating
that level of wealth.
So I think that there's clearly
some devils in the details,
in terms of how you
structure things
and how you help
people, that can
lead to very different
kinds of outcomes.
ANDY McAFEE: The
other thing to say
on this point-- this is a
really fundamental question.
Another reason that I'm not a
fan of the UBI is because it
might be a solution
in a post-work world--
in a world where we just don't
need a lot of human labor.
There is nothing in
the evidence that
says we're heading
into that world, yet.
We've added net jobs in America,
month by month, for, I believe,
75 months straight.
And you can go graph the
number of hours of labor
required to generate
America's economic output--
it has gone up in
lockstep with GDP, ever
since the end of
the Great Recession.
So when you look
at the trend lines,
you don't see any
plateauing or leveling off.
You don't see the end of work.
I'll become a lot more
excited about a UBI
when the amount of
labor hours needed
to generate economic
output starts to level off.
SPEAKER 1: So America has
high rates of labor mobility.
Is that something we should be
encouraging, or discouraging?
ERIK BRYNJOLFSSON: High rates?
SPEAKER 1: Relatively speaking.
ERIK BRYNJOLFSSON: Well, I think
actually, one of the concerns
is that, actually, that number
has been falling quite a bit.
But go ahead.
SPEAKER 1: So is it a good
thing to encourage people
to go where the jobs are?
Or does that risk hollowing
out the communities
that Andy is talking about?
ANDY McAFEE: It's
better than trying
to will those communities
back into existence,
if that's not going to work.
ERIK BRYNJOLFSSON: Absolutely.
I think that one of the
most misguided policies
is trying to target land or
geography, rather than people.
What we want to do
is help the people.
And if we can get them
to match to jobs better,
matched to work better--
mobility is one of our
best tools in America.
As you said, it has
historically been one
of the most mobile societies.
It's becoming more and more
stagnated and ossified.
And that is exactly what
we want to lean against.
Some of our policy, I
think, is a little backward.
We have big subsidies
for homeownership--
which sounds like a good thing.
But it can lock
people in to a home.
And there are a lot
of other barriers,
in terms of land
use and regulation,
that have made it harder
for people to move.
And maybe there's
some cultural things,
as well, as
communities have become
more Balkanized and stratified.
So, you know, if
a group of people
can find better work somewhere
else, I say hey, great.
Let's find a way to
make it easy for them
to find that and match them.
And there are lots
of places in America
that have a shortage of labor.
There are other places
that have a surplus.
You know, whether it's
"go west, young man,"
or whatever the slogan
is, it's been something
that's been part of
the DNA of America,
to be dynamic in that way.
ANDY McAFEE: So it's
weird that mobility--
just moving around the
country-- is, again,
on the decline in America.
It's I think it's
really hard to see,
when you sit in either
Cambridge, Massachusetts
or Silicon Valley--
but almost any measure
of business dynamism
that you would care
about is heading
in the wrong
direction in America--
and has been for a while.
ERIK BRYNJOLFSSON: How many
of the people in this room
were born in Silicon Valley?
Just kind of curious.
OK.
One, two, three-- five hands.
ANDY McAFEE: Yeah.
ERIK BRYNJOLFSSON: Yeah.
So that, you know--
and it's great that,
not just Silicon Valley,
but America has been
a magnet for talent.
And that's part of that.
I wouldn't call it a secret
sauce, because it's not really
a secret.
You know, it attracts the
best and the brightest
from around the world.
And one of the things that
really saddens me, just
to be very specific
to my area, is
when we get these brilliant
grad students that
come from other countries--
China, India, or wherever-- and
then they've finished their PhD
and they want to stay, and
the government says, no.
You have to go back.
We don't want you anymore.
And they're like, no,
no, we want to stay.
And they're like, OK.
Go back, and look.
I guess I have a cousin
working in Bangalore,
I guess I'll go work
with him or her.
And, you know,
eventually they're
not even going to want
to come here anymore.
And we'll have to beg them.
And I think that's bad
for the United States,
and I think it may
be bad for the world,
because we're not getting the
optimal allocation of talent
to where it can create value.
ANDY McAFEE: And
I'll speak, you know,
for the home team-- for America.
This Kafkaesque
nightmare that we've
created, that we've put in the
way of some of the world's most
talented and
ambitious people, who
want to come to this country and
build their lives and careers--
that's what our
enemies would do to us.
It makes no sense to me.
SPEAKER 1: The
majority of people
working in Silicon
Valley were actually
born outside the United States.
So we're working
to improve that.
Question in front,
and then in back.
ERIK BRYNJOLFSSON: Oh,
now we've got mics.
Technology improves.
AUDIENCE: Technology.
Wow.
Coming back to the developing
world for a second,
you mentioned how
automation may be
more dangerous in
manufacturing reliant
countries than in the
United States, of course.
I wanted your take on what
strategies these countries
should try and develop
to anticipate that.
And specifically, if
you think services
can be an interesting
path for growth.
And here I wanted to
trade of services.
I think [INAUDIBLE] are
trading goods, these days.
ANDY McAFEE: Yeah.
It's a super tough question.
Because the path to
prosperity, or the path
to being a middle class
country, was pretty clear
in the 20th century.
And to speak a
little bit bluntly,
you went through
a sweatshop phase.
you went through that phase
of heavy industrialization.
A decent portion
of the population
worked in manufacturing, in
factories and sweatshops.
And then, over time, you
developed a more robust
economy, a more diverse one.
Civil institutions
came along with that.
They became pretty
healthy countries.
We saw that playbook
in the 20th century.
Danny Roderick is a
really good economist,
who has documented
that that playbook is
looking less and less
likely in the 21st century--
mainly because, we
believe, robots,
and to a lesser extent,
the fact that we
have tons of capacity in
countries like America
and China and Germany.
So your question, which
I'm really stalling on,
is what's the new
path to prosperity?
And the reason I'm stalling is I
don't think it's clear, at all.
I don't know about the template
for the 21st century path
to prosperity that
doesn't include either
a phase of industrialization,
or a resource endowment.
What you say sounds right to me.
It has to do with human
capital, and services that can
be delivered over a distance.
I don't know the shining
example of that, yet.
ERIK BRYNJOLFSSON: Well, for
better or worse, unfortunately,
I think it has to
be a playbook that's
more and more similar to what
developed countries have.
Because we could be coming
globally and interconnected,
which means you have to have
an educated workforce that
can deliver some kind of
value that's greater than what
other people are delivering.
And getting people up to
speed on that is hard.
There are some
digital tools that
can speed that process a bit.
And so that's going
to be part of it.
There may be options in services
that can help a little bit.
Personal services
tend to be localized,
and they are somewhat
insulated from globalization.
But it's a tough
question, and one
that I think we
should worry about.
ANDY McAFEE: The clearest
example, I think,
is the Indian high tech sector--
which is a fairly small industry
in a very, very big country.
So I don't know how
well that scales.
But my playbook for the 21st
century will be kind of,
bathe your country
and bandwidth,
get cheap devices
to the people, help
point them toward these amazing
educational resources online,
and entrepreneurs will
find that human capital
and put it to work.
That's easy to say,
and really hard to do.
ERIK BRYNJOLFSSON:
Another example,
that's a bit like that, is
that burgeoning O-to-O sector
in places like China--
online-to-offline--
where these technologies have
allowed lots of entrepreneurs
to create many, many services.
New kinds of products
and services that
wouldn't have been
possible before.
And so you have an explosion of
small-scale entrepreneurship.
SPEAKER 1: All right.
So we're running up on time.
I see two questions in back.
Let's do a mini speed round.
Why don't you both throw
your questions out there,
and I'll let you
answer them quickly.
AUDIENCE: OK.
Well, I was wondering,
when you said
that there are a lot of
the jobs being created,
are they manual labor, or are
they different kind of jobs?
And what do you think the
average person is going
to do in 30 or 50 years, or
whenever every manual labor is
fully automated?
Like, do you have any
thoughts or ideas on that?
ANDY McAFEE: Yep.
I'll try to do that
one super quickly.
The engine of job
creation in America
has downshifted from
classic middle class jobs
to lower-middle class jobs.
They tend to be
service sector jobs.
They tend to be jobs
that involve doing work
in the physical world.
So home health aide, gardener,
short order cook kinds
of things--
the robots can't
do those jobs yet.
Your question is, what
does the world of work
look like in 30 or 50 years
of continued tech progress?
I want to be clear--
I have no idea.
ERIK BRYNJOLFSSON: Let me
just append to Andy's answer.
There's a big chunk of growth
at one end of this big kind
of polarization.
There's also been
some very high end
jobs that have been created.
It's the middle that's been
hollowed out the worst.
So there's high end
jobs, like the ones
of the people in
this room-- a lot
of people who have creative,
technical skills can command
much higher wages.
And there's probably no
better time in human history
to be somebody with those kinds
of skills, or talent, or luck.
And there's no worse
time to be someone
with just routine,
middle class skills that
are increasingly automated.
SPEAKER 1: OK.
One last question, in the very
back, that I had promised.
I'm sorry.
Please.
AUDIENCE: I wanted to ask
about labor and capital,
and how this is affecting--
so do you think this
trend plays into that?
Where corporate profits
are at an all-time high,
and the wage share of the
economy has been dropping?
And do you think that there is
this u-shaped curve in labor,
where low-skill jobs are safe,
very high-skill jobs are safe,
and middle-skill jobs are
kind of taking the fall.
Or do you think it's like,
all of labor as a whole
is going to take a fall
compared to the capital
of the corporate profits?
ANDY McAFEE: The recent
trend is fairly clear.
And you pointed it out--
it's increasing share
of GDP going to capital,
and a decreasing
share going to labor.
For a lot of the
post-war decades,
we thought that
capitalism was going
to lead to greater
equality of income,
and of financial outcomes.
I don't believe that anymore.
I think that the trend,
like I said earlier,
is toward concentration.
There are things we
can do about that.
It's called redistribution.
It's called tax and transfer.
It's called wage subsidy.
This is not an unsolvable
problem, at all.
And I'm less bothered about that
problem than some other people.
But refusing to address it
is the cardinal mistake.
ERIK BRYNJOLFSSON: And
looking to the future,
we have to be careful
about just extrapolating
what happened in the past.
A lot of what happened in
the past couple of decades
was the first wave
of computerization--
automating routine
work, repetitive work.
Looking forward to what
artificial intelligence can do,
there are a lot of
other types of tasks--
someone mentioned manual tasks.
Some very creative work.
Last night Vinod was
talking about oncologists
and radiologists--
these are very highly paid jobs.
So we may see a
different thing going on.
I think the only sure thing
is that the pace of change
is increasing.
And we need to have a
lot more flexibility.
We need to be able to sense and
respond, and be active in how
we do that, and not just sit
back passively, thinking,
well, I hope it
works out for us.
Because we think there's a
lot of things that we can do--
as individuals, as
organizations, as a society--
to help shape the path
we're going towards.
And if we do this
right, this is going
to be the best thing that's
ever happened to humanity.
We're going to have a lot
more wealth, a lot less need
for work.
We're going to have
healthier people.
But there's absolutely
no guarantee
that we will hit on all
of those dimensions.
It's quite possible we could
have a much more dystopian
scenario, where there's a
tremendous concentration
of wealth-- and other outcomes
that we aren't as happy with.
But ultimately, it's not
the choice of technology.
It's going to be our
choices that determine that.
And the reason we wrote
these books was to help
provide a little bit of guidance
on what some of our options
are.
And then we have to
apply our values,
and see if we want to
go in that direction.
ANDY McAFEE: This is
the headline to end on,
and this is awesome.
Overall human prosperity is
about to increase even faster
than it has been doing.
We're heading into
a different chapter.
If we blow the distribution,
the sharing of that prosperity--
shame on us.
SPEAKER 1: Andy, Erik.
"Machine, Platform, Crowd"-- a
new guide to the 21st century.
Thank you very much.
[APPLAUSE]
ERIK BRYNJOLFSSON:
Ken, thanks a lot.
Thank you all for coming.
ANDY McAFEE: We appreciate it.
