Sometimes you read something that is so provocative that you go sleep thinking about and even wake with it in your head. For me, it was Jon Evans, writing in Tech Crunch, making the statement America Has Hit “Peak Jobs”. Evans believes the gulf between the haves and have nots will increase and that the middle-income of society is a relic of the past thanks to automation.
This was exactly the kind of keep-you-up-thinking story I’m talking about. After a night of working through it, I can understand his logic but decided his conclusions are wrong.
Yes, the Middle Class is being hallowed out, but this is happening mostly because the ‘jobs for all’ benefit the U.S. and other developed nations have enjoyed for half a century was really the product of a multi-decade labor shortage. Developed countries and their factories that supplied the world competed for human resources and drove up the value of simply being an ‘everyday’ worker. Labor unions accelerated the pace, but it was a fundamental supply and demand issue.
Globalization changes everything
Then globalization completely change the value of basic work. Jobs flowed for the past couple of decades to low-cost labor markets. Outsourcing became a dirty word and a political football.
But there’s a change taking place that will accelerate in the years to come. What brought growth and new wealth to the developing world thanks mostly to cheap labor will just as quickly disappear when automation and innovation become more important than labor cost. This trend will make transportation cost the long pole in the economic tent and change how and where manufacturing is performed.
And all of this is happening because of the Internet, and more recently because of cloud computing.
Misery and opportunity
Many disruptive things create misery in the short term and opportunity in the longer term. If we were automating and globalizing without a corresponding change in technology, the situation would be bleak for the developed world. Instead, the disruptive ubiquity of the Web that allows one merchant to serve millions also allows one entrepreneur to bring their idea to just as many. Just like domestication of animals, the printing press, industrial farming and other tectonic shifts in human history, the Internet and cloud computing bring both misery and opportunity at the same time. And as much as the Internet allowed some to dominate, adding cloud computing to the mix allows just as many others to disrupt.
Not about more merchants
While many more have a chance to create and sell in a globalized, connected world, this shift isn’t necessarily about creating more merchants. If we look at pre-Internet history, the number of merchants needed to serve a given population was a reasonably predictable number. But now a connected world means fewer merchants, not more. The new world brings disruption to what good and services are desired and how they’re sold. The future is about constant disruption of the merchant class by smarter, smaller entrepreneurs.
The path to wealth has become less about those lucky to escape the middle class through hard work, promotion and investment and more about the ability to disrupt.
Cloud computing and the Internet are the great equalizer and disruptor. Anyone who can cover monthly costs for computing power that used to be a major investment can now take on an entrenched business with better ideas and at lower cost. But beware, the entrepreneur can just as easily be disrupted by the next great idea brought with even greater efficiency.
We’ve entered an era of living in a cycle of disruption. Disruption is a double-edged sword of loss and opportunity…it is both cloud and silver lining.
‘Big data’ and cloud computing empower smart machines to do human work, take human jobs, Ray Kurzweil, Kurzweilia
American has hit ‘peak jobs’, Jon Evans, TechCrunch
10 reasons why 2013 will be the year you quit your job, James Altucher, TechCrunch