The Digital Revolution is upon us, and it has profound implications for our way of life. With so many contradicting narratives (based mostly on opinion rather than fact), it’s about time for a book to fully consider how our future may look.
Ryan Avent’s “The Wealth of Humans” is a refreshing contribution to the recent debate over technology and how it will affect the economy. Avent, a senior economics editor and “Free Exchange” columnist at The Economist, offers much to think about as we consider how technology might shape the future of work.
“Work is not just the means by which we obtain the resources needed to put food on the table,” Avent writes. “It is also a source of personal identity. It helps give structure to our days and our lives. It offers the personal fulfillment that comes from being of use to others, and it is a critical part of the glue that holds society together and smoothes its operation.”
Yet technology will affect work in three major ways, Avent argues. Automation will make workers increasingly irrelevant, as robots and self-service machines replace many of the tasks currently performed by human employees. Globalization will bring developing economies most of the gains in low-income employment. And technology will make the most highly skilled workers more productive, allowing companies to extract even more efficiency at the very top.
All of this could result in a massive surplus of labor, especially for low-skilled workers. Avent spends most of the book examining possible policy remedies to that problem and the economic consequences of a labor glut.
The digital revolution is similar to the industrial revolution, argues Avent, in the way it will transform labor opportunities. “The question we ought to be worried about now is not simply what policies need to be adopted to make life better in this technological future, but how to manage the fierce social battle, only just beginning, that will determine who gets what and by what mechanism,” he writes.
Blending economic history and present-day examples, Avent adds thoughtful context to the problem and briefly reasons through the implications of any policy solutions. There are no easy answers, and Avent deftly exposes the logical fallacies behind the living wage movement and protectionist crusaders alike.
Instead, Avent urges governments to take advantage of low interest rates and the risk aversion of investors by issuing additional government bonds and funding a renewed effort to improve infrastructure. Interestingly, Avent is dismissive of initiatives to improve education or job skills for low-income workers — one of the most common solutions put forward by politicians today. He thinks they will have no significant impact on reducing the glut of labor.
Avent is also a fierce advocate of more housing development. Home and rent prices in major American cities are so high because new developments are often blocked by local governments and existing residents. “It is landowners asserting a property right to something they do not own: the right to say who shall be their neighbor,” he writes. Simply allowing the supply of housing to increase could be more effective than the myriad of government affordable housing initiatives.
He is more open to redistribution than many would expect from a free-marketeer, but some of this may be out of social necessity. Avent believes that technology’s transformation of social capital — a topic covered at length in the book — will create a “fierce contest of ideas and ideologies” as “dissatisfied and alienated” people campaign for additional power.
“Free-floating anger, or even free-floating dissatisfaction, is not a pleasant thing to have washing around a population,” Avent writes. Technology will turn the existing labor structure on its head, and adjusting to the future will not be easy. The only way to move forward is to work hard to achieve broad social consensus by pursuing policies of inclusive economic opportunity without hindering technological innovation.
Finally, Avent also recognizes the important benefits that immigration brings, both to the receiving country and also to immigrants. “There is no anti-poverty [program] in the world as effective as access to American society — to its institutions and economy and opportunities,” he writes.
We are in the midst of a fundamental change to the way society works, and the political debates of the coming years will determine how our society adjusts. Though more detailed analysis and comprehensive policy solutions will be needed, “The Wealth of Humans” is a useful guide in beginning to understand what’s at stake in the political debates of the coming years.