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.
In 1988, Kodak, the photography company, had 145,000 employees. In 2012, Kodak filed for bankruptcy.
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,” such as in health care, makes your job safe, think again.
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.
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.
Co-founder Brian Acton got $3 billion for his 20 percent stake.
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 pay very little.
We need a new economic model.
The economic model that dominated most of the 20th 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. What to do?
“Redistribution” has become a bad word.
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 was secretary of labor under President Bill Clinton.