Here is the actual debate between Gordon and Brynjolfsson from TED 2013. Towards the end it goes in some surprising directions. Gordons first question relates to artificial intelligence and single purpose machines. The rebuttal is that machines solve problems in a different way. The goal is not to mimic human intelligence to offer tools

Brynjolfssons first question related to the issue of fewer working hours. Gordons reply is that early retirement is more of a problem than a benefit because financing retirement is difficult.

Chris Anderson then summarises the two views as follows:

1. “The type of innovation of the 20th century is just far more significant than anything we have seen in the last 10 years and are likely to see going forward.”

…
2. (Brynjolfsson) has a view of accelerating progress”

In graphical terms Gordon sees a bell curve where progress has declined to a very small level whereas Brynjolfsson sees an “S” curve which dips while we figure out the implications and usefulness of these new innovations.

When I watched the original debate (broadcast) live I really liked Gordon’s response to this.

“Erik really nailed it when he says we’ve got this disconnect between productivity and employment.. take the robots – the robots are gonna make money for the people who invent them; they are going to make money for the people who own them and they are going to displace workers.

The refrigerator guy said – that’s the only thing I know how to do with my life… and many of them are dropping out.

What good is it a world in which we have these really snazzy machines, and we listen to all this great music for free on the internet -

but we don’t have gainful employment and we have this next generation coming up with high school drop outs?”

Eriks reply is that the problem is not with the technology itself but that we need to reinvent our organisations so we can (use) this prosperity more broadly ( if that’s the society we want to live in.)

The trick is – how do we do this?

Gordon’s solutions – more immigration, more tourism and decriminalising drugs would have surprised a few at this point but that was quickly glossed over. ( Taxation changes are mentioned later by Gordon.)

However you should watch the debate now if you haven’t already skipped ahead.

When comparing Gordons indicators with the types of innovations that Brynjolfsson talks about it is difficult to really assess the relative value in a granular way.

For example indoor plumbing has a greater significance on quality of life than having access to say more than one digital music download service. But OTOH the positive influence of music on say mental health is something that is harder to measure but still significant.

I’m surprised that no one specifically mentioned Maslow’s hierarchy of needs during the debate. Many of the indicators Gordon uses refer back to the base of the pyramid at the level of physiological needs or the next level – safety. Many many jobs trace back to that at some level like building a house.

Almost all houses have a fridge but how many of them have a wine cooler or separate freezer? It just might be that many of us have the basics covered but we can’t afford or don’t want the other similar products that represent innovation in some way but are not essential.

I’m starting to see estimates of wearable tech go past $1.5b now and we can argue that it is not necessary but that is an innovation that may replace tablets just as tablets are replacing desktop and laptop systems now. The replacement markets are often worth less in $GDP terms because of Moores law and manufacturing scale improvements but they are still innovations.

Perhaps if we dialled back the urge to over consume all of the mod cons we would have a more simple but better quality of life anyway. This is a related topic but I have seen figures which measured consumer spending at around 70% of the GDP of many western countries.

I believe it is about half that in China but I don’t think that is a good thing myself and maybe the collaborative consumption trend is one answer there. ( More on the Rachel Botsman talks in future posts here.)  Nevertheless decreasing the level of consumer consumption in the economy will impact on jobs. Regardless of what we think of some jobs – there still needs to be some way ( jobs) for us to pay for our essentials as well as the other consumer items that make life more comfortable.

As Gordon says at the end of the debate:

“What is the value of all this knowledge – what is the value of Facebook? What is the value of friendship?”

One answer is that knowledge by itself is not as important as the changes we can and do make based on these new ideas.

Referring back to Maslow again it looks like many new innovations are more likely to impact on the self actualisation and esteem levels rather than the safety (although safety includes financial security so that is ironically put at risk from some technology innovations ) and physiological ones. This makes them harder to measure but no less significant.

I wonder is using the Calvert-Henderson* Quality of Life Indicators might be better than using GDP as a way to measure economic growth and how much of GDP is driven by factors such as energy use and demise of oil as a source.

(* Named in part after Hazel Henderson who should have been a TED speaker by now.)

Here is the Prof Robert Gordon TED2013 talk on the end of growth which was answered by the Erik Brynjolfsson counter view (posted on last week.) Then the two of them had a 12 minute debate. The first point I noted is that instead of the 6 headwinds the presentation is now about 4 headwinds. ( Losing 2 headwinds seems odd to me*.)

“So I started wondering and pondering, could it be that the best years of American economic growth are behind us? And that leads to the suggestion, maybe economic growth is almost over. Some of the reasons for this are not really very controversial.

There are four headwinds that are just hitting the American economy in the face. They’re demographics, education, debt and inequality.

They’re powerful enough to cut growth in half. So we need a lot of innovation to offset this decline. And here’s my theme: Because of the headwinds, if innovation continues to be as powerful as it has been in the last 150 years, growth is cut in half. If innovation is less powerful, invents less great, wonderful things, then growth is going to be even lower than half of history.” ….

“The problem we face is that all these great inventions, we have to match them in the future, and my prediction that we’re not going to match them brings us down from the original two-percent growth down to 0.2, the fanciful curve that I drew you at the beginning.” ….

“If so, that’s going to require that our inventions are as important as the ones that happened over the last 150 years.”

Twelve minutes is not long enough for this kind of argument but so far most viewers of the clip seem to think that Gordon is unconvincing. Note: * The 2 headwinds Gordon left out of this updated version of his thesis were environmental impacts and the twin deficits of government and consumer debt.

I wonder if this is because we all want to be more optimistic in the face of some grim economic news and we just hope that the economy will improve or we really do believe in the brave new world of technology driven change.

Brynjolfsson makes a couple of telling points in his talk on how the impacts of change are measured. GDP doesn’t do that at all for the “weightless economy” and also that for a number of key innovations it took a time lag of decades before we not only worked them out but before we changed the work paradigms we were used to.

Zero pricing for “free products & services” and huge price reductions don’t show up in GDP measurements which undermeasures the economic growth and related changes.

It is highly probable that Gordon and Brynjolfsson are both right.

Innovation is very hard to measure because as a species we don’t really like change but the irony here is that some of the headwinds Gordon refers to as slowing innovation are exactly the same ones which will stimulate more innovation.

In the education space ( where I work part time) the increasing costs of tertiary qualifications and the globalisation of markets means that educators are very much looking at ways to improve the learning ecosystems all round. I think the quality of education will improve and that the cost will go down because of technology innovations which are here but not yet well understood.

The real kicker though is that my 11 year old daughter may train for a job that hasn’t been invented yet in only a few years time. These future jobs will have a connection to current ones but measuring the impact of that kind of technological change is too difficult for most of us to imagine.

Here is a clip from one of the masters of innovation on how we have to start with the customer experience rather than the technology because it is not the technology itself that brings the real changes.

When innovation comes along there is a very well known dynamic which sees early adopters and tech users who can make use of new products and services but it is not until they mainstream ( “crossing the chasm”) that they truly become useful products.

I remember the Apple Newton from 1993 to about 1998 and it failed then for various reasons but look around today at tablet computing including iPads and it is a very different world.

An iPad now is a consumer device for all whereas the Newton was a geek toy which was innovative but not really that useful but perhaps without that product evolution we wouldn’t have got to where we are today.

To be fair to Gordon – many innovation stories are hard to measure well in the GDP numbers but the journey from idea to product is one that is gaining in velocity and usefulness.

There are also other localised innovations which are being held up because of finance or political will. These innovations that may not seem hugely significant in terms of GDP impact will have a huge impact in quality of life terms.

The examples I’m thinking of are wider availability of malaria nets and cleaner (less smoke) cooking techniques in parts of the world outside the U.S. Equivalent quality of life innovations happened many years ago in the U.S which is where Gordon’s data is focussed.

At the 2013 TED conference there was a debate between Prof Robert Gordon and Erik Brynjolfsson (director of the MIT Center for Digital Business) on the future of work.

I have written before about Gordons theory  but here is a great way to work through some counter arguments. Erik makes a number of great points like:

“[Current economic] troubles are sometimes misdiagnosed as the end of innovation, but they are actually the growing pains of … the new machine age.”

“We have created more wealth in the past decade than ever, but for a majority of Americans, their income has fallen. This is the great decoupling of productivity from employment, of wealth from work.”

I suggest that you watch this clip and the Gordon clip before you watch the debate as it refers back to both of these talks. I will post the other 2 clips in the next 2 days or so.

The future of work is a huge topic and it won’t go away. I like that Erik has estimated the “free good & services on the internet at $300b. ( I suspect the number and the impact is much greater but hard to measure in GDP terms see Hazel Henderson on this)

“If anything, all these numbers actually understate our progress, because the new machine age is more about knowledge creation than just physical production. It’s mind not matter, brain not brawn, ideas not things. That creates a problem for standard metrics, because we’re getting more and more stuff for free, like Wikipedia, Google, Skype, and if they post it on the web, even this TED Talk. Now getting stuff for free is a good thing, right? Sure, of course it is.

But that’s not how economists measure GDP. Zero price means zero weight in the GDP statistics.

According to the numbers, the music industry is half the size that it was 10 years ago, but I’m listening to more and better music than ever. You know, I bet you are too. In total, my research estimates that the GDP numbers miss over 300 billion dollars per year in free goods and services on the Internet.”

Growth comes from a combination of these factors – digital, exponential growth and combinatorial thinking.

The other part of this clip that I like is this reference.

“The new machine age can be dated to a day 15 years ago when Gary Kasparov, the world chess champion, played Deep Blue, a supercomputer. The machine won that day, and today, a chess program running on a cell phone can beat a human grandmaster. It got so bad that, when he was asked what strategy he would use against a computer, Jan Donner, the Dutch grandmaster, replied, “I’d bring a hammer.”

(Laughter)

“But today a computer is no longer the world chess champion. Neither is a human, because Kasparov organized a freestyle tournament where teams of humans and computers could work together, and the winning team had no grandmaster, and it had no supercomputer. What they had was better teamwork, and they showed that a team of humans and computers, working together, could beat any computer or any human working alone. Racing with the machine beats racing against the machine. Technology is not destiny. We shape our destiny.”

This is the third reference to that freestyle tournament I have come across in the last few months.

Sean Gourley referred to the freestyle story in his TEDxAuckland talk last year and Nate Silver wrote about it in his book “The Signal and the Noise: Why So Many Predictions Fail-but Some Don’t”

In my view that freestyle chess story is becoming something of a mythological creation story for the new world as it was also referred to in a talk by Shyam Sankar, that I have mentioned here before as well.

Serendipity Footnote: It is often said that we are divided by 6 degrees of separation but in New Zealand it is only 2 degrees and we even have a telco company named after that. Here is a pic* of Sean Gourley and Nate Silver together at TED 2013 possibly even taken on the same day as Eriks talk above. This talk reminded me very much of the one that Sean had already given -The Rise of Big Data and Augmented intelligence  in a bit of a snap moment although Brynjolfsson is approaching the story from more of an economics angle. *Pic is from instagram.