Despite low unemployment rates in the United States, more Americans than ever are either not working or not even looking for work. Because of these trends, and also because of wage stagnation for the working class, American income inequality continues to widen. Yet single American parents can purchase an iPhone, with parts made in China, allowing them to Facetime with their children while rushing between part-time jobs. Americans without economic opportunity, especially in rural parts of the country, are among those most hard hit. They are also the most susceptible to "fake news" purveyed by Facebook, convincing them that immigrants and the North American Free Trade (NAFTA) have caused their plight.
To Americans who have benefited from the last several years of recovery, these trends were going largely unnoticed until the 2016 election. The digital revolution that has eliminated many jobs throughout the country has created new goods, services, and experiences that were unimaginable less than a generation ago. And yet, even for the fortunate in the new economy, new sources of uncertainty and economic anxiety were also beginning to fester.
How does an economist reconcile these contradictions? That is the self-imposed task that Ryan Avent, a senior editor and the Free exchange columnist for the Economist, takes on in The Wealth of Humans. His book seeks to make sense of the massive economic and social upheaval now taking place in the modern digital age.
The problems confronting America
Like all good economic writing, a fundamental contribution of The Wealth of Humans is to take a complicated world, simplify it into a manageable set of issues, pose the question that needs asking, walk the reader through the tradeoffs involved, and then frame the potential solutions. Avent introduces one of the core themes of his book—the "future of work"—with,
"[T]hree trends—automation, globalization and the rising productivity of a highly skilled few—are combining to generate an abundance of labor: a wealth of humans… And the institution of work—apart from family, our most important piece of social infrastructure—can no longer be counted on to fulfil its many crucial roles—from the ordering of our days, to the allocation of purchasing power, to the strengthening of social ties that are nurtured when individuals feel as though they are contributing positively to the community." (p. 5)
The book was published in the weeks leading up to the 2016 US Presidential election. Yet, that which Avent identifies as ailing the American social fabric has not much changed since Donald Trump's inauguration. Despite an unemployment rate now at about 4 percent, the US labor force participation rate for prime-age workers remains stubbornly low at 82 percent, roughly 2.5 percentage points below its 2000 level. Millions of potentially productive American workers remain outside of the US economy, not even bothering to look in. An opioid epidemic rages across America.
Yet Avent identifies a set of challenges confronting American society that go much deeper than that. An important passage framing Avent's larger narrative occurs relatively early
"But the promise of the digital revolution is an end to work. The logical endpoint is an economy in which clever software and dexterous machines and abundant energy mean that human work is unnecessary. We are generations away from realizing that promise, just as societies in the early nineteenth century were generations away from achieving the mass industrial prosperity of the post-war decades. But the battle to create the institutions that will eventually support mass digital prosperity has begun." (p. 23)
Imagine an end to work. Then contemplate the reinvention of the formal and informal institutions—that need to reorganize societal and economic interaction—in such a world. The Wealth of Humans goes well beyond other thoughtful writing on the implications of the digital revolution. To his credit, Avent makes a compelling case for why, exactly, "this time is different." But even if one concludes that this time really isn't that different, the clarity of writing and organization of his arguments makes for a thought-provoking intellectual journey.
Explaining the economics
Avent weaves a distinctive mix of stylistic approaches to illustrate how this rapid technological change is making its mark on contemporary society and the economy.
There is plenty of pure economic geekery. Avent distills insights from frontier research on productivity, social change, jobs, and income inequality written by contemporary academics that include William Baumol, Thomas Picketty, Robert Gordon, David Autor, Daron Acemoglu, and Arvind Subramanian. He provides both historical parallels—and critical distinctions—between the current digital upheaval with the insights of Karl Marx and Friedrich Engels from the gut-wrenching change of the industrial revolution. He also pulls bigger strains from the history of economic thought put forth by Adam Smith, David Ricardo, Thomas Malthus, and John Maynard Keynes.
But Avent differentiates The Wealth of Humans through deft use of poignant examples to overcome the abstraction problem—think "widgets"—that is common in economic writing. These are important, as Avent relies on the admittedly abstract phenomenon of social capital—defined as "contextually dependent know-how, which is valuable when shared by a critical mass of people" (p. 119)—to guide his narrative.
Grappling with uncertain, future-of-work possibilities requires positing a range of potential near-term and more fanciful disruptions to currently recognizable jobs. As one example, Avent considers the implications of autonomous vehicles, which he posits may do much more than simply eliminate the need for the millions of taxi drivers and long-distance truckers currently stuck in American traffic jams. Such vehicles could further push the already-reeling retail sector toward a purely-Amazon Prime world in which all purchases ship almost instantly from warehouse to residence. And on behalf of cost-conscience and time-constrained parents, he imagines how reliable autonomous vehicles could displace nannies and eliminate inefficiencies in the child care sector. And he thinks about the redefinition of commercial space, as car dealerships and even parking lots become American societal castaways.
What Avent makes clear—and distinct from earlier economic transformations—is the impact that the digital revolution is having across the jobs distribution. It is not just low-skilled drivers, retail workers, and nannies whose employment prospects are under threat. This time is different because no one's job is safe. Massive open online courses (MOOCs) may replace college lectures and PhDs, 3-D printing of internal organs may affect the market for health care, MDs and RNs, and software advances combined with machine learning could eliminate demand for financial advisors, management consultants, and even MBAs.
Admittedly, some of my favorite passages draw from Avent's personal experience as a columnist for the Economist and his own professional worries. What does it mean for journalists that some types of reporting no longer require humans? Take an earthquake. Software can now transmit information about crucial seismic characteristics directly from scientific instruments to an eager reader, completely bypassing both the scientist and the scribe.
In a book defined by the topic that "no one's job is safe," Avent is refreshingly candid and critical of developments within his own industry, one that has undergone massive upheaval during the transformation from print to online journalism.
Finally, as a fellow economist, I also enjoyed that Avent shares other inputs from his backstory.
It is the economics profession's dirty little secret that we typically read an unfamiliar author from back to front. Because economic results derive from assumptions, the impatient economist comes up to speed by starting at the back, where the scholarly references are found. (The bibliography is the tell of any author's assumptions, perspectives, and biases.)
But by introducing his personal story, Avent puts his assumptions explicitly on the table. He grew up in North Carolina, the product of a middle-class childhood. In various places throughout the book, he is frank about how this shapes his perspective and influences his inference. (And because of this stylistic approach, there is no need to check the references. Thus, even an economist can enjoy The Wealth of Humans from front to back, like a normal human!)
Where does The Wealth of Humans leave us?
For me personally? I am not sure where the digital revolution will end up.
When it comes to education, for example, I am less convinced that "the populations of advanced economies are close to being as educated as they can reasonably be expected to be" (p. 55). As a former academic, my biases lead me to hope—if not conclude—that scientists and educators will find ways to harness the massive troves of big data on students. Someday, these will be used in innovative ways to diagnose learning challenges, overcome cognitive weaknesses, and the result may be deeper educational offerings, and not simply the widening made available through MOOCs.
A century ago, it seemed equally unlikely that vast populations would ever be able to read and write. Why can't education similarly change its ways to allow the same vast populations the basic ability to code and therefore contribute within a continually evolving digital economy?
I am even less sure about how institutions will evolve. But I appreciate Avent's point that the battle to create those institutions—work, traditional government, Google, Facebook—is already taking place, whether or not we were thinking about it in that way.
My main worry is that in the year since this book's publication, US policymakers have mostly gone silent on Avent's concerns. In fact, in the immediate aftermath of the US presidential election, the Trump administration has turned public attention elsewhere. It has focused on destroying the Affordable Care Act, cutting taxes, gutting US social safety net programs, building walls, and generating uncertainty by exploring how to erect new barriers to international trade.
Worse, reading The Wealth of Humans made me reminisce about the "good old days" in which Avent's work was better placed—an era in which policy discussions were evidence-based, and not evidence-avoiding, as became standard fare in 2017.
Pompeii and The Wealth of Humans
In a well-worn tale, Mount Vesuvius erupted in AD 79 and buried the ancient city of Pompeii under volcanic ash. Pompeii was lost for over 1,500 years, but the lack of air and moisture preserved a trove of artifacts. When rediscovered, the archaeological findings provided an extraordinarily detailed insight into life during Roman times.
If President Trump in 2017 has been Mount Vesuvius, then think of The Wealth of Humans as Pompeii. (This Vesuvius trope is mine; Avent uses history and imagery to much greater effect.)
But like Pompeii when it was finally rediscovered, unearthing Avent's book one year after it was published is quite a find. Because 2017 sucked most of the oxygen out of the day-to-day, public discourse over economic policy, the scene set by The Wealth of Humans endures mostly preserved. For better or worse, the economic problems that had accumulated by 2016 remain largely untouched.
The main concern is that, despite Avent's best efforts, policymakers have virtually stopped talking about those economic problems seriously.
Follow @ChadBown on Twitter.