“Who Owns the Future?” attempts to answer the big question: where is this all going?
By “this” I mean the big picture from an economic
perspective.
“Income disparity” is a popular meme. The growing concentration of wealth, complemented by the shrinking of the middle class—or, more
accurately, the lowering of the standard of living of the middle class.
Jaron Lanier does not promote the usual explanations that typically
involve socio-political sloganeering of some sort. He explains the
technological trend that is the real underlying cause, a change every bit as
profound as the industrial revolution that transformed the world in the 19th
and 20th centuries.
According to Lanier, the concentration of wealth in market
economies is the norm. Visualize a curve
of exponential growth. The genius of democratic societies organically creates
artificial barriers (Lanier calls them “levees”) to this inexorable movement of
wealth from the many to the few. These are things like labor unions, the minimum
wage, social security, Medicare, and tenure regimes for teachers. To Lanier,
these are necessary adjustments to a system that otherwise would leave the mass
of the population eventually impoverished.
But relax; Lanier is no socialist laying down a treatise on “social
justice.”
After identifying the technological
causes leading to the erosion of the middle
class and an ever-increasing concentration of wealth, Lanier proposes a
solution.
What we are presently undergoing is the equivalent of the
industrial revolution: the inexorable growth of the digital world. The
transferring of information into digital bits accessible to everyone with a computer
or smartphone. The universal accessibility of information in the “cloud” via
the internet is upending and outright destroying traditional business models
and industries one by one, such as the music and travel industries.
Businesses and industries presently entering the process of slow
disintegration because of simpler and cheaper online alternatives include real
estate (Zillow and Trulia), taxi service (Uber), education (MOOCs), book
publishing and brick-and-mortar retailing (Amazon), as well as newspapers and magazines.
What replaces these businesses is an online service. The
service is centered at what Lanier refers to as a “siren server” —yes, the Sirens that
lured sailors to their doom in Homer’s Odyssey.
They lure the user with the promise of “free.”
But as Lanier painstakingly details, nothing is really free in the new
digital economy. We pay—we
just don’t realize it right away because the price we pay is subtle and
diffuse. One price we are paying is, in effect, the loss of middle class jobs—jobs
replaced by online transactions. Another price we are paying is privacy. Every
transaction we make is tracked. A small step to every thought we make...
In the digital world, wealth becomes concentrated about a relatively
small locus of points in the immediate vicinity of the siren server. This aspect of
the economic revolution we are undergoing has been noticed. It is present in the dire warnings constantly given about the need for better STEM (Science,
Technology, Engineering & Math) education. The argument is that future jobs—those that supposedly
will replace all the disappearing jobs in pre-digital world businesses that
have been supplanted by free software apps on the Net—will require
mathematical, science and (computer) engineering skills. That may be technically
true; however—and it’s a big however—there
will never be anywhere near the same quantity of jobs created in the digital
world economies to balance those lost to the middle class. Furthermore,
believing that we can train thousands of students who can’t add fractions to
compete for jobs in hi-tech is, well, laughable.
Lanier views this new concentration of income wealth as a consequence
of the natural laws of economics responding to a technological revolution. Formerly middle class jobs will continue to be destroyed, and
furthermore, what we have seen in the music industry, the newspaper industry,
and brick-and-mortar book stores, is just the beginning. It’s going to get a
lot worse.
Lanier provides several future scenarios to argue his case.
What is the logical conclusion of 3D-printing?
Only the end of manufacturing as we know it, perhaps. Consumer products, including electronics and clothes,
will be manufactured individually in the home. Plumbers will ‘print out’ a necessary
pipe fitting, obviating the need not only for factories, but also for both distributors and plumbing supply
stores! Besides the printer itself, the new commodity will be the software
designs for the items “printed.” Once
again, siren servers will emerge. A
finite number of smart technicians, cranking out software designs. Lost: entire
industries. Uncountable number of middle-class jobs.
We have already seen how some industries have attempted to
cope with the digital revolution. The music industry fought tooth, claw and
lobbyist against Napsta and the inevitable digitizing of “music product.” Ultimately in vain. Ask your son/daughter how
they get their music, if you don’t already know.
But other industries appear completely oblivious to the
writing on the wall. In the case of education, teachers, the
soon-to-be-displaced workers, have actually cooperated with the siren servers to destroy their own
professions!
Do colleges and universities really believe that their monopoly
on academic accreditation will insulate them from online education provided by
MOOCs (massive open online courses)?
Newsflash: it will be the Googles and the Facebooks that will be the
first to acknowledge academic competence of the skills that matter (to them) earned
via MOOCs. Once hi-tech opens the floodgates...
It is only a matter of time before private enterprise MOOCs
muscle their way into the college accreditation business, and essentially
nullify the value of a BA from PCU. It is only a matter of time before college
students (and especially their parents) rebel at the notion of paying $50,000
to take online courses at a college, when the exact same value can be obtained with
the same effort from a far cheaper alternative.
Jaron Lanier is not some dystopian futurist; he is a bona
fide computer scientist with Silicon Valley pedigree. He is part of the
industry. He presently works for a siren
server: Microsoft. Some of his predictions for future technological
advancements driven by digitizing the world will surprise and shock you. But no matter how wild, they are all
eminently plausible, and no doubt several startups will have as their genesis
an idea first read in this book.
If the book did no more than this, it would be a must-read
for anyone curious about where “this” is all going. But Lanier does more—he
offers a way out, a solution.
Whenever Lanier explores the mechanism of a particular siren server, he exposes the free informational
input necessary for its success. This is
the information that we users give to
the servers, sometimes unknowingly through cookies but just as often
consciously by volunteering information. If you have ever written an online
review of a product, a book or concert video, you have given away monetary
value to a siren server. A good review generates Likes. And Likes generate
sales. Text might be lifted directly out of a review for use by another review
or the siren server itself.
Credit scoring provides another example. A lender relies on a credit score. The credit
score is derived from a scorecard that is only possible because of strategic
credit information culled, without knowledge or consent, from thousands of
people. The lender profits from the information in the credit score by
using it to determine credit risk. The tens of thousands of consumers
who contributed to that algorithm receive no remuneration for their
contribution that made the scorecard possible.
A dating site similarly relies on an algorithm. The
algorithm in turn is constructed by analyzing data points. A particular couple
who used the site and ended up marrying are considered a success. The
parameters for the ‘perfect match’ algorithms are based in some part on this
particular couple. They receive no remuneration.
What we are talking about here is the source of the data.
The data’s historical record. Lanier’s solution to the growing economic dislocations
we are experiencing is to establish the provenance of
all data, and then a payment (“nano-payments”) system of, in effect, royalties
for any and all originators of data.
So, in this scenario, any clever post in a FB timeline that
gets Shared can earn a royalty. What
Lanier is proposing, keeping the history of all data with the data itself,
requires new internet protocols. But he insists it is not only doable, but
actually was a choice in the original inception of the internet, one that could
have been made but wasn’t. He also
offers several fanciful schemes for how the payment scheme would actually work.
Lanier’s analysis of the digital revolution and its impact on
the middle class is compelling. He offers one solution. I have yet to hear
others that make as much sense. I think his suggestions are worth considering.
