Frank Levy and Richard Murnane: The New Division of Labor

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pages: 72 words: 21,361

Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy by Erik Brynjolfsson

"Robert Solow", Amazon Mechanical Turk, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, business cycle, business process, call centre, combinatorial explosion, corporate governance, creative destruction, crowdsourcing, David Ricardo: comparative advantage, easy for humans, difficult for computers, Erik Brynjolfsson, factory automation, first square of the chessboard, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, hiring and firing, income inequality, intangible asset, job automation, John Markoff, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Khan Academy, Kickstarter, knowledge worker, Loebner Prize, low skilled workers, minimum wage unemployment, patent troll, pattern recognition, Paul Samuelson, Ray Kurzweil, rising living standards, Robert Gordon, self-driving car, shareholder value, Skype, too big to fail, Turing test, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, wealth creators, winner-take-all economy, zero-sum game

A good illustration of how much recent technology advances have taken us by surprise comes from comparing a carefully researched book published in 2004 with an announcement made in 2010. The book is The New Division of Labor by economists Frank Levy and Richard Murnane. As its title implies, it’s a description of the comparative capabilities of computers and human workers. In the book’s second chapter, “Why People Still Matter,” the authors present a spectrum of information-processing tasks. At one end are straightforward applications of existing rules. These tasks, such as performing arithmetic, can be easily automated. After all, computers are good at following rules. At the other end of the complexity spectrum are pattern-recognition tasks where the rules can’t be inferred. The New Division of Labor gives driving in traffic as an example of this type of task, and asserts that it is not automatable: The … truck driver is processing a constant stream of [visual, aural, and tactile] information from his environment. … To program this behavior we could begin with a video camera and other sensors to capture the sensory input.

The combination of higher pay in the face of growing supply points unmistakably to an increase in the relative demand for skilled labor. Because those with the least education typically already had the lowest wages, this change has increased overall income inequality. It’s clear from the chart in Figure 3.5 that wage divergence accelerated in the digital era. As documented in careful studies by David Autor, Lawrence Katz, and Alan Krueger, as well as Frank Levy and Richard Murnane and many others, the increase in the relative demand for skilled labor is closely correlated with advances in technology, particularly digital technologies. Hence, the moniker “skill-biased technical change,” or SBTC. There are two distinct components to recent SBTC. Technologies like robotics, numerically controlled machines, computerized inventory control, and automatic transcription have been substituting for routine tasks, displacing those workers.

Team members included Whitney Braunstein, Claire Calméjane, Greg Gimpel, Tong Li, Liron Wand, George Westerman, and Lynn Wu. We’re extremely grateful to them. In addition, Mona Masghati and Maya Bustan helped Andy a great deal with his research, and Heekyung Kim and Jonathan Sidi did the same for Erik. We are grateful for conversations on technology and employment with our MIT colleagues, including Daron Acemoglu, David Autor, Frank Levy, Tod Loofbourrow, Thomas Malone, Stuart Madnick, Wanda Orlikowski, Michael Schrage, Peter Weill, and Irving Wladawsky-Berger. In addition, Rob Atkinson, Yannis Bakos, Susanto Basu, Menzie Chinn, Robert Gordon, Lorin Hitt, Rob Huckman, Michael Mandel, Dan Snow, Zeynep Ton and Marshall van Alstyne were very generous with their insights. We also benefited greatly from talking with people in industry who are making and using incredible technologies, including Rod Brooks, Paul Hofmann Ray Kurzweil, Ike Nassi, and Hal Varian.


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The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, basic income, Baxter: Rethink Robotics, British Empire, business cycle, business intelligence, business process, call centre, Charles Lindbergh, Chuck Templeton: OpenTable:, clean water, combinatorial explosion, computer age, computer vision, congestion charging, corporate governance, creative destruction, crowdsourcing, David Ricardo: comparative advantage, digital map, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, G4S, game design, global village, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, intangible asset, inventory management, James Watt: steam engine, Jeff Bezos, jimmy wales, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Mars Rover, mass immigration, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, payday loans, post-work, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen: Great Stagnation, Vernor Vinge, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

The New New Division of Labor Our ride that day on the 101 was especially weird for us because, only a few years earlier, we were sure that computers would not be able to drive cars. Excellent research and analysis, conducted by colleagues who we respect a great deal, concluded that driving would remain a human task for the foreseeable future. How they reached this conclusion, and how technologies like Chauffeur started to overturn it in just a few years, offers important lessons about digital progress. In 2004 Frank Levy and Richard Murnane published their book The New Division of Labor.1 The division they focused on was between human and digital labor—in other words, between people and computers. In any sensible economic system, people should focus on the tasks and jobs where they have a comparative advantage over computers, leaving computers the work for which they are better suited. In their book Levy and Murnane offered a way to think about which tasks fell into each category.

And it’s not just parents who are concerned about career opportunities in the second machine age. Students themselves, leaders of the organizations that might hire them, educators, policy makers and elected officials, and many others also wonder which human skills and abilities, if any, will still be valued as technology continues to improve. Recent history shows that this is a difficult question to answer. Frank Levy and Richard Murnane’s excellent book The New Division of Labor was by far the best research and thinking on this topic when it came out in 2004, arguing that pattern recognition and complex communication were the two broad areas where humans would continue to hold the high ground over digital labor. As we’ve seen, however, this has not always proved to be the case. So as technology races ahead, will it leave a generation behind in all areas, or at least most of them?

In the former group Susan Athey, David Autor, Zoe Baird, Nick Bloom, Tyler Cowen, Charles Fadel, Chrystia Freeland, Robert Gordon, Tom Kalil, Larry Katz, Tom Kochan, Frank Levy, James Manyika, Richard Murnane, Robert Putnam, Paul Romer, Scott Stern, Larry Summers, and Hal Varian have helped our thinking enormously. In the latter category are Chris Anderson, Rod Brooks, Peter Diamandis, Ephraim Heller, Reid Hoffman, Jeremy Howard, Kevin Kelly, Ray Kurzweil, John Leonard, Tod Loofbourrow, Hilary Mason, Tim O’Reilly, Sandy Pentland, Brad Templeton, and Vivek Wadhwa. All of them were incredibly generous with their time and tolerant of our questions. We did our best to understand the insights they shared with us, and apologize for whatever mistakes we made in trying to convey them in this book. Some members of both groups came together at an extraordinary series of lunches at MIT organized by John Leonard, Frank Levy, Daniela Rus, and Seth Teller that assembled people from the Economics Department, the Sloan School of Management, and the Computer Science and Artificial Intelligence Lab to talk about exactly the topics in which we were most interested.


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The New Division of Labor: How Computers Are Creating the Next Job Market by Frank Levy, Richard J. Murnane

Atul Gawande, business cycle, call centre, computer age, Computer Numeric Control, correlation does not imply causation, David Ricardo: comparative advantage, deskilling, Frank Levy and Richard Murnane: The New Division of Labor, Gunnar Myrdal, hypertext link, index card, information asymmetry, job automation, knowledge economy, knowledge worker, low skilled workers, low-wage service sector, pattern recognition, profit motive, Robert Shiller, Robert Shiller, Ronald Reagan, speech recognition, talking drums, telemarketer, The Wealth of Nations by Adam Smith, working poor

Murnane RUSSELL SAGE FOUNDATION New York PRINCETON UNIVERSITY PRESS Princeton and Oxford Copyright © 2004 by Russell Sage Foundation Requests for permission to reproduce materials from this work should be sent to Permissions, Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 3 Market Place, Woodstock, Oxfordshire OX20 1SY and Russell Sage Foundation, 112 East 64th Street, New York, New York 10021 All Rights Reserved Second printing, and first paperback printing, 2005 Paperback ISBN-13: 978-0-691-12402-5 Paperback ISBN-10: 0-691-12402-7 The Library of Congress has cataloged the cloth edition of this book as follows Levy, Frank, 1941– The new division of labor : how computers are creating the next job market / Frank Levy and Richard J. Murnane. p. cm. ISBN 0-691-11972-4 (cl. : alk. paper) 1. Labor supply—Effect of technological innovations on. 2. Labor supply—Effect of automation on. 3. Computers—Social aspects. 4. Employees—Effect of automation on. 5. Automation—Economic aspects. I. Murnane, Richard J. II. Title. HD6331.L48 2004 331.1—dc22 2003065497 British Library Cataloging-in-Publication Data is available This book has been composed in Dante Printed on acid-free paper. f pup.princeton.edu www.russellsage.org Printed in the United States of America 3 5 7 9 10 8 6 4 2 CONTENTS Acknowledgments vii CHAPTER 1 New Divisions of Labor 1 PART I Computers and the Economy CHAPTER 2 Why People Still Matter 13 CHAPTER 3 How Computers Change Work and Pay PART II The Skills Employers Value CHAPTER 4 Expert Thinking 57 31 vi CONTENTS CHAPTER 5 Complex Communication 76 PART III How Skills Are Taught CHAPTER 6 Enabling Skills 99 CHAPTER 7 Computers and the Teaching of Skills CHAPTER 8 Standards-Based Education Reform in the Computer Age 131 CHAPTER 9 The Next Ten Years Notes 159 Index 169 149 109 ACKNOWLEDGMENTS MANY PEOPLE HELPED US DURING THE YEARS THAT WE worked on this book.

A manager might never have a direct report exactly like Ned, but the ideas she would learn from discussing with others Alonzo’s problem with Ned would help build patterns of knowledge—schemas—that she could adapt to similar problems. 2. Todd Willis is a pseudonym for one of the participants in Basic Blue. 3. See Mary Ann Zehr, “Computer Giants Look to Students,” Education Week 17, no. 31 (April 15, 1998). 4. For the details of this story, see Richard Murnane, Nancy Sharkey, and Frank Levy, “A Role for the Internet in American Education? Lessons from Cisco Networking Academies,” in The Knowledge Economy and Postsecondary Education, ed. Patricia Albjerg Graham and Nevzer G. Stacey (Washington, D.C.: National Academy Press, 2002), 127–57. 5. As discussed later, the community server also keeps track of students’ grades on chapter tests and the semester examination, eliminating the bookkeeping activities that consume a great deal of time for most teachers. 6.

Kathleen Donovan, a reference librarian at Harvard’s Gutman Library, tracked down numerous references for us, in some cases anticipating what we really wanted to know before we understood it. We thank Peter Dougherty, the social science editor at Princeton University Press, his colleague Tim Sullivan, and Suzanne Nichols of the Russell Sage Foundation for pushing us to clarify the book’s message and shepherding the manuscript to publication. Richard Murnane’s secretary, Wendy Angus, patiently kept track of the multiple versions of chapters and made sure that the right versions were sent to readers and to Peter. We dedicate this book to our families. Our children, David, Marin, John, and Daniel, would tease us about this book’s movie rights, but their good humor (most of the time) kept us going. Florence Levy gave us good skeptical questions and a mother’s encouragement.


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Ghost Work: How to Stop Silicon Valley From Building a New Global Underclass by Mary L. Gray, Siddharth Suri

Affordable Care Act / Obamacare, Amazon Mechanical Turk, augmented reality, autonomous vehicles, barriers to entry, basic income, big-box store, bitcoin, blue-collar work, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative consumption, collective bargaining, computer vision, corporate social responsibility, crowdsourcing, data is the new oil, deindustrialization, deskilling, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, en.wikipedia.org, equal pay for equal work, Erik Brynjolfsson, financial independence, Frank Levy and Richard Murnane: The New Division of Labor, future of work, gig economy, glass ceiling, global supply chain, hiring and firing, ImageNet competition, industrial robot, informal economy, information asymmetry, Jeff Bezos, job automation, knowledge economy, low skilled workers, low-wage service sector, market friction, Mars Rover, natural language processing, new economy, passive income, pattern recognition, post-materialism, post-work, race to the bottom, Rana Plaza, recommendation engine, ride hailing / ride sharing, Ronald Coase, Second Machine Age, sentiment analysis, sharing economy, Shoshana Zuboff, side project, Silicon Valley, Silicon Valley startup, Skype, software as a service, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Nature of the Firm, transaction costs, two-sided market, union organizing, universal basic income, Vilfredo Pareto, women in the workforce, Works Progress Administration, Y Combinator

The other tasks carried out by U.S. labor forces are “routine cognitive tasks,” like maintaining expense reports and other services that are “well described by logical rules”; “routine manual tasks,” like “physical tasks that can be well described by using rules,” such as “installing windshields”; and “non-routine manual tasks that cannot be well described as following a set of If-Then-Do rules because they require optical recognition and fine motor control”—“like driving a truck.” “This drive to develop, produce, and market new products relies on the human ability to manage and solve analytical problems and communicate new information, so it keeps expert thinking and complex communication in strong demand.” See Frank Levy and Richard Murnane, The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton, NJ: Princeton University Press, 2004). [back] 42. Shoshana Zuboff, In the Age of the Smart Machine: The Future of Work and Power (New York: Basic Books, 1988). [back] 43. Also called “piece-rate,” “putting-out,” British “cottage industries,” “industrial home work,” and the American “commission system.” See Albrecht, “Industrial Home Work,” 413–30.

In CSCW ’15 Companion: Proceedings of the 18th ACM Conference Companion on Computer Supported Cooperative Work & Social Computing, 117–21. New York: ACM, 2015. https://doi.org/10.1145/2685553.2699339. Leopold, Till Alexander, Saadia Zahidi, and Vesselina Ratcheva. The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution. Geneva, Switzerland: World Economic Forum, 2016. Levy, Frank, and Richard Murnane. The New Division of Labor: How Computers Are Creating the Next Job Market. Princeton, NJ: Princeton University Press, 2004. Li, Fei-Fei. “ImageNet: Where Have We Been? Where Are We Going?” ACM Learning Webinar, 2017. https://learning.acm.org/. Lichtenstein, Nelson. The Most Dangerous Man in Detroit. New York: Basic Books, 1995. Light, Jennifer. “When Computers Were Women.” Technology and Culture 40, no. 3 (July 1999): 455–83.

This world of work defies an economic ranking of “meaningful employment” along a skills ladder. Early industrialists sought to divide labor between machines and full-time employees, but that division couldn’t see, much less value, the workers who filled in the gap. Similarly, as tech engineers and businesses looked to automate productivity, they generated a demand for people to step in, for an indeterminate stretch, to do what economist Frank Levy and computer scientist Richard Murnane refer to as the “expert thinking” and “complex communication” required to make services work, as promised.41 Caught in the paradox of automation’s last mile, these workers are pointed toward some vague exit, attached to an imagined automated future floating on the horizon. A century later, contingent labor remains tucked in the folds of a busy production loop hidden from sight and impossible to fully credit or value.


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The Formula: How Algorithms Solve All Our Problems-And Create More by Luke Dormehl

3D printing, algorithmic trading, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, big data - Walmart - Pop Tarts, call centre, Cass Sunstein, Clayton Christensen, commoditize, computer age, death of newspapers, deferred acceptance, disruptive innovation, Edward Lorenz: Chaos theory, Erik Brynjolfsson, Filter Bubble, Flash crash, Florence Nightingale: pie chart, Frank Levy and Richard Murnane: The New Division of Labor, Google Earth, Google Glasses, High speed trading, Internet Archive, Isaac Newton, Jaron Lanier, Jeff Bezos, job automation, John Markoff, Kevin Kelly, Kodak vs Instagram, lifelogging, Marshall McLuhan, means of production, Nate Silver, natural language processing, Netflix Prize, Panopticon Jeremy Bentham, pattern recognition, price discrimination, recommendation engine, Richard Thaler, Rosa Parks, self-driving car, sentiment analysis, Silicon Valley, Silicon Valley startup, Slavoj Žižek, social graph, speech recognition, Steve Jobs, Steven Levy, Steven Pinker, Stewart Brand, the scientific method, The Signal and the Noise by Nate Silver, upwardly mobile, Wall-E, Watson beat the top human players on Jeopardy!, Y Combinator

Computer scientist and teacher John MacCormick similarly gives the example of an algorithm’s unsuitability for being used as a teaching aid for grading students’ work, since this is a task that is too complex (and, depending on the subject, too subjective) for a bot to carry out.5 Could both of these tasks be performed algorithmically in the future as computers continue to get more powerful? Absolutely. It is for this reason that it is dangerous to bet against a bot. A decade ago, respected MIT and Harvard economists Frank Levy and Richard Murnane published a well-researched book entitled The New Division of Labor, in which they compared the respective capabilities of human workers and computers. In an optimistic second chapter called “Why People Still Matter,” the authors described a spectrum of information-processing tasks ranging from those that could be handled by a computer (e.g., arithmetic), to those that only a human could do. One illustration they gave was that of a long-distance truck driver: The . . . truck driver is processing a constant stream of [visual, aural and tactile] information from his environment. . . .

Colors, no. 85, December 3, 2012. colorsmagazine.com/stories/magazine/85/story/algorithms. 4 Gladwell, Malcolm. Blink: The Power of Thinking Without Thinking (New York: Little, Brown, 2005). 5 MacCormick, John. Nine Algorithms That Changed the Future: The Ingenious Ideas That Drive Today’s Computers (Princeton, N.J.: Princeton University Press, 2012). 6 Levy, Frank, and Richard Murnane. The New Division of Labor: How Computers Are Creating the Next Job Market (New York: Russell Sage Foundation; Princeton, N.J.: Princeton University Press, 2004). 7 Stone, Brad. The Everything Store: Jeff Bezos and the Age of Amazon (New York: Little, Brown, 2013). 8 Bellos, David. Is That a Fish in Your Ear? Translation and the Meaning of Everything (New York: Faber and Faber, 2011). 9 Lanier, Jaron.


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Only Humans Need Apply: Winners and Losers in the Age of Smart Machines by Thomas H. Davenport, Julia Kirby

AI winter, Andy Kessler, artificial general intelligence, asset allocation, Automated Insights, autonomous vehicles, basic income, Baxter: Rethink Robotics, business intelligence, business process, call centre, carbon-based life, Clayton Christensen, clockwork universe, commoditize, conceptual framework, dark matter, David Brooks, deliberate practice, deskilling, digital map, disruptive innovation, Douglas Engelbart, Edward Lloyd's coffeehouse, Elon Musk, Erik Brynjolfsson, estate planning, fixed income, follow your passion, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, game design, general-purpose programming language, global pandemic, Google Glasses, Hans Lippershey, haute cuisine, income inequality, index fund, industrial robot, information retrieval, intermodal, Internet of things, inventory management, Isaac Newton, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joi Ito, Khan Academy, knowledge worker, labor-force participation, lifelogging, longitudinal study, loss aversion, Mark Zuckerberg, Narrative Science, natural language processing, Norbert Wiener, nuclear winter, pattern recognition, performance metric, Peter Thiel, precariat, quantitative trading / quantitative finance, Ray Kurzweil, Richard Feynman, risk tolerance, Robert Shiller, Robert Shiller, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, six sigma, Skype, social intelligence, speech recognition, spinning jenny, statistical model, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, superintelligent machines, supply-chain management, transaction costs, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, Works Progress Administration, Zipcar

While his objective was mainly to show how advancing automation could and must enable humans to embrace their humanity more, and he wasn’t as concerned with defining those human attributes too tightly, he did point to creativity and spirituality as parts of the human condition that machines do not share. He also identified a human strength in the range and speed of our adaptability, in contrast to both other animals and machines. More recently, economists Frank Levy and Richard Murnane put a finer point on things, saying (in their persuasive book, The New Division of Labor: How Computers Are Creating the Next Job Market) that the great strengths of humans are expert thinking and complex communication. The brain’s gift for pattern recognition is the key to what they call “expert thinking,” which is what allows humans, but not computers, to imagine new ways of solving problems (ways, in other words, that have not already been discovered and spelled out step by step).

Nicita concedes that sophisticated decision analytics unleashed on large data sets will uncover new and important insights that her colleagues would miss. But, she says, that will give her people the opportunity to go deeper and offer clients “context, humanization and the ‘why’ behind big data.” Her shop will increasingly “go beyond analysis and translate that data in a way that informs business decisions through synthesis and the power of great narrative.” This sounds an awful lot like what economists Frank Levy and Richard Murnane refer to as the human strength of complex communication. It also sounds like an ideal partnership of human and machine, in which the value each brings to the arrangement is amplified by the other—in other words, it sounds like augmentation. The best investments in intelligent machines, Nicita thinks—and this is the core belief of an augmentation strategy—do not usher people out the door, much less relegate them to doing the bidding of robot overlords.

Dan Townend, “Study Shows 40 Per Cent of Brits Rely on Autocorrect for Spelling,” Daily Express, October 5, 2014, http://www.express.co.uk/news/uk/519111/Brits-rely-on-autocorrect-for-spelling 4. Christopher Niesche, “The New Flavours of Auditing,” IntheBlack.com, April 11, 2014, http://intheblack.com/articles/2014/04/11/the-new-flavours-of-auditing. 5. Catherine Rampell, “Want a Job? Go to College, and Don’t Major in Architecture,” New York Times Economix blog, January 5, 2012, http://economix.blogs.nytimes.com/2012/01/05/want-a-job-go-to-college-and-dont-major-in-architecture. 6. Frank Levy, “How College Changes Demands for Human Skills,” OECD Working Paper, March 2010, http://www.oecd.org/edu/skills-beyond-school/45052661.pdf. Chapter 2: Just How Smart Are Smart Machines? 1. Ray Kurzweil, The Singularity Is Near (New York: Viking, 2005), 206. 2. Thomas H. Davenport and Jeanne G. Harris, “Automated Decision-Making Comes of Age,” MIT Sloan Management Review, Summer 2005, http://sloanreview.mit.edu/article/automated-decision-making-comes-of-age/. 3.


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The Technology Trap: Capital, Labor, and Power in the Age of Automation by Carl Benedikt Frey

"Robert Solow", 3D printing, autonomous vehicles, basic income, Bernie Sanders, Branko Milanovic, British Empire, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, collective bargaining, computer age, computer vision, Corn Laws, creative destruction, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, desegregation, deskilling, Donald Trump, easy for humans, difficult for computers, Edward Glaeser, Elon Musk, Erik Brynjolfsson, everywhere but in the productivity statistics, factory automation, falling living standards, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Frank Levy and Richard Murnane: The New Division of Labor, full employment, future of work, game design, Gini coefficient, Hyperloop, income inequality, income per capita, industrial cluster, industrial robot, intangible asset, interchangeable parts, Internet of things, invention of agriculture, invention of movable type, invention of the steam engine, invention of the wheel, Isaac Newton, James Hargreaves, James Watt: steam engine, job automation, job satisfaction, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kickstarter, knowledge economy, knowledge worker, labor-force participation, labour mobility, Loebner Prize, low skilled workers, Malcom McLean invented shipping containers, manufacturing employment, mass immigration, means of production, Menlo Park, minimum wage unemployment, natural language processing, new economy, New Urbanism, Norbert Wiener, oil shock, On the Economy of Machinery and Manufactures, Pareto efficiency, pattern recognition, pink-collar, Productivity paradox, profit maximization, Renaissance Technologies, rent-seeking, rising living standards, Robert Gordon, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, social intelligence, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade route, Triangle Shirtwaist Factory, Turing test, union organizing, universal basic income, washing machines reduced drudgery, wealth creators, women in the workforce, working poor, zero-sum game

Even so, economists would expect the wages of people in technologically stagnant jobs to rise, as employers need to pay them more to prevent workers from leaving for more productive jobs of higher pay. As noted, the fact that the wages of men without college degrees have fallen over the course of three decades, in other words, suggest that they are faced with fewer alternative job options for which their skills are suitable. Together with Autor, in their pioneering 2004 book, The New Division of Labor, Frank Levy and Richard Murnane, two economists at the Massachusetts Institute of Technology, were among the first to note this pattern: As computers have helped channel economic growth, two quite different types of jobs have increased in number, jobs that pay very different wages. Jobs held by the working poor—janitors, cafeteria workers, security guards—have grown in relative importance. But the greater job growth has taken place in the upper part of the pay distribution—managers, doctors, lawyers, engineers, teachers, technicians.

As the mathematician Claude Shannon demonstrated in 1950, in his seminal paper on how to program a machine to play chess, a lower-bound estimate of the number of possible moves in chess is greater than the number of atoms in the observable universe, and the number of possible moves in Go is more than twice that number.2 Indeed, even if every atom in the universe was its own universe and had inside it the number of atoms in our universe, there would still be fewer atoms than the number of possible legal moves in Go. The illimitable complexity of the game means that not even the best players are capable of breaking it down into meaningful rules. Instead professionals play by recognizing patterns that emerge “when clutches of stones surround empty spaces.”3 As discussed above, humans still held the comparative advantage in pattern recognition when Frank Levy and Richard Murnane published their brilliant book The New Division of Labor in 2004.4 At the time, computers were nowhere near capable of challenging the human brain in identifying patterns. But now they are. Much more important than the fact that AlphaGo won is how it did so. While Deep Blue was a product of the rule-based age of computing, whose success rested upon the ability of a programmer to write explicit if-then-do rules for various board positions, AlphaGo’s evaluation engine was not explicitly programmed.

Jakubauskas, 1960, “Adjustment to an Automatic Airline Reservation System,” in Impact of Automation: A Collection of 20 Articles about Technological Change, from the Monthly Labor Review (Washington: Bureau of Labor Statistics), 94. 14. Ibid. 15. Quoted in Levy and Murnane, 2004, The New Division of Labor, 4. 16. Quoted in ibid. 17. D. H. Autor, 2015, “Polanyi’s Paradox and the Shape of Employment Growth,” in Re-evaluating Labor Market Dynamics (Kansas City: Federal Reserve Bank of Kansas City), 129–177. 18. M. Polanyi, 1966, The Tacit Dimension (New York: Doubleday), 4. 19. According to the O-ring production function of Michael Kremer, an improvement in one task in the production of something makes the other tasks more valuable (1993, “The O-Ring Theory of Economic Development,” Quarterly Journal of Economics 108 [3]: 551–75). 20. Levy and Murnane, 2004, The New Division of Labor, 13–14. 21. R. Reich, 1991, The Work of Nations: Preparing Ourselves for Twenty-First Century Capitalism (New York: Knopf). 22.


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The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It by Timothy Noah

assortative mating, autonomous vehicles, blue-collar work, Bonfire of the Vanities, Branko Milanovic, business cycle, call centre, collective bargaining, computer age, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, Deng Xiaoping, easy for humans, difficult for computers, Erik Brynjolfsson, Everybody Ought to Be Rich, feminist movement, Frank Levy and Richard Murnane: The New Division of Labor, Gini coefficient, Gunnar Myrdal, income inequality, industrial robot, invisible hand, job automation, Joseph Schumpeter, longitudinal study, low skilled workers, lump of labour, manufacturing employment, moral hazard, oil shock, pattern recognition, Paul Samuelson, performance metric, positional goods, post-industrial society, postindustrial economy, purchasing power parity, refrigerator car, rent control, Richard Feynman, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, Stephen Hawking, Steve Jobs, The Spirit Level, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, union organizing, upwardly mobile, very high income, Vilfredo Pareto, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, Yom Kippur War

Economic theory dating back to the nineteenth century said that technological advances wouldn’t reduce net employment because the number of jobs wasn’t fixed; a new machine might eliminate jobs in one part of the economy, but it would also create jobs in another part.6 For example, someone had to be employed to make these new machines. But as the economists Frank Levy of MIT and Richard J. Murnane of Harvard point out in their 2004 book The New Division of Labor, computers represented an entirely different sort of new machine. Previously, technology had performed physical tasks. (Think of John Henry‘s nemesis, the steam-powered hammer.) Computers were designed to perform cognitive tasks. (Think of Jeopardy champion Ken Jennings’s nemesis, IBM’s Watson.) Theoretically, there was no limit to the kinds of work computers might eventually perform.

A decade after the Nobelists sent their letter, the Harvard sociologist (and onetime Fortune magazine journalist) Daniel Bell observed that it was “one more instance of the penchant for overdramatizing a momentary innovation and blowing it up far out of proportion to its actuality.” See Daniel Bell, The Coming of Post-Industrial Society: A Venture in Social Forecasting (New York: Basic Books, 1999; originally published in 1973), 463. 8. Frank Levy and Richard J. Murnane, The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton, NJ.: Princeton University Press, 2004), 13–25; and Farhad Manjoo, “Will Robots Steal Your Job?,” Slate, Sept. 26–30, 2011, at http://www.slate.com/articles/technology/robot_invasion/2011/09/will_robots_steal_your_job.html. Levy and Murnane’s book grew out of a 2003 paper that they wrote with MIT’s David Autor. 9.

But as service jobs migrate offshore, the more relevant distinction is between what Blinder calls “personally-delivered services” and “impersonally-delivered services.” Only impersonally delivered services can be moved offshore.21 Impersonally delivered services bear some similarity to, but are not exactly the same as, jobs requiring “rule-based logic,” which, as noted in the previous chapter, are the jobs that the MIT economist Frank Levy and the Harvard economist Richard Murnane deem most vulnerable to automation. But impersonally delivered services include a lot more high-skill jobs (though they include lots of low-skill jobs, too). Securities analysis (high-skill) can be delivered remotely; so can keyboard entry (low-skill), radiology (high-skill), and customer complaint centers. Governments have become enthusiastic exporters of service jobs, though in the United States it’s typically done through private-sector subcontractors.


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The Glass Cage: Automation and Us by Nicholas Carr

Airbnb, Airbus A320, Andy Kessler, Atul Gawande, autonomous vehicles, Bernard Ziegler, business process, call centre, Captain Sullenberger Hudson, Charles Lindbergh, Checklist Manifesto, cloud computing, computerized trading, David Brooks, deliberate practice, deskilling, digital map, Douglas Engelbart, drone strike, Elon Musk, Erik Brynjolfsson, Flash crash, Frank Gehry, Frank Levy and Richard Murnane: The New Division of Labor, Frederick Winslow Taylor, future of work, global supply chain, Google Glasses, Google Hangouts, High speed trading, indoor plumbing, industrial robot, Internet of things, Jacquard loom, James Watt: steam engine, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, knowledge worker, Lyft, Marc Andreessen, Mark Zuckerberg, means of production, natural language processing, new economy, Nicholas Carr, Norbert Wiener, Oculus Rift, pattern recognition, Peter Thiel, place-making, plutocrats, Plutocrats, profit motive, Ralph Waldo Emerson, RAND corporation, randomized controlled trial, Ray Kurzweil, recommendation engine, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, software is eating the world, Stephen Hawking, Steve Jobs, TaskRabbit, technoutopianism, The Wealth of Nations by Adam Smith, turn-by-turn navigation, US Airways Flight 1549, Watson beat the top human players on Jeopardy!, William Langewiesche

Tesla Motors, the electric car pioneer, is developing an automotive autopilot that “should be able to [handle] 90 percent of miles driven,” according to the company’s ambitious chief executive, Elon Musk.3 The arrival of Google’s self-driving car shakes up more than our conception of driving. It forces us to change our thinking about what computers and robots can and can’t do. Up until that fateful October day, it was taken for granted that many important skills lay beyond the reach of automation. Computers could do a lot of things, but they couldn’t do everything. In an influential 2004 book, The New Division of Labor: How Computers Are Creating the Next Job Market, economists Frank Levy and Richard Murnane argued, convincingly, that there were practical limits to the ability of software programmers to replicate human talents, particularly those involving sensory perception, pattern recognition, and conceptual knowledge. They pointed specifically to the example of driving a car on the open road, a talent that requires the instantaneous interpretation of a welter of visual signals and an ability to adapt seamlessly to shifting and often unanticipated situations.

See also Tom Vanderbilt, “Let the Robot Drive: The Autonomous Car of the Future Is Here,” Wired, February 2012. 2.Daniel DeBolt, “Google’s Self-Driving Car in Five-Car Crash,” Mountain View Voice, August 8, 2011. 3.Richard Waters and Henry Foy, “Tesla Moves Ahead of Google in Race to Build Self-Driving Cars,” Financial Times, September 17, 2013, ft.com/intl/cms/s/0/70d26288-1faf-11e3-8861-00144feab7de.html. 4.Frank Levy and Richard J. Murnane, The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton: Princeton University Press, 2004), 20. 5.Tom A. Schweizer et al., “Brain Activity during Driving with Distraction: An Immersive fMRI Study,” Frontiers in Human Neuroscience, February 28, 2013, frontiersin.org/Human_Neuroscience/10.3389/fnhum.2013.00053/full. 6.N. Katherine Hayles, How We Think: Digital Media and Contemporary Technogenesis (Chicago: University of Chicago Press, 2012), 2. 7.Mihaly Csikszentmihalyi and Judith LeFevre, “Optimal Experience in Work and Leisure,” Journal of Personality and Social Psychology 56, no. 5 (1989): 815–822. 8.Daniel T.

Roberts, “ ‘The Case against Automation in Manned Fighter Aircraft,” SETP Quarterly Review 2, no. 3 (Fall 1957): 18–23. 42.Quoted in Mindell, Between Human and Machine, 77. 43.Harris, Human Performance on the Flight Deck, 221. Chapter Four: THE DEGENERATION EFFECT 1.Alfred North Whitehead, An Introduction to Mathematics (New York: Henry Holt, 1911), 61. 2.Quoted in Frank Levy and Richard J. Murnane, The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton: Princeton University Press, 2004), 4. 3.Raja Parasuraman et al., “Model for Types and Levels of Human Interaction with Automation,” IEEE Transactions on Systems, Man, and Cybernetics—Part A: Systems and Humans 30, no. 3 (2000): 286–297. See also Nadine Sarter et al., “Automation Surprises,” in Gavriel Salvendy, ed., Handbook of Human Factors and Ergonomics, 2nd ed.


pages: 204 words: 67,922

Elsewhere, U.S.A: How We Got From the Company Man, Family Dinners, and the Affluent Society to the Home Office, BlackBerry Moms,and Economic Anxiety by Dalton Conley

assortative mating, call centre, clean water, commoditize, dematerialisation, demographic transition, Edward Glaeser, extreme commuting, feminist movement, financial independence, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Home mortgage interest deduction, income inequality, informal economy, Jane Jacobs, Joan Didion, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, labor-force participation, late capitalism, low skilled workers, manufacturing employment, mass immigration, McMansion, mortgage tax deduction, new economy, off grid, oil shock, PageRank, Ponzi scheme, positional goods, post-industrial society, post-materialism, principal–agent problem, recommendation engine, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Skype, statistical model, The Death and Life of Great American Cities, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, women in the workforce, Yom Kippur War

Ann Huff Stevens, “The More Things Change, the More They Stay the Same: Trends in Long-Term Employment in the United States,” NBER Working Paper no. 11878, 2005. 35. Arlie Russell Hochschild, The Time Bind: When Work Becomes Home and Home Becomes Work (New York: Metropolitan Books, 1997). 36. Markus Mobius and Raphael Schoenle, “The Evolution of Work,” NBER Working Paper no. 12694, 2006. 37. Frank Levy and Richard J. Murnane, The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton, N.J.: Princeton University Press, 2004.). 38. Ibid., p. 38. 39. “Employment Status of Women and Men in 2006,” Women’s Bureau, U.S. Department of Labor, at http://www.dol.gov/wb/factsheets/Qf-ESWM06.htm. 40. Alison Owings, Hey, Waitress!: The USA From the Other Side of the Tray (Berkeley: University of California Press, 2002.). 41.

Or what about updating our garage band’s MySpace site at 2:00 a.m.? After all, it is for our band, which we hope will be discovered in the not-too-distant future. That’s an investment, isn’t it? For most of the industrial era, machines were used to augment or replace humans in performing some physical tasks. Now, with computerization, they were replacing some mental tasks as well. The economists Frank Levy and Richard Murnane put the emphasis on some since, they point out, a robot could not change a baby’s diaper. Similarly, computers (so far) are not very good at synthesizing data to see patterns on their own. They have no interpretive ability. Thus computers, according to Levy and Murnane, create as many jobs as they eliminate. They do this by stimulating economic growth by lowering costs for the tasks they do well: Computers “shift work away from routine tasks and towards … expert thinking and complex communication.”


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Homo Deus: A Brief History of Tomorrow by Yuval Noah Harari

23andMe, agricultural Revolution, algorithmic trading, Anne Wojcicki, anti-communist, Anton Chekhov, autonomous vehicles, Berlin Wall, call centre, Chris Urmson, cognitive dissonance, Columbian Exchange, computer age, Deng Xiaoping, don't be evil, drone strike, European colonialism, experimental subject, falling living standards, Flash crash, Frank Levy and Richard Murnane: The New Division of Labor, glass ceiling, global village, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, job automation, John Markoff, Kevin Kelly, lifelogging, means of production, Mikhail Gorbachev, Minecraft, Moneyball by Michael Lewis explains big data, Monkeys Reject Unequal Pay, mutually assured destruction, new economy, pattern recognition, Peter Thiel, placebo effect, Ray Kurzweil, self-driving car, Silicon Valley, Silicon Valley ideology, stem cell, Steven Pinker, telemarketer, The Future of Employment, too big to fail, trade route, Turing machine, Turing test, ultimatum game, Watson beat the top human players on Jeopardy!, zero-sum game

., ‘Human-Level Control through Deep Reinforcement Learning’, Nature, 26 February 2015, accessed 12 August 2015, http://www.nature.com/nature/journal/v518/n7540/full/nature14236.html. 14. Michael Lewis, Moneyball: The Art of Winning an Unfair Game (New York: W. W. Norton, 2003). Also see the 2011 film Moneyball, directed by Bennett Miller and starring Brad Pitt as Billy Beane. 15. Frank Levy and Richard Murnane, The New Division of Labor: How Computers are Creating the Next Job Market (Princeton: Princeton University Press, 2004); Dormehl, The Formula, 225–6. 16. Tom Simonite, ‘When Your Boss is an Uber Algorithm’, MIT Technology Review, 1 December 2015, retrieved 4 February 2016, https://www.technologyreview.com/s/543946/when-your-boss-is-an-uber-algorithm/. 17. Simon Sharwood, ‘Software “Appointed to Board” of Venture Capital Firm’, The Register, 18 May 2014, accessed 12 August 2015, http://www.theregister.co.uk/2014/05/18/software_appointed_to_board_of_venture_capital_firm/; John Bates, ‘I’m the Chairman of the Board’, Huffington Post, 6 April 2014, accessed 12 August 2015, http://www.huffingtonpost.com/john-bates/im-the-chairman-of-the-bo_b_5440591.html; Colm Gorey, ‘I’m Afraid I Can’t Invest in That, Dave: AI Appointed to VC Funding Board’, Silicon Republic, 15 May 2014, accessed 12 August 2015, https://www.siliconrepublic.com/discovery/2014/05/15/im-afraid-i-cant-invest-in-that-dave-ai-appointed-to-vc-funding-board. 18.

Not that Beane and Oakland could enjoy their success for long. Soon enough, many other baseball teams adopted the same algorithmic approach, and since the Yankees and Red Sox could pay far more for both baseball players and computer software, low-budget teams such as the Oakland Athletics now had an even smaller chance of beating the system than before.14 In 2004 Professor Frank Levy from MIT and Professor Richard Murnane from Harvard published a thorough research of the job market, listing those professions most likely to undergo automation. Truck drivers were given as an example of a job that could not possibly be automated in the foreseeable future. It is hard to imagine, they wrote, that algorithms could safely drive trucks on a busy road. A mere ten years later, Google and Tesla not only imagine this, but are actually making it happen.15 In fact, as time goes by, it becomes easier and easier to replace humans with computer algorithms, not merely because the algorithms are getting smarter, but also because humans are professionalising.


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Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek by Rutger Bregman

autonomous vehicles, banking crisis, Bartolomé de las Casas, basic income, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, George Santayana, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Future of Employment, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey

David Rotman, “How Technology Is Destroying Jobs,” MIT Technology Review (June 12, 2013). http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs 22. Quoted in: Brynjolfsson and McAfee, The Second Machine Age, p. 27. 23. Ian Morris, Why The West Rules – For Now (2010), p. 495. 24. Morris, Why The West Rules, p. 497. 25. Diane Coyle, GDP. A Brief but Affectionate History (2014), p. 79. 26. Frank Levy and Richard Murnane, The New Division of Labor (2004). 27. There are indications that even jobs for the highly-skilled have come under pressure since 2000, leading them to snap up the less-skilled jobs. Increasingly, employees are overqualified for their jobs. See: Paul Beaudry, David A. Green and Ben Sand, “The Great Reversal in the Demand for Skill and Cognitive Tasks,” National Bureau of Economic Research (January 2013). http://www.economics.ubc.ca/files/2013/05/pdf_paper_paul-beaudry-great-reversal.pdf 28.


pages: 518 words: 147,036

The Fissured Workplace by David Weil

accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, banking crisis, barriers to entry, business cycle, business process, buy and hold, call centre, Carmen Reinhart, Cass Sunstein, Clayton Christensen, clean water, collective bargaining, commoditize, corporate governance, corporate raider, Corrections Corporation of America, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, declining real wages, employer provided health coverage, Frank Levy and Richard Murnane: The New Division of Labor, George Akerlof, global supply chain, global value chain, hiring and firing, income inequality, information asymmetry, intermodal, inventory management, Jane Jacobs, Kenneth Rogoff, law of one price, loss aversion, low skilled workers, minimum wage unemployment, moral hazard, Network effects, new economy, occupational segregation, Paul Samuelson, performance metric, pre–internet, price discrimination, principal–agent problem, Rana Plaza, Richard Florida, Richard Thaler, Ronald Coase, shareholder value, Silicon Valley, statistical model, Steve Jobs, supply-chain management, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, ultimatum game, union organizing, women in the workforce, yield management

In The Gloves-Off Economy: Workplace Standards at the Bottom of America’s Labor Market, edited by Annette Bernhardt, Heather Boushey, Laura Dresser, and Chris Tilly. Champaign, IL: Labor and Employment Relations Association, 243–267. Levinson, Marc. 2011. The Great A&P and the Struggle for Small Business in America. New York: Hill and Wang. Levitt, Peggy. 2001. The Transnational Villagers. Berkeley: University of California Press. Levy, Frank, and Richard J. Murnane. 2005. The New Division of Labor. Princeton, NJ: Princeton University Press. Lewis, Michael. 2009. Panic! The Story of Modern Financial Insanity. New York: W. W. Norton. ______. 2010. The Big Short: Inside the Doomsday Machine. New York: W. W. Norton. Liu, Peng. 2010. “Real Estate Investment Trusts: Performance, Recent Findings, and Future Directions.” Cornell Hospitality Quarterly 51, no. 3: 415–428. Livesay, Harold. 1975.

“Making the HR Outsourcing Decision.” Sloan Management Review 45, no. 1: 53–60. Alexander, Charlotte. 2012. “The Law and Economics of Peripheral Labor: A Poultry Industry Case Study.” Berkeley Journal of Employment and Labor Law (forthcoming). Appelbaum, Eileen, and Rose Batt. 2012. “A Primer on Private Equity at Work.” Challenge 55, no. 5: 5–38. Appelbaum, Eileen, Annette Bernhardt, and Richard Murnane, eds. 2003. Low Wage America: How Employers Are Reshaping Opportunity in the Workplace. New York: Russell Sage Foundation. Arlen, Jennifer, and W. Bentley MacLeod. 2005. “Beyond Master-Servant: A Critique of Vicarious Liability.” In Exploring Tort Law, edited by Stuart Madden. New York: Cambridge University Press, 111–142. Appleton, William C., and Joe Baker. 1984. “The Effect of Unionization on Safety in Bituminous Deep Mines.”

Nickel and Dimed: On (Not) Getting by in America. New York: Holt. Erickcek, George, Susan Houseman, and Arne Kalleberg. 2003. “The Effects of Temporary Services and Contracting Out on Low-Skilled Workers: Evidence from Auto Suppliers, Hospitals, and Public Schools.” In Low Wage America: How Employers Are Reshaping Opportunity in the Workplace, edited by Eileen Appelbaum, Annette Bernhardt, and Richard Murnane. New York: Russell Sage Foundation, 368–406. Erickson, Chris, and Daniel Mitchell. 2007. “Monopsony as a Metaphor for the Emerging Post-union Labor Market.” International Labor Review 146, nos. 3–4: 163–187. Estlund, Cynthia. 1992. “What Do Workers Want? Employee Interests, Public Interests, and Freedom of Expression under the National Labor Relations Act.” University of Pennsylvania Law Review 140, no. 3: 921–1004. ______. 2005.


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The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan

additive manufacturing, Airbnb, AltaVista, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, basic income, bitcoin, blockchain, Burning Man, call centre, collaborative consumption, collaborative economy, collective bargaining, commoditize, corporate social responsibility, cryptocurrency, David Graeber, distributed ledger, employer provided health coverage, Erik Brynjolfsson, Ethereum, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, George Akerlof, gig economy, housing crisis, Howard Rheingold, information asymmetry, Internet of things, inventory management, invisible hand, job automation, job-hopping, Kickstarter, knowledge worker, Kula ring, Lyft, Marc Andreessen, megacity, minimum wage unemployment, moral hazard, moral panic, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, peer-to-peer rental, profit motive, purchasing power parity, race to the bottom, recommendation engine, regulatory arbitrage, rent control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Ross Ulbricht, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart contracts, Snapchat, social software, supply-chain management, TaskRabbit, The Nature of the Firm, total factor productivity, transaction costs, transportation-network company, two-sided market, Uber and Lyft, Uber for X, uber lyft, universal basic income, Zipcar

, CEPS Working Paper No. 142, Princeton, NJ, March 2007, 2. https://www.princeton.edu/ceps/workingpapers/142blinder.pdf. 12. Alan S. Blinder and Alan B. Krueger, Alternative Measures of Offshorability: A Survey Approach, National Bureau of Economic Research Working Paper No. w15287, 2006, http://www.nber.org/papers/w15287. 13. Blinder, How Many U.S. Jobs, 35. 14. The McKinsey study is at http://www.mckinsey.com/insights/business_technology/four_fundamentals_of_workplace_automation. 15. Frank Levy and Richard J. Murnane, The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton, NJ: Princeton University Press, 2004). 16. Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: W.W. Norton, 2014), 9. 17. Ibid., 9–10. 18. Ibid., 10. 19. Ibid., 180. 20. David Card and John E. DiNardo, “Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles,” Journal of Labor Economics 20, 4 (2002): 733–783. 21.

A November 2015 McKinsey and Company study indicates that “as many as 45 percent of the activities individuals are paid to perform can be automated by adapting currently demonstrated technologies.”14 Looking deeper into the future of work, Erik Brynjolfsson and Andrew McAfee in The Second Machine Age argue that although computers have been transforming work, economics, and everyday life for several decades, we have finally reached a pivotal moment—a moment when we are grappling with the “full force” of digital technologies. The Second Machine Age builds on a book by the economists Frank Levy and Richard Murnane about the human–computer tradeoff in the labor market.15 Levy and Murnane examine, in detail, what tasks computers perform better than humans, and what tasks humans perform better than computers. They draw a broad conclusion—that computers have inherent advantages in tasks like rule-based decision making and simple pattern recognition, but digitization makes two kinds of tasks (complex communication and expert thinking) more valuable—and prescribe that humans acquire the skills that enable them to take on jobs involving such tasks.


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The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age by Robert Wachter

"Robert Solow", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, AI winter, Airbnb, Atul Gawande, Captain Sullenberger Hudson, Checklist Manifesto, Chuck Templeton: OpenTable:, Clayton Christensen, collapse of Lehman Brothers, computer age, creative destruction, crowdsourcing, deskilling, disruptive innovation, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Google Glasses, Ignaz Semmelweis: hand washing, Internet of things, job satisfaction, Joseph Schumpeter, Kickstarter, knowledge worker, lifelogging, medical malpractice, medical residency, Menlo Park, minimum viable product, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, peer-to-peer, personalized medicine, pets.com, Productivity paradox, Ralph Nader, RAND corporation, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, Skype, Snapchat, software as a service, Steve Jobs, Steven Levy, the payments system, The Wisdom of Crowds, Thomas Bayes, Toyota Production System, Uber for X, US Airways Flight 1549, Watson beat the top human players on Jeopardy!, Yogi Berra

More important, as recently as a decade ago, some very smart and savvy computer engineers and economists believed that another seemingly intractable problem, building a driverless car, was beyond the reach of modern technology. Just consider the challenges: a kid running into the street after a soccer ball; a texting teenager swerving in the middle lane; a traffic light on the fritz. And the left turn. “Executing a left turn across oncoming traffic,” two highly respected economists, MIT’s Frank Levy and Harvard’s Richard Murnane, wrote in 2004, “involves so many factors that it is hard to imagine the set of rules that can replicate a driver’s behavior.” Yet six years later, Google’s unveiling of its driverless car demonstrated that this “insoluble problem” had been solved. As of April 2014, the Google car had clocked nearly 700,000 miles and been involved in two accidents. One reportedly occurred after a human took over the wheel, and the other when the Google car was rear-ended by, one presumes, another human driver.

Norton, 2014). While the car is an astounding achievement, there still are a few things it cannot do, described in R. Sorokanich, “Six Simple Things Google’s Self-Driving Car Still Can’t Handle,” August 30, 2014, available at http://gizmodo.com/6-simplethings-googles-self-driving-car-still-cant-han-1628040470. 94 “Executing a left turn across oncoming traffic” F. Levy and R. J. Murnane, The New Division of Labor: How Computers Are Creating the Next Job Market (Princeton, NJ: Princeton University Press, 2004). 94 “Just as factory jobs were eliminated” The story of Watson’s defeat of the Jeopardy champions is described in S. Baker, Final Jeopardy: Man vs. Machine and the Quest to Know Everything (New York: Houghton Mifflin Harcourt, 2011). 94 Sean Hogan, vice president for IBM Healthcare Interview of Hogan by the author, July 16, 2014. 94 “I can’t see how that doesn’t happen” Interview of McAfee by the author, August 13, 2014. 95 Hemingway’s observation about how a person goes broke E.


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Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society by Will Hutton

Andrei Shleifer, asset-backed security, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, business cycle, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, diversification, double helix, Edward Glaeser, financial deregulation, financial innovation, financial intermediation, first-past-the-post, floating exchange rates, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, Hyman Minsky, I think there is a world market for maybe five computers, income inequality, inflation targeting, interest rate swap, invisible hand, Isaac Newton, James Dyson, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, liberal capitalism, light touch regulation, Long Term Capital Management, Louis Pasteur, low cost airline, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, mass immigration, means of production, Mikhail Gorbachev, millennium bug, money market fund, moral hazard, moral panic, mortgage debt, Myron Scholes, Neil Kinnock, new economy, Northern Rock, offshore financial centre, open economy, plutocrats, Plutocrats, price discrimination, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, railway mania, random walk, rent-seeking, reserve currency, Richard Thaler, Right to Buy, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, Rory Sutherland, Satyajit Das, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, unpaid internship, value at risk, Vilfredo Pareto, Washington Consensus, wealth creators, working poor, zero-sum game, éminence grise

Porter and Claas van der Linde (1995) ‘Green and Competitive: Ending the Stalemate’, Harvard Business Review, September–October. 57 Joakim Nordqvist (2006) ‘Evaluation of Japan’s Top Runner Programme: Within the Framework of the AID-EE Project’, at http://www.aid-ee.org/index.htm. Chapter Ten: Dismantling the Have-What-I-Hold Society 1 Cabinet Office (2009) Unleashing Aspiration: The Final Report of the Panel on Fair Access to the Professions, HMSO. 2 Frank Levy and Richard Murnane (2004) The New Division of Labor: How Computers Are Creating the Next Job Market, Princeton University Press. See also Maarten Goos and Alan Manning (2007) ‘Lousy and Lovely Jobs: The Rising Polarization of Work in Britain’, Review of Economics and Statistics 89 (1): 118–33. 3 Howard Gardner (2009) Five Minds for the Future, Harvard Business School Press. 4 Arjun Appadurai, ‘The Capacity to Aspire: Culture and the Terms of Recognition’, in Vijayendra Rao and Michael Walton (eds) (2004) Culture and Public Action, Stanford University Press. 5 See his latest work: Amartya Sen (2009) The Idea of Justice, Harvard University Press; see also his (1992) Inequality Reexamined, Oxford University Press. 6 Edmund Phelps (2006) ‘Macroeconomics for a Modern Economy’, Nobel Prize lecture. 7 Tom Clark and Andrew Leicester (2004) ‘Inequality and Two Decades of British Tax and Benefit Reforms’, Fiscal Studies 25 (2): 129–58. 8 Alison Wolf, ‘Education’, in Varun Uberoi, Adam Coutts, Iain Mclean and David Halpern (eds) (2009) Options for a New Britain, Palgrave Macmillan. 9 Tim Horton and James Gregory (2009) The Solidarity Society: Why We Can Afford to End Poverty and How to Do It with Public Support, Fabian Society. 10 Tom MacInnes, Peter Kenway and Anushree Parekh, ‘Monitoring Poverty and Social Exclusion 2009’, report, Joseph Rowntree Foundation. 11 John Hills, Tom Sefton and Kitty Stewart (eds) (2009) Towards a More Equal Society?