Race Against The Machine

11Nov11

I’ve been an avid follow of Andrew McAfee’s Blog ever since JP first pointed me in that direction. He’s clearly a man that understands how technology is reshaping how we do business. Whilst I was on holiday a few weeks ago I noticed that he’d published a book along with Erik BrynjolssonRace Against The Machine. The subtitle does a great job:

How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy

The first thing worth noting is that this book has been published only on Kindle, which means it’s bang up to date. I recall seeing data in there from Aug 2011 – only a couple of months old at the time of reading.

The second important point is that it’s short. I got through it in a couple of hours, and I’m not one of those speed readers who can consume an entire novel in the course of a plane ride.

I don’t intend to pick the book apart here, overall I think it’s a great piece of work – perhaps the first thing I’ve come across that does a good job of explaining why the world, its people and our economies are where they are, and how we might use technology to get us somewhere better. What I do want to do is spend some time picking at the recommendations, as I feel this was the weakest area, and that in pursuit of brevity the authors had failed to securely attach many of their recommendations to their main argument. They have 19 specific steps, which I’ll try to tackle in turn:

  1. Invest in education, starting with paying teachers more. I find this hard to disagree with initially. As I grew up teaching was an admirable profession, and my teachers seemed to be well enough off. Something changed along the way – the only guy that wanted to go into teaching on my degree course got the worst grade on the entire course (though he did graduate, which was better than a third of the original intake). We do seem to have ended up in a vicious circle of teaching being undervalued by society leading to lowering opinion of the career… I feel the remedy is likely to be more transformational than throwing money at the problem. We still predominantly use 19th century teaching methods, as brilliantly illustrated in this video of Sir Ken Robinson speaking at the RSA, and that’s what really needs to change.
  2. Hold teachers accountable for performance (by eliminating tenure). Since reading the book I finally got around to watching Waiting for “Superman”, and it seems like tenure (and the Unions that keep it in place) really is a huge problem for the US education system. Of course we don’t have tenure in the UK, and it still feels like education is going down the toilet. Attempts by succesive education secretaries to make teachers more accountable seem to have done nothing more than introduce beureacracy, so this topic needs to be approached with care.
  3. Separate student instruction from testing and certification. I think this one is aimed at the disastrous no child left behind act and the pernicious unintended consequences it’s had on education in the US by stripping teachers of discretion and putting in place a system that’s there to be gamed.
  4. Keep K-12 students in classrooms longer. Again a very US centric prescription. Unless the race against (or with) the machine is a zero sum game for the planet then I’d have liked to see global recommendations. What’s the right number of hours for kids to spend in classrooms, and where’s the source data for such a recommendation?
  5. Skilled immigrant visas. Immigration law is a mess just about everywhere, and usually a political/media hot potato. The public debate is all about keeping the wrong people out rather than allowing the right people in – that’s what needs to change first. The EU experiment shows that a (somewhat) borderless labour market works at an individual and state economic level, but the whole situation is bereft with envy and xenophobia.
  6. Teach entrepreneurship throughout higher education. Who and how? Teachers aren’t entrepreneurs. In most cases even business school teachers aren’t entrepreneurs. Getting this right means schools engaging in a new way with (local) businesses. I was fortunate enough to take part in such a program whilst at 6th form college (=12th grade) but it ran in the margins rather than the mainstream (during a holiday if I recall). I’d go so far as to say that entrepreneurship might be the wrong target here – how about some of the basic skills needed to run a business – book keeping, marketing, CRM etc.?
  7. Founders visas. I don’t see the difference between a founder and a skilled immigrant. So why repeat the point? My friend Kirk has also gone to some efforts to point out the flaws in any plan aimed at startups.
  8. Templates for new businesses. Is starting a business a knowledge management problem that can be resolved by codification of implicit to explicit, and greater uniformity? It’s probably worth looking at the agencies involved and the incentive structure around their activities – essentially who amongst the lawyers, bank managers, accountants etc. has their snout in the trough as part of making this difficult right now?
  9. Lower government barriers to business creation. Another snout in the trough problem, only this time it’s public and elected officials. The issue doesn’t stop at business creation either – in many cases established firms use legislation to create barriers to entry to deal with the problem of disruption from below. The authors recognise the political and economic complexities, but offer no explanation of how to deal with them. To resolve this one we need to recognise that it’s not just the 3rd world that’s riddled with corruption – it’s endemic – just dressed up more nicely as ‘lobbying’ and ‘political donations’. The founding fathers in the US recognised the need to separate church and state; we must now do something to separate state (or at least the political structure of state) and money. Politics should be a calling not a career.
  10. Investment in infrastructure. It does appal me whenever I visit the US how shoddy the basic infrastructure looks and feels, but things seem to work despite that. Also roads and railroads are the infrastructure of the industrial age rather than the information age. Would a comparatively smaller investment in say fibre to the doorstep be more useful than bigger roads with fewer pot holes? I’d suggest a look at data from S Korea might provide some illumination here.
  11. Increase funding for basic research. Another one where I’d like to see some evidence. Is China pulling ahead because their government does more of this? Has the level of basic research worldwide been able to find a different level because of the open and collaborative nature of the Internet? How do we know that present levels of investment are wrong?
  12. Keep hiring and firing as easy as possible. Why are the authors even talking about a system grounded in redundant concepts like a job for life? This one gets answered at 14.
  13. Make it more attractive to hire people than buy technology. This feels like a pure Luddite argument. The race against the machine will not be won by making the machine pay higher taxes.
  14. Decouple benefits from jobs. Again, evidence from countries that run different systems could be used to construct an argument for optimisation. Denmark and the Netherlands are referenced here, but what are they doing, and what has it accomplished? If the US sticks with its approach to health insurance then why should big firms be able to negotiate a better deal than individuals? Isn’t it dumb of insurers to allow employees of big firms to be lumped together rather than considering the risks of an individual? Or is their some dumb concept of fairness at work here where the deck is allowed to be stacked one way but not another?
  15. Don’t rush to regulate new network businesses. It would be interesting here to have comparison of how different countries regulated the Internet as it emerged, and the effect that this had on associated economic activity (both pure play net businesses and other businesses supported by the Internet).
  16. Eliminate home mortgage subsidy. The tip of the iceberg of a bigger problem where cheap and easy debt collided with limited capital. The trick is perhaps to find an investment vehicle that can be indexed against real estate markets for those who want to have their cake (accumulation of capital in property) and eat it (rent wherever they wish to go). There is probably a point to be made here on sales tax for property transactions also.
  17. Reduce subsidies to financial services. The sector was attracting too many of the brightest and best long before the realities of too big to fail were demonstrated or understood. The issue we face at the moment is that the smart people within financial services are doing a better job of gaming the system than those outside.
  18. Reform the patent system. I couldn’t agree more with this one. Software patents are a disaster, and we seem to have a fundamental mismatch between the duration of patents (to suit the pharma industry) and the lifetime of technology in other sectors. The only winners seem to be lawyers, but then the US is run by a lawyer elite.
  19. Shorten copyright and increase flexibility of fair use. This is particularly true for software – why should stuff that’s obsolete (e.g. Windows XP) be protected decades past the end of its useful life, and who are the rent seekers that think this is a good idea. Almost nothing being created today that isn’t explicitly put into the public domain or creative commons will fall into the public domain within our lifetimes.
As I read back through that lot (and I seem to have written more than the original authors did) the repeated theme is evidence, evidence, evidence. It’s all out there, so I hope that Andrew and Erik return with another episode and stronger data foundations to build their arguments on.


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