Why the Internet is creating more value than jobs

See also: Why the water mill is creating lots more value than jobs C14

Why the steam engine is creating a lot more value than jobs C19

Why electricity is creating lots more value than jobs C20

Because software and the Internet are making it easier to provide more value, more quickly and more cheaply, than ever before. Thus, less jobs needed. Plus more of the jobs that are needed can be done off-shore, or, on-shore but with less office space and commuting, which in turn drives down money that needs to be spent on those sectors as well. Also the increasing popularity of so-called Agile and MVP philosophies is also driving down the cost of testing business ideas and getting to market. And yes, there's an increasing amount of actionable information, quality entertainment and useful functionality available for free on the Internet. So less money (needing to be) spent in those areas, thus less money available for jobs in those areas, for any given unit of product provided. Plus, due to the Internet, an increasing proportion of the revenue that comes into businesses (overall, but most proportionately in the software industries) can be captured by the owners/capitalists/entrepreneurs, rather than labor.

I'm not sure if this is a net win or net lose, overall, for the world. But it's certainly a net win for certain subsets of the population, and a net lose for other subsets. But even for those who it is a net lose, they are not forced to stay in some frozen static configuration or context, there are choices one can make to shift oneself to take better advantage of the new economic landscape, making it more likely to be a net win for them. It may not be easy. But few things in life are easy, and the universe doesn't guarantee anybody a free lunch (outside the more extreme cases of great inherited wealth, etc.)

One thing I'm sure of is that, all other things being equal, we're lucky to be in the field of software and the Internet at a time when this shift is occurring, because we're in a population subset where it can more easily be a net win for us.

Increased leverage of the individual. The information age (post-industrial) doesn't need the same labor inputs to achieve the same wealth creation as before.

While this is great for individuals on the right side of the digital divide, we'll continue to see the impact this will have on societies for some time to come.

Technology makes a lot of manual work unnecessary. But the salaries that are saved are available to be spent on hiring people for other things.

Which is why mechanizing the farm didn't leave 80% unemployment in its wake.

The market for labor is like any other market. If prices are allowed to fluctuate, supply will continuously adjust to meet demand and vice-versa.

But if prices are kept artificially high, there will be a surplus. More workers will try to get the higher wages and jobs that are unprofitable for employers at the high price will not be filled.

You may not like, you may not even want to understand or acknowledge it, but this is how people behave in any market.

This article really speaks to some of the ideas presented by Paul Graham in his essay about the future of startups[1]. Combining ideas from them paints a particularly optimistic picture for the future of the individual. When a student can create and run a business in his spare time, it sort of marks the potential for a shift in the way value is measured. The emphasis on the utility or engagement of a service over strict monetary value could enable our growth going forward to be in quality of experiences rather than GDP (as Nick Szabo pointed out already isn't growing that much in developed nations anyway).

Going forward we could see applications that make it really easy for individuals without direct knowledge of HTML, CSS and a server scripting language to create valuable tools (they do exist know, but not really in a way that enable the right audience to create the right things). These, along with the existing social tools, are the things that could change the way an economy works by cutting out large corporations and creating an entire market of "externalities."

[1] http://www.paulgraham.com/webstartups.html

The US may be stagnating, but China and the other members of the BRICS aren't. The USA needs to find an industry that will grow quickly and large enough to drive its whole economy. The Internet isn't going be that industry any more, as the greatest part of its growth has already happened.

Well-written interesting article, and good links too: e.g. to this site on orbiting data centres:

http://server-sky.com/

"These pessimistic observations of long-term economic growth are in many ways a much needed splash of cold water in the face for the Kurzweilian "The Singularity is Near" crowd, the people who think nearly everything important has been growing exponentially." [emphasis added]

For the "great stagnation" folks, apparently "everything important" is macro and that indeed, in a documentable way has not been growing exponentially. For the singularity folks "everything important" is micro and has been growing exponentially in a documentable way.

If the article had an argument why micro stuff has suddenly stopped mattering, that would one thing. But the discussion here seems to dismissal through mere trick-language.

summary: intellectual property is very different from physical property and inevitably wants to escape into wider world, so called developing world in particular.

that's why we find our thesis that we should be selling higher margin products to developing world and leave cheap stuff to be produced by them broken - they get our knowledge essentially for free, leaving us without manufacturing base and without capability to fund innovation further. and there's nothing we can do about it either, in my opinion.