Erik Brynjolfsson and Andrew McAfee, “Thriving in the Automated Economy,” The Futurist, MarchApril 2012, 27-31. Available online at http://ebusiness.mit.edu/erik/MA2012_Brynjolfsson_McAfee.pdf :RUOG)XWXUH6RFLHW\:RRGPRQW$YHQXH6XLWH%HWKHVGD0'86$ZZZZIVRUJ$OOULJKWVUHVHUYHG _____________________________________________________________________________________ Thriving in the Automated Economy By Erik Brynjolfsson and Andrew McAfee LISA MATHIAS T KHOHJHQGRI-RKQ+HQU\EHFDPH SRSXODU LQ WKH ODWH QLQHWHHQWK FHQWXU\ DV WKH HIIHFWV RI WKH VWHDPSRZHUHG,QGXVWULDO5HYR OXWLRQ ZHUH IHOW LQ HYHU\ LQGXVWU\ DQGMREWKDWUHOLHGKHDYLO\RQKXPDQ VWUHQJWK ,W·V WKH VWRU\ RIDFRQWHVW EHWZHHQ D VWHDP GULOO DQG -RKQ +HQU\DSRZHUIXOUDLOURDGZRUNHU WRVHHZKLFKRIWKHWZRFRXOGERUH WKH ORQJHU KROH LQWR VROLG URFN +HQU\ZLQVWKLVUDFHDJDLQVWWKHPD FKLQHEXWORVHVKLVOLIHKLVH[HUWLRQV FDXVH KLV KHDUW WR EXUVW +XPDQV QHYHUGLUHFWO\FKDOOHQJHGWKHVWHDP GULOODJDLQ 7KLVOHJHQGUHIOHFWHGSRSXODUXQ HDVHDWWKHWLPHDERXWWKHSRWHQWLDO IRUWHFKQRORJ\WRPDNHKXPDQODERU REVROHWH%XWWKLVLVQRWDWDOOZKDW KDSSHQHGDVWKH,QGXVWULDO5HYROX WLRQSURJUHVVHG$VVWHDPSRZHUDG YDQFHG DQG VSUHDG WKURXJKRXW LQ GXVWU\PRUHKXPDQZRUNHUVZHUH QHHGHG QRW IHZHU 7KH\ ZHUH QHHGHG QRW IRU WKHLU UDZ SK\VLFDO VWUHQJWKDVZDVWKHFDVHZLWK-RKQ +HQU\EXWLQVWHDGIRURWKHUKXPDQ VNLOOVSK\VLFDORQHVOLNHORFRPRWLRQ GH[WHULW\FRRUGLQDWLRQDQGSHUFHS WLRQDQGPHQWDORQHVOLNHFRPPXQL FDWLRQ SDWWHUQ PDWFKLQJ DQG FUH DWLYLW\ 7KURXJKRXWWKH,QGXVWULDO5HYROX WLRQ HFRQRPLVWV KDYH UHDVVXUHG ZRUNHUVDQGWKHSXEOLFWKDWQHZMREV ZRXOGEHFUHDWHGHYHQDVROGRQHV ZHUHHOLPLQDWHG)RUPRUHWKDQ Two management experts show why labor’s race against automation will only be won if we partner with our machines. 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Invest in education. 6WDUW E\ VLPSO\SD\LQJWHDFKHUVPRUHVRWKDW PRUH RI WKH EHVW DQG WKH EULJKWHVW VLJQXSIRUWKLVSURIHVVLRQDVWKH\ GRLQPDQ\RWKHUQDWLRQV$PHULFDQ WHDFKHUVPDNHOHVVWKDQWKHDY HUDJHFROOHJHJUDGXDWH7HDFKHUVDUH VRPHRI$PHULFD·VPRVWLPSRUWDQW ZHDOWKFUHDWRUV,QFUHDVLQJWKHTXDQ WLW\DQGTXDOLW\RIVNLOOHGODERUSUR YLGHVDGRXEOHZLQE\ERRVWLQJHFR 30THE FUTURIST0DUFK$SULOwww.wfs.org QRPLFJURZWKDQGUHGXFLQJLQFRPH LQHTXDOLW\ 2. Hold teachers accountable for performance by, for example, eliminating tenure.7KLVVKRXOGEHSDUWRI WKHEDUJDLQIRUKLJKHUSD\ 3. Separate student instruction from testing and certification.)RFXV VFKRROLQJ PRUH RQ YHULILDEOH RXW FRPHVDQGPHDVXUDEOHSHUIRUPDQFH DQGOHVVRQVLJQDOLQJWLPHHIIRUWRU SUHVWLJH 4. Keep K-12 students in classrooms for more hours.2QHUHDVRQ $PHULFDQVWXGHQWVODJEHKLQGLQWHU QDWLRQDO FRPSHWLWRUV LV WKDW WKH\ VLPSO\UHFHLYHDERXWRQHPRQWKOHVV LQVWUXFWLRQSHU\HDU 5. Increase the number of skilled workers in the United States by encouraging skilled immigrants.2IIHU JUHHQFDUGVWRIRUHLJQVWXGHQWVZKHQ WKH\FRPSOHWHDGYDQFHGGHJUHHVHV SHFLDOO\LQVFLHQFHDQGHQJLQHHULQJ VXEMHFWV DW DSSURYHG XQLYHUVLWLHV ([SDQG WKH +% YLVD SURJUDP 6NLOOHG ZRUNHUV LQ $PHULFD RIWHQ FUHDWH PRUH YDOXH ZKHQ ZRUNLQJ ZLWKRWKHUVNLOOHGZRUNHUV%ULQJLQJ WKHP WRJHWKHU FDQ LQFUHDVH ZRUOG ZLGHLQQRYDWLRQDQGJURZWK Entrepreneurship 6. Teach entrepreneurship as a skillQRWMXVWLQHOLWHEXVLQHVVVFKRROV EXW WKURXJKRXW KLJKHU HGXFDWLRQ )RVWHUDEURDGHUFODVVRIPLGWHFK PLGGOHFODVVHQWUHSUHQHXUVE\WUDLQ LQJ WKHP LQ WKH IXQGDPHQWDOV RI EXVLQHVVFUHDWLRQDQGPDQDJHPHQW 7. Boost entrepreneurship in America by creating a category of founders’ visas for entrepreneurs, OLNHWKRVHLQ&DQDGDDQGRWKHUFRXQ WULHV 8. Create clearinghouses and databases to facilitate the creation and dissemination of templates for new businesses.$VHWRIVWDQGDUG L]HG SDFNDJHV IRU VWDUWXSV FDQ VPRRWKWKHSDWKIRUQHZHQWUHSUH QHXUVLQPDQ\LQGXVWULHV7KHVHFDQ UDQJHIURPIUDQFKLVHRSSRUWXQLWLHV WRGLJLWDO´FRRNERRNVµWKDWSURYLGH WKHVNHOHWRQVWUXFWXUHIRUDQRSHUD WLRQ-REWUDLQLQJVKRXOGEHVXSSOH PHQWHGZLWKHQWUHSUHQHXUVKLSJXLG DQFHDVWKHQDWXUHRIZRUNHYROYHV 9. Aggressively lower the governmental barriers to business cre- ation.,QWRRPDQ\LQGXVWULHVHODER UDWHUHJXODWRU\DSSURYDOVDUHQHHGHG IURPPXOWLSOHDJHQFLHVDWPXOWLSOH OHYHOVRIJRYHUQPHQW7KHVHWRRRI WHQKDYHWKHLPSOLFLWJRDORISUHVHUY LQJUHQWVRIH[LVWLQJEXVLQHVVRZQHUV DW WKH H[SHQVH RI QHZ EXVLQHVVHV DQGWKHLUHPSOR\HHV Investment 10. Invest to upgrade the country’s communications and transportation infrastructure.7KH$PHULFDQ 6RFLHW\ RI &LYLO (QJLQHHUV JLYHV D JUDGHRI'WRWKHRYHUDOOLQIUDVWUXF WXUHLQWKH8QLWHG6WDWHVDWSUHVHQW ,PSURYLQJLWZLOOEULQJSURGXFWLYLW\ EHQHILWVE\IDFLOLWDWLQJIORZDQGPL[ LQJLGHDVSHRSOHDQGWHFKQRORJLHV ,WZLOODOVRSXWPDQ\SHRSOHWRZRUN GLUHFWO\<RXGRQ·WKDYHWREHDQDU GHQW .H\QHVLDQ WR EHOLHYH WKDW WKH EHVWWLPHWRPDNHWKHVHLQYHVWPHQWV LVZKHQWKHUHLVSOHQW\RIVODFNLQWKH ODERUPDUNHW 11. Increase funding for basic research and for preeminent government R&D institutions,LQFOXGLQJ WKH1DWLRQDO6FLHQFH)RXQGDWLRQWKH 1DWLRQDO ,QVWLWXWHV RI +HDOWK DQG WKH 'HIHQVH $GYDQFHG 5HVHDUFK 3URMHFWV$JHQF\'$53$ZLWKDUH QHZHG IRFXV RQ LQWDQJLEOH DVVHWV DQGEXVLQHVVLQQRYDWLRQ/LNHRWKHU IRUPVRIEDVLFUHVHDUFKWKHVHLQYHVW PHQWVDUHRIWHQXQGHUIXQGHGE\SUL YDWHLQYHVWRUVEHFDXVHRIVSLOORYHUD EHQHILW WKDW DFFUXHV WR VRPHRQH RU VRPHFRPSDQ\WKDW·VIDUDZD\IURP WKHRULJLQDOLQQRYDWRU Laws, Regulations, and Taxes 12. Preserve the relative flexibility of American labor markets by resisting efforts to regulate hiring and firing. %DQQLQJ OD\RIIV SDUDGR[LFDOO\ FDQORZHUHPSOR\PHQWE\PDNLQJLW ULVNLHU IRUILUPVWRKLUH LQ WKHILUVW SODFHHVSHFLDOO\LIWKH\DUHH[SHUL PHQWLQJZLWKQHZSURGXFWVRUEXVL QHVVPRGHOV 13. Make it comparatively more attractive to hire a person than to buy more technology through incentives, rather than regulation. 7KLV FDQEHGRQHE\DPRQJRWKHUWKLQJV GHFUHDVLQJ HPSOR\HU SD\UROO WD[HV DQG SURYLGLQJ VXEVLGLHV RU WD[ EUHDNV IRU HPSOR\LQJ SHRSOH ZKR KDYH EHHQ RXW RI ZRUN IRU D ORQJ WLPH7D[HVRQFRQJHVWLRQDQGSROOX WLRQFDQPRUHWKDQPDNHXSIRUWKH UHGXFHGODERUWD[HV 14. Decouple benefits from jobs to increase flexibility and dynamism. 7\LQJ KHDOWK FDUH DQG RWKHU PDQGDWHGEHQHILWVWRMREVPDNHVLW KDUGHU IRU SHRSOH WR PRYH WR QHZ MREV RU WR TXLW DQG VWDUW QHZ EXVL QHVVHV)RULQVWDQFHPDQ\DSRWHQ WLDOHQWUHSUHQHXUKDVEHHQEORFNHG E\WKHQHHGWRPDLQWDLQKHDOWKLQVXU DQFH'HQPDUNDQGWKH1HWKHUODQGV KDYHOHGWKHZD\KHUH 15. Don’t rush to regulate new network businesses.6RPHREVHUY HUVIHHOWKDW´FURZGVRXUFLQJµEXVL QHVVHV OLNH $PD]RQ·V 0HFKDQLFDO 7XUNZKLFKDOORZVDJOREDOSRRORI ZRUNHUVWRELGRQOLQHIRUWHPSRUDU\ MREVRUWDVNVH[SORLWWKHLUPHPEHUV ZKRVKRXOGWKHUHIRUHEHEHWWHUSUR WHFWHG +RZHYHU HVSHFLDOO\ LQ WKLV HDUO\H[SHULPHQWDOSHULRGWKHGH YHORSHUV RI WKHVH LQQRYDWLYH SODW IRUPV VKRXOG EH JLYHQ PD[LPXP IUHHGRP WR LQQRYDWH DQG H[SHUL PHQW DQG WKHLU PHPEHUV·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³WKDWWDVNLVLQKHUHQWO\ LPSRVVLEOH,QVWHDGZHVHHNWRLQLWL DWHDFRQYHUVDWLRQ7KDWFRQYHUVDWLRQ ZLOOEHVXFFHVVIXOLIZHDFFXUDWHO\GL DJQRVHWKHPLVPDWFKEHWZHHQDFFHO HUDWLQJWHFKQRORJLHVDQGVWDJQDQWRU JDQL]DWLRQVDQGVNLOOV 6 X F F H V V I X O H F R Q R P L H V L Q W K H WZHQW\ILUVW FHQWXU\ ZLOO EH WKRVH WKDWGHYHORSWKHEHVWZD\VWRIRVWHU RUJDQL]DWLRQDOLQQRYDWLRQDQGVNLOO GHYHORSPHQW DQG ZH LQYLWH RXU UH D G H U V W R F R Q W U L E X W H W R W K D W DJHQGD ❑ 16. Eliminate or reduce the massive home mortgage subsidy.7KLV FRVWVPRUHWKDQELOOLRQSHU\HDU ZKLFK ZRXOG GR PXFK PRUH IRU JURZWKLIDOORFDWHGWRUHVHDUFKRUHG XFDWLRQ:KLOHKRPHRZQHUVKLSKDV PDQ\ODXGDEOHEHQHILWVLWOLNHO\UH GXFHVODERUPRELOLW\DQGHFRQRPLF IOH[LELOLW\ZKLFKFRQIOLFWVZLWKWKH HFRQRP\·VLQFUHDVHGQHHGIRUIOH[L ELOLW\ 17. Reduce the large implicit and explicit subsidies to financial services.7KLVVHFWRUDWWUDFWVDGLVSUR SRUWLRQDWH QXPEHU RI WKH EHVW DQG WKH EULJKWHVW PLQGV DQG WHFKQROR JLHVLQSDUWEHFDXVHWKHJRYHUQPHQW HIIHFWLYHO\ JXDUDQWHHV ´WRR ELJ WR IDLOµLQVWLWXWLRQV 18. Reform the patent system.1RW RQO\GRHVLWWDNH\HDUVWRLVVXHJRRG SDWHQWV GXH WR WKH EDFNORJ DQG VKRUWDJHRITXDOLILHGH[DPLQHUVEXW WRRPDQ\ORZTXDOLW\SDWHQWVDUHLV VXHGFORJJLQJRXUFRXUWV$VDUH VXOWSDWHQWWUROOVDUHFKLOOLQJLQQRYD WLRQUDWKHUWKDQHQFRXUDJLQJLW 19. Shorten, rather than lengthen, copyright periods and increase the flexibility of fair use.&RS\ULJKWFRY Brynjolfsson McAfee About the Authors Erik Brynjolfsson is a professor at the MIT Sloan School of Management, director of the MIT Center for Digital Business, chairman of the Sloan Management Review, a research associate at the National Bureau of Economic Research, and co-author of Wired for Innovation: How IT Is Reshaping the Economy. Andrew McAfee is a principal research scientist and associate director at the MIT Center for Digital Business at the Sloan School of Management. He is the author of Enterprise 2.0: New Collaborative Tools for Your Organization’s Toughest Challenges. This article was excerpted with permission from their book Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy (Digital Frontier Press, 2011). Purchase the book via Amazon. www.wfs.orgTHE FUTURIST0DUFK$SULO31 McKinsey Global Institute, “The world at work: Jobs, pay, and skills for 3.5 billion people,” June 2012, 1-12. Available online at http://www.mckinsey.com/Insights/MGI/Research/Labor_Markets/The_world_at_work ______________________________________________________________________________________ Philip Auerswald, “To Innovate, Play with Pieces Off the Game Board,” HBR Blog Network, June 11, 2012. Available online at: http://blogs.hbr.org/cs/2012/06/to_innovate_play_with_pieces_o.html To Innovate, Play with Pieces Off the Game Board Think back to the last time you played chess with a first-grader. (Never? Shame!) You'll recall the almost overwhelming temptation the kid feels to play with the pieces off the board. Firstgraders can learn the rules and make appropriate moves on the board, but they aren't so ready as grownups to give up on the pieces that land on the sidelines. In fact, off the board, those pieces can be more interesting. Kings can strut about. Knights can whinny and gallop. As adults we might smile at such imaginative play, but we don't tend to encourage it. We'd rather see the focus on the strategic use of the relevant assets and on the kinds of moves that could win the game. To a kid's mind, that's thinking too narrowly. However huge the number is of possible strategic combinations and re-combinations on the chessboard, it is nothing compared with the number and variety of moves off the board. I thought about all this when I heard Karim Khoja's story. (It is one that I tell in my book, The Coming Prosperity ) When he started building the mobile phone company Roshan in 2003, he faced some singular challenges. Why? Because Roshan is in Afghanistan. Seventy percent of the people in Afghanistan are illiterate. So when Roshan advertised that it was hiring, ten thousand people responded, but few had even the most rudimentary qualifications. You could say they were all pieces off the game board of the global economy. Khoja recalls his chief technology officer, Eric Chapman, announcing a week into the search that they were going to have to choose their engineers in a different way. Sounding totally exasperated, he continued: "If they can open up a PC, switch it on, and speak English, we're going to hire them." Four million subscribers later, Khoja was running the largest company in Afghanistan and still marveling: "Those were our engineers." The key was Roshan's sustained commitment to on-the-job training of Afghans. Khoja continues: "Today when you come to Roshan, you come to our network control center, you come to our call center, you will find not one single expatriate. It is those sixteen engineers we chose—the ones who could speak English and start up a PC—that today run a quarter-of-a-billion-dollar network nationwide." You may or may not be planning to start a company in Afghanistan. But frontier spaces are everywhere: They are the vast expanses off the board. They are the places where the rules you've learned along the way don't necessarily apply, and might only prevent your most valuable moves. Far from Aghanistan, in the USA, the world of work off the game board is becoming an increasingly lively place to be. A new generation entering the workforce is experiencing the harsh reality that there are fewer and fewer opportunities to play—much less succeed—as pieces on the 20th century's game boards. (Wasn't the most popular one Monopoly®?) They join a large number of game pieces that have been removed from the board in the course of play during the past decade—or that, Toy Story-like, simply got up and walked. For one reason or another, many of the most capable and determined players in the economy are now playing off the board, and yet not feeling on the sidelines. Truly game-changing institutional innovations are unlikely to come about from internalizing the rules and making the moves that allowed others to win. If the game board represents existing business models, the most promising pathway to disruptive innovation is to look around for underutilized assets—those game pieces off the board—and to configure them for success in a world of unbounded possibilities. This notion that innovation happens when people can ignore business-as-usual rules might remind you of the value of a "skunk works"—a team set apart from a larger organization and given license to work on its own terms. The protoypical Skunk Works was Lockheed Martin's Advanced Development Projects (ADP) unit, a group characterized by autonomy, secrecy, and an elite identity. Its unconventional approach not only yielded the design of the U-2 spy plane and other famed aircraft, it inspired hundreds of other companies to create, or at least to tolerate the creation of, similarly (un)structured innovation units. But the new version of playing off the game board goes even further. It isn't hidden in the cracks of a massive corporate hierarchy; it's outside the hierarchy entirely, in the open space. When it's corporate sponsored, it might look like Microsoft's Garage, where employees go to pursue their passions even when those passions don't connect with Their Work. They're spotting intriguing, leftover pieces from the standard, rule-bound game and finding ways to play with them according to ideas of their own. Today, in contrast with the 1950s, companies are creating or joining such spaces only partly because they hope that the new games their employees invent there will result in new product and service lines. They also recognize that providing employees with opportunities to play games off the board is becoming essential to the recruitment and retention of top talent. Chances are good that in your organization, too, the people who represent your best future are playing with the pieces off the game board. Don't just encourage them. Join them. Tim Kreider, “The ‘Busy’ Trap,” The Opinionator, June 30, 2012. Available online at http://opinionator.blogs.nytimes.com/2012/06/30/the-busy-trap The ‘Busy’ Trap If you live in America in the 21st century you've probably had to listen to a lot of people tell you how busy they are. It's become the default response when you ask anyone how they're doing: "Busy!" "So busy." "Crazy busy." It is, pretty obviously, a boast disguised as a complaint. And the stock response is a kind of congratulation: "That's a good problem to have," or "Better than the opposite." Notice it isn't generally people pulling back-to-back shifts in the I.C.U. or commuting by bus to three minimum-wage jobs who tell you how busy they are; what those people are is not busy but tired. Exhausted. Dead on their feet. It's almost always people whose lamented busyness is purely self-imposed: work and obligations they've taken on voluntarily, classes and activities they've "encouraged" their kids to participate in. They're busy because of their own ambition or drive or anxiety, because they're addicted to busyness and dread what they might have to face in its absence. Almost everyone I know is busy. They feel anxious and guilty when they aren't either working or doing something to promote their work. They schedule in time with friends the way students with 4.0 G.P.A.'s make sure to sign up for community service because it looks good on their college applications. I recently wrote a friend to ask if he wanted to do something this week, and he answered that he didn't have a lot of time but if something was going on to let him know and maybe he could ditch work for a few hours. I wanted to clarify that my question had not been a preliminary heads-up to some future invitation; this was the invitation. But his busyness was like some vast churning noise through which he was shouting out at me, and I gave up trying to shout back over it. Even children are busy now, scheduled down to the half-hour with classes and extracurricular activities. They come home at the end of the day as tired as grown-ups. I was a member of the latchkey generation and had three hours of totally unstructured, largely unsupervised time every afternoon, time I used to do everything from surfing the World Book Encyclopedia to making animated films to getting together with friends in the woods to chuck dirt clods directly into one another's eyes, all of which provided me with important skills and insights that remain valuable to this day. Those free hours became the model for how I wanted to live the rest of my life. The present hysteria is not a necessary or inevitable condition of life; it's something we've chosen, if only by our acquiescence to it. Not long ago I Skyped with a friend who was driven out of the city by high rent and now has an artist's residency in a small town in the south of France. She described herself as happy and relaxed for the first time in years. She still gets her work done, but it doesn't consume her entire day and brain. She says it feels like college - she has a big circle of friends who all go out to the cafe together every night. She has a boyfriend again. (She once ruefully summarized dating in New York: "Everyone's too busy and everyone thinks they can do better.") What she had mistakenly assumed was her personality - driven, cranky, anxious and sad - turned out to be a deformative effect of her environment. It's not as if any of us wants to live like this, any more than any one person wants to be part of a traffic jam or stadium trampling or the hierarchy of cruelty in high school - it's something we collectively force one another to do. Busyness serves as a kind of existential reassurance, a hedge against emptiness; obviously your life cannot possibly be silly or trivial or meaningless if you are so busy, completely booked, in demand every hour of the day. I once knew a woman who interned at a magazine where she wasn't allowed to take lunch hours out, lest she be urgently needed for some reason. This was an entertainment magazine whose raison d'être was obviated when "menu" buttons appeared on remotes, so it's hard to see this pretense of indispensability as anything other than a form of institutional self-delusion. More and more people in this country no longer make or do anything tangible; if your job wasn't performed by a cat or a boa constrictor in a Richard Scarry book I'm not sure I believe it's necessary. I can't help but wonder whether all this histrionic exhaustion isn't a way of covering up the fact that most of what we do doesn't matter. I am not busy. I am the laziest ambitious person I know. Like most writers, I feel like a reprobate who does not deserve to live on any day that I do not write, but I also feel that four or five hours is enough to earn my stay on the planet for one more day. On the best ordinary days of my life, I write in the morning, go for a long bike ride and run errands in the afternoon, and in the evening I see friends, read or watch a movie. This, it seems to me, is a sane and pleasant pace for a day. And if you call me up and ask whether I won't maybe blow off work and check out the new American Wing at the Met or ogle girls in Central Park or just drink chilled pink minty cocktails all day long, I will say, what time? But just in the last few months, I've insidiously started, because of professional obligations, to become busy. For the first time I was able to tell people, with a straight face, that I was "too busy" to do this or that thing they wanted me to do. I could see why people enjoy this complaint; it makes you feel important, sought-after and put-upon. Except that I hate actually being busy. Every morning my in-box was full of e-mails asking me to do things I did not want to do or presenting me with problems that I now had to solve. It got more and more intolerable until finally I fled town to the Undisclosed Location from which I'm writing this. Here I am largely unmolested by obligations. There is no TV. To check e-mail I have to drive to the library. I go a week at a time without seeing anyone I know. I've remembered about buttercups, stink bugs and the stars. I read. And I'm finally getting some real writing done for the first time in months. It's hard to find anything to say about life without immersing yourself in the world, but it's also just about impossible to figure out what it might be, or how best to say it, without getting the hell out of it again. Idleness is not just a vacation, an indulgence or a vice; it is as indispensable to the brain as vitamin D is to the body, and deprived of it we suffer a mental affliction as disfiguring as rickets. The space and quiet that idleness provides is a necessary condition for standing back from life and seeing it whole, for making unexpected connections and waiting for the wild summer lightning strikes of inspiration - it is, paradoxically, necessary to getting any work done. "Idle dreaming is often of the essence of what we do," wrote Thomas Pynchon in his essay on sloth. Archimedes' "Eureka" in the bath, Newton's apple, Jekyll & Hyde and the benzene ring: history is full of stories of inspirations that come in idle moments and dreams. It almost makes you wonder whether loafers, goldbricks and no-accounts aren't responsible for more of the world's great ideas, inventions and masterpieces than the hardworking. "The goal of the future is full unemployment, so we can play. That's why we have to destroy the present politico-economic system." This may sound like the pronouncement of some bongsmoking anarchist, but it was actually Arthur C. Clarke, who found time between scuba diving and pinball games to write "Childhood's End" and think up communications satellites. My old colleague Ted Rall recently wrote a column proposing that we divorce income from work and give each citizen a guaranteed paycheck, which sounds like the kind of lunatic notion that'll be considered a basic human right in about a century, like abolition, universal suffrage and eighthour workdays. The Puritans turned work into a virtue, evidently forgetting that God invented it as a punishment. Perhaps the world would soon slide to ruin if everyone behaved as I do. But I would suggest that an ideal human life lies somewhere between my own defiant indolence and the rest of the world's endless frenetic hustle. My role is just to be a bad influence, the kid standing outside the classroom window making faces at you at your desk, urging you to just this once make some excuse and get out of there, come outside and play. My own resolute idleness has mostly been a luxury rather than a virtue, but I did make a conscious decision, a long time ago, to choose time over money, since I've always understood that the best investment of my limited time on earth was to spend it with people I love. I suppose it's possible I'll lie on my deathbed regretting that I didn't work harder and say everything I had to say, but I think what I'll really wish is that I could have one more beer with Chris, another long talk with Megan, one last good hard laugh with Boyd. Life is too short to be busy. Paul Krugman, “Degrees and Dollars,” New York Times, March 6, 2011. Available online at http://www.nytimes.com/2011/03/07/opinion/07krugman.html Degrees and Dollars It is a truth universally acknowledged that education is the key to economic success. Everyone knows that the jobs of the future will require ever higher levels of skill. That’s why, in an appearance Friday with former Florida Gov. Jeb Bush, President Obama declared that “If we want more good news on the jobs front then we’ve got to make more investments in education.” But what everyone knows is wrong. The day after the Obama-Bush event, The Times published an article about the growing use of software to perform legal research. Computers, it turns out, can quickly analyze millions of documents, cheaply performing a task that used to require armies of lawyers and paralegals. In this case, then, technological progress is actually reducing the demand for highly educated workers. And legal research isn’t an isolated example. As the article points out, software has also been replacing engineers in such tasks as chip design. More broadly, the idea that modern technology eliminates only menial jobs, that well-educated workers are clear winners, may dominate popular discussion, but it’s actually decades out of date. The fact is that since 1990 or so the U.S. job market has been characterized not by a general rise in the demand for skill, but by “hollowing out”: both high-wage and low-wage employment have grown rapidly, but medium-wage jobs — the kinds of jobs we count on to support a strong middle class — have lagged behind. And the hole in the middle has been getting wider: many of the high-wage occupations that grew rapidly in the 1990s have seen much slower growth recently, even as growth in low-wage employment has accelerated. Why is this happening? The belief that education is becoming ever more important rests on the plausible-sounding notion that advances in technology increase job opportunities for those who work with information — loosely speaking, that computers help those who work with their minds, while hurting those who work with their hands. Some years ago, however, the economists David Autor, Frank Levy and Richard Murnane argued that this was the wrong way to think about it. Computers, they pointed out, excel at routine tasks, “cognitive and manual tasks that can be accomplished by following explicit rules.” Therefore, any routine task — a category that includes many white-collar, nonmanual jobs — is in the firing line. Conversely, jobs that can’t be carried out by following explicit rules — a category that includes many kinds of manual labor, from truck drivers to janitors — will tend to grow even in the face of technological progress. And here’s the thing: Most of the manual labor still being done in our economy seems to be of the kind that’s hard to automate. Notably, with production workers in manufacturing down to about 6 percent of U.S. employment, there aren’t many assembly-line jobs left to lose. Meanwhile, quite a lot of white-collar work currently carried out by well-educated, relatively well-paid workers may soon be computerized. Roombas are cute, but robot janitors are a long way off; computerized legal research and computer-aided medical diagnosis are already here. And then there’s globalization. Once, only manufacturing workers needed to worry about competition from overseas, but the combination of computers and telecommunications has made it possible to provide many services at long range. And research by my Princeton colleagues Alan Blinder and Alan Krueger suggests that high-wage jobs performed by highly educated workers are, if anything, more “offshorable” than jobs done by low-paid, less-educated workers. If they’re right, growing international trade in services will further hollow out the U.S. job market. David Bornstein, “Open Education for a Global Economy,” The Opinionator, July 11, 2012. Available at http://opinionator.blogs.nytimes.com/2012/07/11/open-education-for-a-globaleconomy/ Open Education for a Global Economy If you or your kids have taken an online lesson at the Khan Academy (3,200 video lessons, 168 million views), been enlightened by a TED Talk (1,300 talks, 800 million views), watched a videotaped academic lecture (Academic Earth, Open Courseware Consortium, Open Culture), enrolled in a MOOC (Massive Open Online Course, now being offered by companies like Udacity and a growing list of universities, including M.I.T., Harvard and Stanford), or simply learned to play guitar, paint a landscape or make a soufflé via YouTube - then you know that the distribution channels of education have changed - and that the future of learning is free and open. This is good news for everyone, but it is particularly good for the vast number of people around the world whose job prospects are constrained by their skill levels and who lack the resources to upgrade them through conventional training. It's a problem that a company based in Ireland called ALISON - Advanced Learning Interactive Systems Online - is helping to address with a creative model. ALISON provides free online interactive education to help people acquire basic workplace skills. It's not a megasite. It has a million registered learners, the bulk of whom live in the United States, the United Kingdom, India, Malaysia, the Philippines, Nigeria and the Middle East, where ALISON has 200,000 students. It is adding 50,000 learners each month, but the kinds of services it offers are likely to proliferate in the coming years. To understand why, we only have to think back to last week, when the big news was the release of the June jobs report, which found that the unemployment rate had stalled disappointingly at 8.2 percent. As always, the story behind that number is more noteworthy than the political spin it gets. According to the Department of Labor, the unemployment rate for people in "management, business and financial operations" is nowhere near 8.2 percent; it's only 3.8 percent. For workers in "installation, maintenance and repair," it's 5.3 percent. It's workers in certain occupations - like "transportation and material moving" (10.3 percent unemployment) and "construction and extraction" (13 percent) - who are experiencing the most severe economic pain. That's because the skills of many workers are increasingly out of sync with the demands of the job market, and the gap is likely to grow, particularly given that only a minority of companies provide formal training to employees. This isn't just an American problem, however. There are 200 million unemployed people around the world, 75 million of whom are youths, and many lack rudimentary workplace skills - the ability to use a computer, make a budget, communicate in an office environment. According to a study published last month by the McKinsey Global Institute, by 2020, the world will have a surplus of up to 95 million low-skill workers and a shortage of up to 40 million college graduates. Free and open online education could help close this gap, but only if it's intentionally directed to the people around the world who most need it. Right now, a lot of free education is thrown online without a clear sense of how it will help people prepare themselves for employment. In May, Unesco, the branch of the United Nations that focuses on education, held an international gathering in China, where representatives concluded that the development of technical and vocational education and training - what one official called the "poor cousin of mainstream education" -- should be deemed a "top priority" to tackle global unemployment. ALISON addresses this need. It offers some 400 vocational courses at "certificate level" (1 to 2 hours of study) or "diploma level" (about 9 to 11 hours of study) and plans to add 600 more in the coming year. Its most popular course, ABC IT, is a 15- to 20-hour training suite that covers similar ground to the widely recognized International Computer Driving License curriculum. (ALISON's certification is free; ICDL certification can cost over $500). Other popular offerings are project management, accounting, customer service, human resources, Microsoft Excel, health studies, basic study skills, operations management and psychology. Last year, 50,000 users earned certificates or diplomas, which indicate that they completed courses and scored 80 percent or above on ALISON's online assessment. Employers can verify an applicant's knowledge with an online "flash test" of randomized questions (reminiscent of typing tests for stenographers). ALISON doesn't have the capacity to track its learners' career progress, but it has thousands of testimonials on its Web site. A typical example is one from Mariyam Thiseena, from the Maldives, who wrote: "I love ALISON because you give the feeling that even the poorest person deserves an education." (Thiseena wrote to me that she found ALISON through Google and is currently pursuing a diploma in environmental engineering.) Another student, Zakiyu Iddris Tandunayir, from Accra, Ghana, completed a diploma in social media marketing. "I've been interested in social media for a long time," he told me by phone, "but when I discovered ALISON, I committed myself to it. I studied day in and day out. I passed my exam, then I set up a page on Facebook to do social media for businesses. I put my number in there and people started calling me." Tandunayir added that he has since received contracts worth $700. "For my eight years of Internet experience I have never felt the way I feel now," he commented. ALISON is a for-profit social enterprise. "My vision is that all basic education and training is freely accessible online worldwide and accessible by everyone," explains the company founder Mike Feerick, who received an award last year from Unesco for innovation in online workplace education and has been recognized by Ashoka as a social entrepreneur. "Education underpins all social progress. If we can improve the general education level worldwide, global poverty can be dealt with profoundly and a general standard of living can be vastly improved." Feerick says that the scope of the problem necessitates a business approach. There is not enough philanthropy, and perhaps not even enough government investment, to meet the world's workplace development needs. (Seven percent of the world's people currently have college degrees.) ALISON works to leverage and redirect the large supply of for-profit courses, searching for high-quality vocational offerings and inviting publishers to put some of their courses on ALISON, available free. For example, it carries hundreds of hours of English and French language instruction from the British Council and Alliance Francaise. (It never offers short "teaser" courses that link to paid sites, only modules at a minimum of a certificate level.) It hunts for courses that meet the specific needs of workers or employers in specific industries. For instance, it offers a 5 to 6 hour diploma in European Union public procurement, which sounds a bit dry - unless you're applying for a job in a company that hopes to win contracts from the E.U., in which case it is a standout credential. Publishers agree to work with ALISON because the company generates business leads for them and shares its revenues, mostly from advertising, sales of certificates and token fees from learners. (A graduate can purchase a paper certificate for $30 or one on parchment for $120, and opt to pay for premium access that loads slightly more quickly and has no ads.) Given its model, the more ALISON grows, the more free courses it will be able to offer. The decision to make everything on ALISON free remains the key factor that distinguishes the site from others of its type, and makes it globally valuable. (In addition to English, there are courses in French, Spanish, Farsi and Arabic, and the platform is going to be translated into Arabic, Mandarin, Spanish and Brazilian Portuguese.) Unlike academic instruction, which is increasingly free online - you can take hundreds of lessons in algebra or calculus at the Khan Academy - quality workplace skills training is usually pricey. So is certification. Sites like Lynda.com, which offer training in software tools, require a paid subscription. Udemy, a relatively new education company with some excellent free courses, charges fees for many courses that offer workplace skills. If you're a would-be programmer from Egypt, there is a world of difference between a free course in Microsoft Access and one that costs $99. Just as there is great variability in teacher quality, online education is a mixed bag. "There's an enormous amount of learning out there," notes Feerick. "There's also an enormous amount of rubbish. It's hard to make out the difference if you don't know what's coming. We turn down a huge number of courses that are low quality." What does ALISON look for? Feerick's staff members ask the following. "Is it good content? Is it interactive? Does it ask you to do something? Sometimes the content really lends itself to video - like language learning where you need pronunciation help. Does it flow logically? Is the content from a reliable source? Is there a way to assess the learning?" In the United States, ALISON is now offered through government workplace centers in 18 states. When a job seeker goes to EmployFlorida or Virginia Workforce Connection, for example, he or she can work with a counselor to survey the job market and assess skill gaps. The client may then be referred to traditional brick and mortar training or ALISON courses. ALISON also supplies digital literacy training to public schools in the United States. Jaime Maniatis, the technology instructor at the Daylight/Twilight Alternative High School, in Trenton, N.J., which serves students who have previously dropped out, has been using its ABC IT course for a number of years. "It's accessible from any computer in the building," she said. "You can listen to it or read it, so it's good for E.S.L. students. It's interactive and has quizzes that help the students stay focused. And with all the cuts in education, it gives me security because I know I'll always be able to use it - because it's free." She added that this year, she plans to spend $165 for a premium service that is ad-free and allows her to track students' progress in three classrooms. As the cost of formal education has skyrocketed and the job market continues to change at a rapid clip, the responsibility for keeping their skills up-to-date will likely fall more and more on individuals. Many will turn to online learning - for convenience and affordability. There are, of course, drawbacks to this. But there are advantages too - including the ability to work at your own pace and gain exposure to a broad array of topics. (The long tail of the Internet means that online courses can be highly specialized and still cost-effective. A university may offer a general electrical engineering course, but an online site can offer a course in how to operate a Siemens generator.) Perhaps the biggest advantage of online learning will be that women can more easily bypass the sexism and discrimination associated with traditional vocational education. At ALISON, all students receive a learning record, a kind of archive of their response to life's vicissitudes. Feerick notes: "The record says, 'I might be 58 years of age, but I'm still learning.'" Don Peck, “Can the Middle Class Be Saved?” The Atlantic, September 2011, 2-4. Available online: http://www.theatlantic.com/magazine/archive/2011/09/can-the-middle-class-besaved/8600/ Can the Middle Class Be Saved? *** Changing the Path of the American Economy True recovery from the Great Recession is not simply a matter of jolting the economy back onto its former path; it’s about changing the path. No single action or policy prescription can fix the varied problems facing the middle class today, but through a combination of approaches—some aimed at increasing the growth rate of the economy itself, and some at ensuring that more people are able to benefit from that growth—we can ameliorate them. Many of the deepest economic trends that the recession has highlighted and temporarily sped up will take decades to fully play out. We can adapt, but we have to start now. The rest of this article suggests how we might do so. The measures that I propose are not comprehensive, nor are they without drawbacks. But they are emblematic of the types of proposals we will need to weigh in the coming years, and of the nature of the national conversation we need to have. That conversation must begin with a reassessment of how globalization is affecting American society, and of what it will take for the U.S. to thrive in a rapidly changing world. In 2010, the McKinsey Global Institute released a report detailing just how mighty America’s multinational companies are—and how essential they have become to the U.S. economy. Multinationals headquartered in the U.S. employed 19 percent of all private-sector workers in 2007, earned 25 percent of gross private-sector profits, and paid out 25 percent of all privatesector wages. They also accounted for nearly three-quarters of the nation’s private-sector R&D spending. Since 1990, they’ve been responsible for 31 percent of the growth in real GDP. Yet for all their outsize presence, multinationals have been puny as engines of job creation. Over the past 20 years, they have accounted for 41 percent of all gains in U.S. labor productivity—but just 11 percent of private-sector job gains. And in the latter half of that period, the picture grew uglier: according to the economist Martin Sullivan, from 1999 through 2008, U.S. multinationals actually shrank their domestic workforce by about 1.9 million people, while increasing foreign employment by about 2.4 million. The heavy footprint of multinational companies is merely one sign of how inseparable the U.S. economy has become from the larger global economy—and these figures neatly illustrate two larger points. First, we can’t wish away globalization or turn our backs on trade; to try to do so would be crippling and impoverishing. And second, although American prosperity is tied to globalization, something has nonetheless gone wrong with the way America’s economy has evolved in response to increasingly dense global connections. Particularly since the 1970s, the United States has placed its bets on continuous innovation, accepting the rapid transfer of production to other countries as soon as goods mature and their manufacture becomes routine, all with the idea that the creation of even newer products and services at home will more than make up for that outflow. At times, this strategy has paid off big. Rapid innovation in the 1990s allowed the economy to grow quickly and create good, new jobs up and down the ladder to replace those that were becoming obsolete or moving overseas, and enabled strong income growth for most Americans. Yet in recent years, that process has broken down. One reason, writes the economist Michael Mandel, is that America no longer enjoys the economic fruits of its innovations for as long as it used to. Knowledge, R&D, and business know-how depreciate more quickly now than they did even 15 years ago, because global communication is faster, connections are more seamless, and human capital is more broadly diffused than in the past. As a result, domestic production booms have ended sooner than they used to. IT-hardware production, for instance, which in 1999 the Bureau of Labor Statistics projected would create about 155,000 new jobs in the U.S. over the following decade, actually shrank by nearly 500,000 jobs in that time. Jobs in data processing also fell, presumably as a result of both offshoring and technological advance. Because innovations now depreciate faster, we need more of them than we used to in order to sustain the same rate of economic growth. Yet in the aughts, as an array of prominent economists and entrepreneurs have recently pointed out, the rate of big innovations actually slowed considerably; with the housing bubble fueling easy growth for much of that time, we just didn’t notice. This slowdown may have been merely the result of bad luck—big breakthroughs of the sort that create whole categories of products or services are difficult to predict, and long droughts are not unknown. Overregulation in certain areas may also have played a role. The economist Tyler Cowen, in his recent book, The Great Stagnation, argues that the scientific frontier itself—or at least that portion of it leading to commercial innovation—has been moving outward more slowly, and requiring ever more resources to do so, for many decades. Process innovation has been quite rapid in recent years. U.S. multinationals and other companies are very good at continually improving their operational efficiency by investing in information technology, restructuring operations, and shifting work around the globe. Some of these activities benefit some U.S. workers, by making the jobs that stay in the country more productive. But absent big breakthroughs that lead to new products or services—and given the vast reserves of low-wage but increasingly educated labor in China, India, and elsewhere—rising operational efficiency hasn’t been a recipe for strong growth in either jobs or wages in the United States. America has huge advantages as an innovator. Places like Silicon Valley, North Carolina’s Research Triangle, and the Massachusetts high-tech corridor are difficult to replicate, and the United States has many of them. Foreign students still flock here, and foreign engineers and scientists who get their doctorates here have been staying on for longer and longer over the past 15 years. When you compare apples to apples, the United States still leads the world, handily, in the number of skilled engineers, scientists, and business professionals in residence. But we need to better harness those advantages to speed the pace of innovation, in part by putting a much higher national priority on investment—rather than consumption—in the coming years. That means, among other things, substantially raising and broadening both national and private investment in basic scientific progress and in later-stage R&D—through a combination of more federal investment in scientific research, perhaps bigger tax breaks for private R&D spending, and a much lower corporate tax rate (and a simpler corporate tax code) overall. Edmund Phelps and Leo Tilman, professors at Columbia University, have proposed the creation of a National Innovation Bank that would invest in, or lend to, innovative start-ups—bringing more money to bear than venture-capital funds could, and at a lower cost of capital, which would promote more investment and enable the funding of somewhat riskier ventures. The broader idea behind such a bank is that because innovation carries so many ambient benefits—from job creation to the experience gained by even failed entrepreneurs and the people around them—we should be willing to fund it more liberally as a society than private actors would individually. Removing bureaucratic obstacles to innovation is as important as pushing more public funds toward it. As Wall Street has amply demonstrated, not every industry was overregulated in the aughts. Nonetheless, the decade did see the accretion of a number of regulatory measures that may have chilled the investment climate (the Sarbanes-Oxley accounting reforms and a proliferation of costly security regulations following the creation of the Department of Homeland Security are two prominent examples). Regulatory balance is always difficult in practice, but Michael Mandel has suggested a useful rule of thumb: where new and emerging industries are concerned—industries that are at the forefront of the economy and could provide big bursts of growth—our bias should be toward light regulation, allowing creative experimentation and encouraging fast growth. The rapid expansion of the Internet in the 1990s is a good example of the benefit that can come from a light regulatory hand early in an industry’s development; green technology, wireless platforms, and social-networking technologies are perhaps worthy of similar treatment today. Any serious effort to accelerate innovation would mean taking many other actions as well—from redoubling our commitment to improving U.S. schools, to letting in a much larger number of creative, highly skilled immigrants each year. Few such measures will be without costs or drawbacks. Among other problems, a mandate of light regulation on high-potential industries requires the government to “pick winners.” Tilting government spending toward investment and innovation probably means tilting it away from defense and programs aimed at senior citizens. And because the benefits of innovation diffuse more quickly now, the return on national investment in scientific research and commercial innovation may be lower than it was in previous decades. Despite these drawbacks and trade-offs, the alternative to heavier investment and a higher priority on national innovation is dismal to contemplate. As we strive toward faster innovation, we also need to keep the production of new, high-value goods within American borders for a longer period of time. Protectionist measures are generally self-defeating, and while vigilance against the theft of intellectual property and strong sanctions when such theft is discovered are sensible, they are unlikely to alter the basic trends of technological and knowledge diffusion. (Much of that diffusion is entirely legal, and the long history of industrialization and globalization suggests that attempts to halt it will fail.) What can really matter is a fair exchange rate. Throughout much of the aughts and continuing to the present day, China, in particular, has taken extraordinary measures to keep its currency undervalued relative to the dollar, and this has harmed U.S. industry. We must press China on currency realignment, putting sanctions on the table if necessary. Given some of the workforce trends of the past decade, doubling down on technology, innovation, and globalization may seem wrongheaded. And indeed, this strategy is no cure-all. But without a vibrant, innovative economy, all other prospects dim. For the professional middle class in particular, an uptick in innovation and a return to faster economic growth would solve many problems, and likely reignite income growth. While technology is eating into the work that some college graduates do, their general skills show little sign of losing value. Recent analysis by the McKinsey Global Institute, for instance, indicates that demand for college grads by American businesses is likely to grow quickly over the next decade even if the economy grows very slowly; rapid economic growth would cause demand for college grads to far exceed supply. Still, even in boom times, many more people than we would care to acknowledge won’t have the education, skills, or abilities to prosper in a pure and globalized market, shaped by enormous labor reserves in China, India, and other developing countries. Over the next decade or more, even if national economic growth is strong, what we do to help and support moderately educated Americans may well determine whether the United States remains a middle-class country. Filling the Hole in the Middle Class In The Race Between Education and Technology, the economists Claudia Goldin and Lawrence Katz write that throughout roughly the first three-quarters of the 20th century, most Americans prospered and inequality fell because, although technological advance was rapid—and mostly biased toward people with relatively high skills—educational advance was faster still; the pool of people who could take advantage of new technologies kept growing larger, while the pool of those who could not stayed relatively small. There would be no better tonic for the country’s recent ills than a resumption of the rapid advance of skills and abilities throughout the population. Clearly there is room for improvement. About 30 percent of young adults finish college today, yet that figure is 50 percent among those with affluent parents. It follows that with improvements in the K–12 school system, more-stable home environments, and widespread financial access to college, we eventually could move to a 50 percent college graduation rate overall. And because IQ worldwide has been slowly increasing from generation to generation—a somewhat mysterious development known as the “Flynn effect”—higher rates still may eventually come within reach. Yet the past three decades of experience suggest that this upward migration, even to, say, 40 percent, will be slow and difficult. (From 1979 to 2009, the percentage of people ages 25 to 29 with a four-year college degree rose from 23.1 percent to 30.6 percent—or roughly 1 percentage point every four years.) And ultimately, of course, the college graduation rate is likely to hit a substantially lower ceiling than that for high school or elementary school. For a time, elementary school was the answer to the question of how to build a broad middle class in America. And for a time after that, the answer was high school. College may never provide as comprehensive an answer. At the very least, over the next decade or two, college education simply cannot be the whole answer to the woes of the middle class, since even under the rosiest of assumptions, most of the middle of society will not have a four-year college degree. Among the more pernicious aspects of the meritocracy as we now understand it in the United States is the equation of merit with test-taking success, and the corresponding belief that those who struggle in the classroom should expect to achieve little outside it. Progress along the meritocratic path has become measurable from a very early age. This is a narrow way of looking at human potential, and it badly underserves a large portion of the population. We have beaten the drum so loudly and for so long about the centrality of a college education that we should not be surprised when people who don’t attend college—or those who start but do not finish—go adrift at age 18 or 20. Grants, loans, and tax credits to undergraduate and graduate students total roughly $160 billion each year; by contrast, in 2004, federal, state, and local spending on employment and training programs (which commonly assist people without a college education) totaled $7 billion—an inflation-adjusted decline of about 75 percent since 1978. As we continue to push for better K–12 schooling and wider college access, we also need to build more paths into the middle class that do not depend on a four-year college degree. One promising approach, as noted by Haskins and Sawhill, is the development of “career academies”—schools of 100 to 150 students, within larger high schools, offering a curriculum that mixes academic coursework with hands-on technical courses designed to build work skills. Some 2,500 career academies are already in operation nationwide. Students attend classes together and have the same guidance counselors; local employers partner with the academies and provide work experience while the students are still in school. “Vocational training” programs have a bad name in the United States, in part because many people assume they close off the possibility of higher education. But in fact, career-academy students go on to earn a postsecondary credential at the same rate as other high-school students. What’s more, they develop firmer roots in the job market, whether or not they go on to college or community college. One recent major study showed that on average, men who attended career academies were earning significantly more than those who attended regular high schools, both four and eight years after graduation. They were also 33 percent more likely to be married and 36 percent less likely to be absentee fathers. Career-academy programs should be expanded, as should apprenticeship programs (often affiliated with community colleges) and other, similar programs that are designed to build an ethic of hard work; to allow young people to develop skills and achieve goals outside the traditional classroom as well as inside it; and ultimately to provide more, clearer pathways into real careers. By giving young people more information about career possibilities and a tangible sense of where they can go in life and what it takes to get there, these types of programs are likely to lead to more-motivated learning, better career starts, and a more highly skilled workforce. Their effect on boys in particular is highly encouraging. And to the extent that they can expose boys to opportunities within growing fields like health care (and also expose them to male role models within those fields), these programs might even help weaken the grip of the various stereotypes that seem to be keeping some boys locked into declining parts of the economy. Even in the worst of scenarios, “middle skill” jobs are not about to vanish altogether. Many construction jobs and some manufacturing jobs will return. And there are many, many middleincome occupations—from EMTs, lower-level nurses, and X-ray technicians, to plumbers and home remodelers—that trade and technology cannot readily replace, and these fields are likely to grow. A more highly skilled workforce will allow faster, more efficient growth; produce betterquality goods and services; and earn higher pay. All of that said, the overall pattern of change in the U.S. labor market suggests that in the next decade or more, a larger proportion of Americans may need to take work in occupations that have historically required little skill and paid low wages. Analysis by David Autor indicates that from 1999 to 2007, low-skill jobs grew substantially as a share of all jobs in the United States. And while the lion’s share of jobs lost during the recession were middle-skill jobs, job growth since then has been tilted steeply toward the bottom of the economy; according to a survey by the National Employment Law Project, three-quarters of American job growth in 2010 came within industries paying, on average, less than $15 an hour. One of the largest challenges that Americans will face in the coming years will be doing what we can to make the jobs that have traditionally been near the bottom of the economy better, more secure, and more fulfilling—in other words, more like middle-class jobs. As the urban theorist Richard Florida writes in The Great Reset, part of that process may be under way already. A growing number of companies have been rethinking retail-workforce development, to improve productivity and enhance the customer experience, leading to moreenjoyable jobs and, in some cases, higher pay. Whole Foods Markets, for instance, one of Fortune magazine’s “Best Companies to Work For,” organizes its workers into teams and gives them substantial freedom as to how they go about their work; after a new worker has been on the job for 30 days, the team members vote on whether the new employee has embraced the job and the culture, and hence whether he or she should be kept on. Best Buy actively encourages all its employees to suggest improvements to the company’s work processes, much as Toyota does, and favors promotion from within. Trader Joe’s sets wages so that full-time employees earn at least a median income within their community; store captains, most of them promoted from within, can earn six figures. The natural evolution of the economy will surely make some service jobs more productive, independent, and enjoyable over time. Yet productivity improvements at the bottom of the economy seem unlikely to be a sufficient answer to the problems of the lower and middle classes, at least for the foreseeable future. Indeed, the relative decline of middle-skill jobs, combined with slow increases in college completion, suggests a larger pool of workers chasing jobs in retail, food preparation, personal care, and the like—and hence downward pressure on wages. Whatever the unemployment rate over the next several years, the long-term problem facing American society is not that employers will literally run out of work for people to do—it’s that the market value of much low-skill and some middle-skill work, and hence the wages employers can offer, may be so low that few American workers will strongly commit to that work. Bad jobs at rock-bottom wages are a primary reason why so many people at the lower end of the economy drift in and out of work, and this job instability in turn creates highly toxic social and family problems. American economists on both the right and the left have long advocated subsidizing low-wage work as a means of social inclusion—offering an economic compact with everyone who embraces work, no matter their level of skill. The Earned Income Tax Credit, begun in 1975 and expanded several times since then, does just that, and has been the country’s best anti-poverty program. Yet by and large, the EITC helps only families with children. In 2008, it provided a maximum credit of nearly $5,000 to families with two children, with the credit slowly phasing out for incomes above $15,740 and disappearing altogether at $38,646. The maximum credit for workers without children (or without custody of children) was only $438. We should at least moderately increase both the level of support offered to families by the EITC and the maximum income to which it applies. Perhaps more important, we should offer much fuller support for workers without custody of children. That’s a matter of basic fairness. But it’s also a measure that would directly target some of the biggest budding social problems in the United States today. A stronger reward for work would encourage young, less-skilled workers—men in particular—to develop solid, early connections to the workforce, improving their prospects. And better financial footing for young, less-skilled workers would increase their marriageability. A continued push for better schooling, the creation of clearer paths into careers for people who don’t immediately go to college, and stronger support for low-wage workers—together, these measures can help mitigate the economic cleavage of U.S. society, strengthening the middle. They would hardly solve all of society’s problems, but they would create the conditions for more-predictable and more-comfortable lives—all harnessed to continuing rewards for work and education. These, ultimately, are the most-critical preconditions for middle-class life and a healthy society. The Limits of Meritocracy As a society, we should be far more concerned about whether most Americans are getting ahead than about the size of the gains at the top. Yet extreme income inequality causes a cultural separation that is unhealthy on its face and corrosive over time. And the most-powerful economic forces of our times will likely continue to concentrate wealth at the top of society and to put more pressure on the middle. It is hard to imagine an adequate answer to the problems we face that doesn’t involve greater redistribution of wealth. Soaking the rich would hardly solve all of America’s problems. Holding all else equal, we would need to raise the top two tax rates to roughly 90 percent, then unrealistically assume no change in the work habits of the people in those brackets, merely to bring the deficit in a typical year down to 2 percent of GDP. But even with strong budget discipline and a reduction in the growth of Medicare costs, somewhat higher taxes for most Americans—in one form or another—seem inevitable. If we aim to increase our national investment in innovation, and to provide more assistance to people who are falling out of the middle class (or who can’t step up into it), that’s even more true. The professional middle class in particular should not expect exemption from tax increases. Over time, the United States has expected less and less of its elite, even as society has oriented itself in a way that is most likely to maximize their income. The top income-tax rate was 91 percent in 1960, 70 percent in 1980, 50 percent in 1986, and 39.6 percent in 2000, and is now 35 percent. Income from investments is taxed at a rate of 15 percent. The estate tax has been gutted. High earners should pay considerably more in taxes than they do now. Top tax rates of even 50 percent for incomes in the seven-figure range would still be considerably lower than their level throughout the boom years of the post-war era, and should not be out of the question—nor should an estate-tax rate of similar size, for large estates. The rich have not become that way while living in a vacuum. Technological advance, freer trade, and wider markets—along with the policies that promote them—always benefit some people and harm others. Economic theory is quite clear that the winners gain more than the losers lose, and therefore the people who suffer as a result of these forces can be fully compensated for their losses—society as a whole still gains. This precept has guided U.S. government policy for 30 years. Yet in practice, the losers are seldom compensated, not fully and not for long. And while many of the gains from trade and technological progress are widely spread among consumers, the pressures on wages that result from these same forces have been felt very differently by different classes of Americans. What’s more, some of the policies that have most benefited the rich have little to do with greater competition or economic efficiency. Fortunes on Wall Street have grown so large in part because of implicit government protection against catastrophic losses, combined with the steady elimination of government measures to limit excessive risk-taking, from the 1980s right on through the crash of 2008. As America’s winners have been separated more starkly from its losers, the idea of compensating the latter out of the pockets of the former has met stiff resistance: that would run afoul of another economic theory, dulling the winners’ incentives and squashing their entrepreneurial spirit; some, we are reminded, might even leave the country. And so, in a neat and perhaps unconscious two-step, many elites have pushed policies that benefit them, by touting theoretical gains to society—then ruled out measures that would distribute those gains widely. Even as we continue to strive to perfect the meritocracy, signs that things may be moving in the other direction are proliferating. The increasing segregation of Americans by education and income, and the widening cultural divide between families with college-educated parents and those without them, suggests that built-in advantages and disadvantages may be growing. And the concentration of wealth in relatively few hands opens the possibility that much of the next generation’s elite might achieve their status through inheritance, not hard or innovative work. America remains a magnet for talent, for reasons that go beyond the tax code; and by international standards, none of the tax changes recommended here would create an excessive tax burden on high earners. If a few financiers choose to decamp for some small island-state in search of the smallest possible tax bill, we should wish them good luck. In political speeches and in the media, the future of the middle class is often used as a stand-in for the future of America. Yet of course the two are not identical. The size of the middle class has waxed and waned throughout U.S. history, as has income inequality. The post-war decades of the 20th century were unusually hospitable to the American middle class—the result of strong growth, rapid gains in education, progressive tax policy, limited free agency at work, a limited pool of competing workers overseas, and other supportive factors. Such serendipity is anomalous in American history, and unlikely to be repeated. Yet if that period was unusually kind to the middle class, the one we are now in the midst of appears unusually cruel. The strongest forces of our time are naturally divisive; absent a wideranging effort to constrain them, economic and cultural polarization will almost surely continue. Perhaps the nonprofessional middle class is rich enough today to absorb its blows with equanimity. Perhaps plutonomy, in the 21st century, will prove stable over the long run. But few Americans, no matter their class, will be eager for that outcome.
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