September 4, 2013
THE FUTURE OF ECONOMIC GROWTH DOES NOT INCLUDE LABOR:
The Disruptive Dozen (Erik Brynjolfsson, James Manyika, Andrew McAfee, 9/04/13, Project Syndicate)
To help cut through the hype that surrounds the arrival of almost all new technologies, the McKinsey Global Institute examined more than 100 rapidly evolving technologies and identified 12 that are almost certain to disturb the status quo in the coming years. The MGI estimates that the combined annual economic impact of this "disruptive dozen" - which span information technology, machinery and vehicles, energy, bioscience, and materials - will reach $14-33 trillion by 2025. Much of this value - in many cases, a significant majority - is likely to accrue to consumers.Consider the mobile Internet, with an annual economic impact that is projected to reach $10 trillion by 2025. As advanced-country consumers continue to amass benefits from constant access to an increasing amount of information, apps, and online services, more than two billion developing-country citizens could gain access to the same benefits from technological progress in the rest of the world. The value of these benefits would dwarf the value likely to be reaped by suppliers of mobile devices and Internet services.Similar user-oriented value shifts are occurring across Internet-related technologies, including those not among the disruptive dozen. For example, only a small fraction of the $1 trillion in estimated annual value of online search will likely go to the service providers.But, for workers, the news is not all positive, with machines replacing humans in an increasing number of domains - far beyond routine physical and clerical activities. As computer-processing power grows and artificial-intelligence software advances, machines are increasingly able to perform complex tasks requiring abstract thinking, such as inferring meaning and making judgments.As a result, companies are beginning to automate more highly skilled knowledge-based jobs in fields like law and medicine. While this process will generate a significant amount of value - more than $5 trillion in 2025, according to MGI estimates - it will not be distributed evenly among workers, leaving many to confront the need to retrain for new jobs.Entrepreneurs, executives, and stockholders face similar uncertainty as disruptive technologies change the rules of the game by reducing entry barriers and lowering the minimum efficient scale (the smallest amount a company must produce while still taking full advantage of economies of scale). For example, 3D printing allows start-ups and small companies to "print" highly complicated prototypes, molds, and products in a variety of materials with no tooling or setup costs.
Posted by Orrin Judd at September 4, 2013 6:57 PM