Three Moves Ahead Logo

The Book That Started It All

Three Moves Ahead the Book

An utterly fresh guide to winning in today's business environment. –

<< Back

John Keynes, meet George Jetson

Boy, do the Jetsons have a deal: an affluent lifestyle fully serviced by friendly robots, and funded by George’s full-time, 9 hour-a-week job. So that’s how it’ll be in 2062, I guess; but back here in 2010, we’re only just beginning to see the overwhelming impact of revolutionary technology advances on the workforce. And these days, it doesn’t exactly make for family comedy.

Let’s look at some recent examples, and then at the disturbing long-term trends:

  1. Hewlett-Packard Co. just announced it would lay off 9,000 humans because it has installed new computers to run… its computing centers.
  2. UPS is laying off pilots for the first time ever, partly because its new jets require just 2 pilots instead of 3 (at $180,000 each per year).
  3. Netflix Inc. is cutting 160 jobs because customers are streaming movies over the Internet, so delivery center personnel aren’t needed.
  4. Not even chocolateers are exempt: Hershey expects to lay off 600 workers as it moves production to a newer, more efficient plant

None of these companies is firing people because they’re in trouble; quite the opposite, they are experiencing record results. (And this, by the way, is the answer to all those who ask: with unemployment so high, how can the stock market be up?)

These and countless similar examples demonstrate why productivity numbers have been going through the roof over the past few years… and will continue to, at an ever faster pace. Mainstream economists have tended to miss the point here: they see the recent productivity spike as a consequence of the massive downsizing of the Great Recession, which left fewer people doing more work. And of course, that dislocation did accelerate the process. But more important is what the companies discovered after the bloodletting: relying more on technology allowed them not just to survive, but to become more profitable than ever.

Those same economists now say that, because U.S. companies had “cut to the bone” on payrolls, a big pickup in employment is inevitable. Wrong, as the above examples prove.To future historians, the Great Recession may well be remembered not for all the excesses that led to it, but rather as the tipping point when silicon began to replace carbon as the key element in the workforce.

This has been in process for many decades. Productivity has risen in a constant slope since records have been kept, just as computing power has obeyed Moore’s law (even before he recognized it). These two charts illustrate the point; they are taken from David Indiviglio’s excellent article in The Atlantic and Ray Kurweil’s “The Singularity is Near”:

Productivity Chart

Of course, the scales are different, but the trends are crystal clear: both are on a steady upwards march that is only quickening.

Moore's Law Chart

We’ve had this convenience of ignoring the profound long-term societal impact of these patterns because even exponential trends look and feel flat for a long time… until they hit an inflection point. That’s where we are now.

What will happen when society simply has no need for 40 or 50 hours of dedicated labor every week from the majority of its adult population? With luck, we become George Jetsons, but I’m not so sure. Remember, he’s got the Society Preventing Cruelty to Humans on his side.

For a while, voters may continue to believe that the unemployment rate largely reflects how well the government is doing its job, and throw various regimes in and out of office while looking for better numbers. And, in an effort to comply, the Fed and Congress will probably keep throwing money in various forms at the problem. But what they and the electorate will eventually realize is that no government can repeal Moore’s Law, or its real world consequences.

President Obama will be remembered for many “firsts,” but I think one will be that he was the first chief executive to face an unemployment rate that no amount of traditional economic stimulus would relieve. Frankly, I’m afraid that, soon enough, even folks like Jim Carville will have problems getting hired; after all, it doesn’t take a Hal 9000 to tell politicians who can’t understand their low poll numbers: “It’s the Jetson economy, stupid”.