Derek Thompson

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I was on the subway the other day and a disparate group of six people of different ages, races and genders began a spontaneous conversation about how the they couldn’t afford to live anywhere nice anymore and how the middle class was gone in America, that the country wasn’t for them anymore. Small sample size to be sure, but one that’s backed up by more than four decades of research. Part of the problem could be remedied politically if finding solutions was in vogue in America, but the bigger picture would seem to be a grand sweep of history that announced itself in the aftermath of the Great Recession, as profits returned but not jobs.

I fear Derek Thompson’s excellent Atlantic feature “A World Without Work” may be accurate in its position that this time it’s different, that technological unemployment may take root in America (and elsewhere), and I think one of the writer’s biggest contributions is explaining how relatively quickly the new normal can take hold. (He visits Youngstown, a former industrial boomtown that went bust, to understand the ramifications of work going away.)

I don’t believe a tearing of the social fabric need attend an enduring absence of universal employment provided wealth isn’t aggregated at one end of the spectrum, but I don’t have much faith right now in government to step into the breach should such opportunities significantly deteriorate. Much of Thompson’s piece is dedicated finding potential solutions to a radical decline of Labor–a post-workist world. He believes America can sustain itself if citizens are working fewer hours but perhaps not if most don’t need to punch the clock at all. I’m a little more sanguine than that if basic needs are covered. Then I think we’ll see people get creative.

An excerpt:

After 300 years of breathtaking innovation, people aren’t massively unemployed or indentured by machines. But to suggest how this could change, some economists have pointed to the defunct career of the second-most-important species in U.S. economic history: the horse.

For many centuries, people created technologies that made the horse more productive and more valuable—like plows for agriculture and swords for battle. One might have assumed that the continuing advance of complementary technologies would make the animal ever more essential to farming and fighting, historically perhaps the two most consequential human activities. Instead came inventions that made the horse obsolete—the tractor, the car, and the tank. After tractors rolled onto American farms in the early 20th century, the population of horses and mules began to decline steeply, falling nearly 50 percent by the 1930s and 90 percent by the 1950s.

Humans can do much more than trot, carry, and pull. But the skills required in most offices hardly elicit our full range of intelligence. Most jobs are still boring, repetitive, and easily learned. The most-common occupations in the United States are retail salesperson, cashier, food and beverage server, and office clerk. Together, these four jobs employ 15.4 million people—nearly 10 percent of the labor force, or more workers than there are in Texas and Massachusetts combined. Each is highly susceptible to automation, according to the Oxford study.

Technology creates some jobs too, but the creative half of creative destruction is easily overstated. Nine out of 10 workers today are in occupations that existed 100 years ago, and just 5 percent of the jobs generated between 1993 and 2013 came from “high tech” sectors like computing, software, and telecommunications. Our newest industries tend to be the most labor-efficient: they just don’t require many people. It is for precisely this reason that the economic historian Robert Skidelsky, comparing the exponential growth in computing power with the less-than-exponential growth in job complexity, has said, “Sooner or later, we will run out of jobs.”

Is that certain—or certainly imminent? No. The signs so far are murky and suggestive. The most fundamental and wrenching job restructurings and contractions tend to happen during recessions: we’ll know more after the next couple of downturns. But the possibility seems significant enough—and the consequences disruptive enough—that we owe it to ourselves to start thinking about what society could look like without universal work, in an effort to begin nudging it toward the better outcomes and away from the worse ones.

To paraphrase the science-fiction novelist William Gibson, there are, perhaps, fragments of the post-work future distributed throughout the present. I see three overlapping possibilities as formal employment opportunities decline. Some people displaced from the formal workforce will devote their freedom to simple leisure; some will seek to build productive communities outside the workplace; and others will fight, passionately and in many cases fruitlessly, to reclaim their productivity by piecing together jobs in an informal economy. These are futures of consumption, communal creativity, and contingency. In any combination, it is almost certain that the country would have to embrace a radical new role for government.

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In an Atlantic piece, Derek Thompson notes that while CDs are under siege, digital music is itself being disrupted, with abundance making profits scarce. Music is desired, but the record store–in any form–is not. The opening:

CDs are dead.

That doesn’t seem like such a controversial statement. Maybe it should be. The music business sold 141 million CDs in the U.S. last year. That’s more than the combined number of tickets sold to the most popular movies in 2014 (Guardians) and 2013 (Iron Man 3). So “dead,” in this familiar construction, isn’t the same as zero. It’s more like a commonly accepted short-cut for a formerly popular thing is now withering at a commercially meaningful rate.

And if CDs are truly dead, then digital music sales are lying in the adjacent grave. Both categories are down double-digits in the last year, with iTunes sales diving at least 13 percent.

The recorded music industry is being eaten, not by one simple digital revolution, but rather by revolutions inside of revolutions, mouths inside of mouths, Alien-style. Digitization and illegal downloads kicked it all off. MP3 players and iTunes liquified the album. That was enough to send recorded music’s profits cascading. But today the disruption is being disrupted: Digital track sales are falling at nearly the same rate as CD sales, as music fans are turning to streaming—on iTunes, SoundCloud, Spotify, Pandora, iHeartRadio, and music blogs. Now that music is superabundant, the business (beyond selling subscriptions to music sites) thrives only where scarcity can be manufactured—in concert halls, where there are only so many seats, or in advertising, where one song or band can anchor a branding campaign.•

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“In your home or in your car, protect your valuable tapes.”

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The unemployment rate is falling in America, but wages aren’t rising in most sectors, which is counterintuitive. Two explanatory notes about U.S. employment in the aftermath of the 2008 economic collapse, one from Eric Brynjolfsson and Andrew McAfee’s The Second Machine Age, and the other from Derek Thompson’s Atlantic article “The Rise of Invisible Unemployment.”

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From Brynjolfsson and McAfee:

“A few years ago we had a very candid discussion with one CEO, and he explained that he knew for over a decade that advances in information technology had rendered many routine information-processing jobs superfluous. At the same time, when profits and revenues are on the rise, it can be hard to eliminate jobs. When the recession came, business as usual obviously was not sustainable, which made it easier to implement a round of streamlining and layoffs. As the recession ended and profits and demand returned, the jobs doing routine work were not restored. Like so many other companies in recent years, his organization found it could use technology to scale up without the workers.”

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From Thompson:

“3. The rise of invisible work is too large to ignore.

By ‘invisible work,’ I mean work done by American companies that isn’t done by Americans workers. Globalization and technology is allowing corporations to expand productivity, which shows up in earnings reports and stock prices and other metrics that analysts typically associate with a healthy economy. But globalization and technology don’t always show up in US wage growth because they often represent alternatives to US-based jobs. Corporations have used the recession and the recovery to increase profits by expanding abroad, hiring abroad, and controlling labor costs at home. It’s a brilliant strategy to please investors. But it’s an awful way to contribute to domestic wage growth.

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Amazon is a wildly successful company that doesn’t really make any profits. Huh? That cackling taskmaster Jeff Bezos has a long-term plan based on trading the present for some nebulous point in the future. The opening of “The Amazon Mystery” by Derek Thompson at the Atlantic:

If there’s a sentence that sums up Amazon, the weirdest major technology company in America, it’s one that came from its own CEO, Jeff Bezos, speaking at the Aspen Institute’s 2009 Annual Awards Dinner in New York City: “Invention requires a long-term willingness to be misunderstood.”

In other words: if you don’t yet get what I’m trying to build, keep waiting.

Four years later, Amazon’s annual revenue and stock price have both nearly tripled, but for many onlookers, the long wait for understanding continues. Bezos’s company has grown from its humble Seattle beginnings to become not only the largest bookstore in the history of the world, but also the world’s largest online retailer, the largest Web-hosting company in the world, the most serious competitor to Netflix in streaming video, the fourth-most-popular tablet maker, and a sprawling international network of fulfillment centers for merchants around the world. It is now rumored to be close to launching its own smartphone and television set-top box. The every-bookstore has become the store for everything, with the global ambition to become the store for everywhere.

Seriously: What is Amazon? A retail company? A media company? A logistics machine? “

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The oppressive cable-television industry makes wonderful Netflix possible, as Derek Thompson points out in an Atlantic post. An excerpt:

“The 100 million households paying for cable are subsidizing the entertainment on Netflix. This subsidy allows Netflix to charge an affordable-enough monthly rate so that they can attract a truly mass audience. Just about everything that you love about Netflix (its affordability, its variety, its ability to take risks) is made possible because of just about everything you hate about cable, whose high cost and refusal to offer a la carte creates high margins for entertainment companies, who auction the scraps to Netflix, Amazon and other Internet video companies.

The instinct among some tech writers to implicitly root for Netflix over the traditional cable industry is understandable. Netflix is cheap and easy to use. Cable is expensive and remote controls are terrible. Netflix’s affordability and its willingness to take risks are both made possible by the same traditional TV business they’re threatening.”

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From Derek Thompson’s eye-opening Atlantic piece, which explains how air travel changed in America (for the better) when D.C. regulators stood down:

“If you want a two-word answer to why airfares have dropped so much since the 1970s, it’s this: Deregulation worked.

Before 1978, the airlines played by Washington’s rules. The government determined whether a new airline could fly to a certain city, charge a certain price, or even exist in the first place. With limited competition, airlines were guaranteed a profit, and they lavished flyers with expensive services paid with expensive airfares. The silver and cloth came at a predictable price: The vast majority of Americans couldn’t afford to fly, at all.

With prices skyrocketing during the energy crisis of the 1970s, an all-star team of senators and economists decided that Washington should get out of the business of coddling the airlines. Let’s hear from a young former aide to Sen. Ted Kennedy named Stephen Breyer (oh, yeah, that Stephen Breyer) reviewing the free market case for letting airlines fly solo:

In California and Texas, where fares were unregulated, they were much lower. The San Francisco-Los Angeles fare was about half that on the comparable, regulated Boston-Washington route. And an intra-Texas airline boasted that the farmers who used to drive across the state could fly for even less money — and it would carry any chicken coops for free.

Three decades later, the lesson from Texas — if you deregulate the skies, ticket prices will fall — has been applied across the country. The democratization of the air is obvious enough from the frenetic bustle of every major U.S. airport. But the stats are mind-blowing, as well. 

— In 1965, no more than 20 percent of Americans had ever flown in an airplane. By 2000, 50 percent of the country took at least one round-trip flight a year. The average was two round-trip tickets. 

— The number of air passengers tripled between the 1970s and 2011. 

— In 1974, it was illegal for an airline to charge less than $1,442 in inflation-adjusted dollars for a flight between New York City and Los Angeles. On Kayak, just now, I found one for $278.”

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From “How Headphones Changed the World,” Derek Thompson’s Atlantic article about the unusual origins of the tech item, which was invented by Nathaniel Baldwin, a Mormon supporter of the polygamist movement:

“In 1910, the Radio Division of the U.S. Navy received a freak letter from Salt Lake City written in purple ink on blue-and-pink paper. Whoever opened the envelope probably wasn’t expecting to read the next Thomas Edison. But the invention contained within represented the apotheosis of one of Edison’s more famous, and incomplete, discoveries: the creation of sound from electrical signals.

The author of the violet-ink note, an eccentric Utah tinkerer named Nathaniel Baldwin, made an astonishing claim that he had built in his kitchen a new kind of headset that could amplify sound. The military asked for a sound test. They were blown away. Naval radio officers clamored for the ‘comfortable, efficient headset’ on the brink of World War I. And so, the modern headphone was born.”

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Headphones on display in a 1970s Continental ad:

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