Raw thoughts from Alex Dong

Book Review: Race against the machine

We are certainly living in an interesting time.  Besides all the financial crisis looming on the horizon, there are some fundamental challenges facing all the countries, that is unemployment because of technology advancement. In Spain, 60% people under 35 are unemployed. Despite all the seemingly good new, US is still losing job positions. But this time, it’s not because of outsourcing to China or India, but because more and more jobs have been replaced by robots.

[caption id=“” align=“alignleft” width=“201”] Race Against The Machine $3.99[/caption]

This book is written by two professors from MIT Centre for Digital Business. This thin book really discussed two things: most jobs today will be replaced by robots and how we can cope with that.

First, many of the mid-range jobs done by human being will be replaced by robots. This is the same thing that has happened to the horses in 19th century and bank tellers before ATM was introduced.  This has become very obvious when the recent economic recovery in US has seen strong growth yet no job has been created.

The grim unemployment statistics puzzled many because other measures of business health rebounded pretty quickly after the Great Recession officially ended in June 2009. GDP growth averaged 2.6% in the seven quarters after the recession’s end, a rate 75% as high as the long-term average over 1948-2007. U.S. corporate profits reached new records. And by 2010, investment in equipment and software returned to 95% of its historical peak, the fastest recovery of equipment investment in a generation

Most economists aren’t taking these worries very seriously. The idea that computers might significantly disrupt human labor markets—and, thus, further weaken the global economy—so far remains on the fringes.

College graduates who seek the traditional type of job, where someone else tells them what to do each day, will find themselves increasingly in competition with machines, which excel at following detailed instructions

The root of our problems is not that we’re in a Great Recession, or a Great Stagnation, but rather that we are in the early throes of a Great Restructuring.

Instead, the stagnation of median incomes primarily reflects a fundamental change in how the economy apportions income and wealth. The median worker is losing the race against the machine.

Second, the authors suggest that the only way we human being can win this battle “against” the machine is to work side-by-side with the machine. As a society,  it’s time for another good shake to some fundamental things.

The best chess player is a team of humans using computers.

But at the same time, the computer, like all general purpose technologies, requires parallel innovation in business models, organizational processes structures, institutions, and skills. These intangible assets, comprising both organizational and human capital, are often ignored on companies’ balance sheets and in the official GDP statistics, but they are no less essential than hardware and software.

The most productive firms reinvented and reorganized decision rights, incentives systems, information flows, hiring systems, and other aspects of organizational capital to get the most from the technology. This, in turn, required radically different and, generally, higher skill levels in the workforce

On Education

It also enables unbundling of instruction, evaluation, and certification, which encourages educational systems to be based more on delivering genuine, measurable results and less on simply signaling selection, effort, and prestige.

Combining videoconferencing, software, and networks with local teachers and tutors has a number of potential advantages. The very best “superstar” teachers can be “replicated” via technology, giving more students a chance to learn from them.In particular, softer skills like leadership, team building, and creativity will be increasingly important.