Race Against the Machine “Talk Title”ebusiness.mit.edu/sponsors/common/2012-AnnualConf/AC... · 2012. 6. 1. · “Talk Title” Name . Title . CDB Annual Conference . May 23,

“Talk Title” Name Title CDB Annual Conference May 23, 2012

Race Against the Machine Andrew McAfee Erik Brynjolfsson

1

CDB Annual Conference May 23, 2012

The Problem

“Ten years ago we had Steve Jobs, Bob Hope, and Johnny Cash…”

2 http://www.reddit.com/r/reddit.com/related/l2y30/10_years_ago_we_had_steve_jobs_bob_hope_and/

The Problem

“Ten years ago we had Steve Jobs, Bob Hope, and Johnny Cash…

Now we have no

jobs, no hope, and no cash.”

- LiamMyers, Reddit.com

3 http://www.reddit.com/r/reddit.com/related/l2y30/10_years_ago_we_had_steve_jobs_bob_hope_and/

Productivity, Wealth Creation, Wages, and Jobs: Good News and Bad News

4 Copyright © 2011 Erik Brynjolfsson and Andrew McAfee

Productivity Growth


GDP Growth


100

110

120

130

140

150

160

170

180

190

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Inde

x (1

975

= 1

00)

Index of Growth in US Real GDP per Capita and Real Median Household Income, 1975-2009

Real GDP per Capita

GDP per capita vs median Income


100

110

120

130

140

150

160

170

180

190

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Inde

x (1

975

= 1

00)

Index of Growth in US Real GDP per Capita and Real Median Household Income, 1975-2009

Real GDP per Capita

Real Median Household Income

8 Copyright © 2012 Andrew McAfee

9 Copyright © 2012 Andrew McAfee

Median Income

Source: BLS 11 Copyright © 2011 Erik Brynjolfsson and Andrew McAfee

Job Creation

Source: BLS 12 Copyright © 2011 Erik Brynjolfsson and Andrew McAfee

Duration of Unemployment

BLS 13 Copyright © 2011 Erik Brynjolfsson and Andrew McAfee

What’s Going On?

Business Cycle

“All the facts suggest that high unemployment in America is the result of inadequate demand—full stop”


Stagnation

“We have been living off low-hanging fruit for at least three hundred years. ... Yet during the last forty years, that low-hanging fruit started disappearing… we are at a technological plateau… That’s it. That is what has gone wrong.


Our View “Digital technologies change

rapidly, but organizations and skills aren’t keeping pace. As a result, millions of people are being left behind. Their incomes and jobs are being destroyed, leaving them worse off … than before the digital revolution. While the foundation of our economic system presumes a strong link between value creation and job creation, the Great Recession reveals the weakening or breakage of that link. .”


The Digitization of the Economy

Copyright © 2011 Erik Brynjolfsson and Andrew McAfee 18

IT Investment Over Time






What are the Economic Consequences of this Rapid

Digitization of the Economy?

Three Sets of Winners and Losers

1. High Skilled vs. Low Skilled workers



1. High Skilled vs. Low Skilled workers


Skill Disparities



1. High Skilled vs. Low Skilled workers 2. Superstars vs. Everyone Else


Superstars

Source: Piketty and Saez


Superstars



1. High Skilled vs. Low Skilled workers 2. Superstars vs. Everyone Else 3. Capital vs. Labor


Capital


… vs. Labor


We Ain’t Seen Nothing Yet…


Our View “Computers are now doing

many things that used to be the domain of people only. The pace and scale of this encroachment into human skills is relatively recent and has profound economic implications. Perhaps the most important of these is that while digital progress grows the overall economic pie, it can do so while leaving some people, or even a lot of them, worse off.”











Recent Technological Progress

State of Understanding, 2004

Human Abilities - Pattern Matching - Complex Communication


The bakery truck driver is processing a constant stream of [visual, aural, and tactile] information from his environment… to program this behavior we could begin with a video camera and other sensors to capture the sensory input. But executing a left turn against oncoming traffic involves so many factors that it is hard to imagine discovering the set of rules that can replicate a driver’s behavior.



The bakery truck driver is processing a constant stream of [visual, aural, and tactile] information from his environment… to program this behavior we could begin with a video camera and other sensors to capture the sensory input. But executing a left turn against oncoming traffic involves so many factors that it is hard to imagine discovering the set of rules that can replicate a driver’s behavior.





Complex Communication

Source: http://www.nytimes.com/2010/03/09/technology/09translate.html 42 Copyright © 2011 Erik Brynjolfsson and Andrew McAfee

Complex Communication Human Evaluation Scale 5 – Excellent The information was presented clearly and with

appropriate grammar, vocabulary, and style and can take action on it.

4 – Very Good There may be minor errors in the text, but I am very confident that I understand the meaning and can take action on it.

3 – Actionable There are errors in the text, but I am reasonably confident that I understand the meaning and can take action on it.

2 – Unclear Errors in grammar, vocabulary and style make it difficult to understand the meaning, but I can guess it.

1 – Poor Fundamental errors in grammar and vocabulary make it very difficult to understand the meaning.

0 – Exceptionally poor No useful information is conveyed at all.

Source: Lionbridge 43 Copyright © 2011 Erik Brynjolfsson and Andrew McAfee

Complex Communication Segment Ratings

您送来的风扇是最初随处理器一起提供的吗？

You sent the original fan with the processor? 5 GeoFluent

You sent the first with the processor fan is provided with it? 2 Google

好的，先生，我会立即向您发送需要填写的系统配置表单（通过电子邮件），填写此表单后，请您将其发回来，我会立即上报您的案例

Hello, Sir, I will immediately send you a system configuration form to complete (via email), fill this form after I would request you to send it back, I will escalate you case 3 GeoFluent

Yes, sir, I will immediately send you a form to fill in the system configuration (by email), fill out this form, please send it back to you, I will be immediately reported to your case 2 Google

风扇上是否有任何物理损坏？

Any physical damage on the fan? 5 GeoFluent

Are there any fans on the physical damage? 1 Google

我们需要您单独将此设备的购买凭证发送给我们。

We need you to separate to send us the proof of purchase of the unit. 2 GeoFluent

We need your proof of purchase separate devices to send this to us. 2 Google


Complex Communication Segment Ratings

Nos alegramos de serle de ayuda.

We are glad to be of help. 5 GeoFluent

We welcome help. 1 Google

Con el fin de procesar el pedido de sustitución, le pediría que me confirmara los detalles de más abajo.

In order to process replacement order for you I request you to confirm the below details. 4 GeoFluent

In order to process the replacement order, I would ask that I confirm the details below. 2 Google

Recibirá un mensaje de correo electrónico generado automáticamente que incluirá instrucciones detalladas acerca del procedimiento de embalaje y la dirección a la que debe enviar la unidad defectuosa.

You will receive an auto generated email which will contain detailed instructions regarding the packing procedure and the address to which you will have to send the faulty unit. 5 GeoFluent

Receive an automatically generated email that will include detailed instructions on the packing procedure and the address to which to send the defective unit. 3 Google

Tenemos muchos problemas con esta misma memoria, ya que no es compatible con el procesador.

We had lots of problems with this same memory as it is not compatible with the processor. 5 GeoFluent

We have many problems with this same report, it is not compatible with the processor. 2 Google



0

1

2

3

4

5

Comprehension Rating for Actionable Content

2.8

4.1 Human evaluators ranked

customized GeoFluent output 48% higher than a

baseline engine

Human Evaluation of Spanish to English Chat Translation

Baseline MT Engine

GeoFluent customized MT



47

90% of the translated segments were found to be actionable

83% of users responded that in cases where the translation was not clear, they were able to achieve a successful translation by asking for clarification

Source: Lionbridge

Combining Complex Communication and Pattern Matching: The Digital Frontier

The Digital Frontier



Source: “Building Watson: It’s not so elementary, my dear” – W. Shih. HBS case #9-612-017 50 Copyright © 2011 Erik Brynjolfsson and Andrew McAfee





How Is This Happening?

Moore’s Law


0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Dolla

rs

Average Transistor Price

Moore’s Law


1.E-08

1.E-07

1.E-06

1.E-05

1.E-04

1.E-03

1.E-02

1.E-01

1.E+00

1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Dolla

rs

Average Transistor Price

Moore’s Law


1.0E+06

1.0E+07

1.0E+08

1.0E+09

1.0E+10

1.0E+11

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

(Hz)

Microprocessor Clock Speed

Sources: Berndt et al., ITRS

Second Half of the Chessboard

1958 + 32 * 1.5 = 2006

We enter second half of the technology chessboard?

US BEA starts tracking IT

Moore’s Law doubling period (years)


What Is To Be Done?


Education

1.Invest in education 2.Hold teachers accountable for performance 3.Separate student instruction from testing and

certification 4.Keep K-12 students in classrooms for more

hours 5.Increase the ratio of skilled workers in the

United States by encouraging skilled immigrants


Entrepreneurship

6. Teach entrepreneurship as a skill not just in elite business schools but throughout higher education

7. Boost entrepreneurship in American by creating a category of founders’ visas for entrepreneurs

8. Create clearinghouses and databases to facilitate the creation and dissemination of templates for new businesses

9. Aggressively lower the governmental barriers to business creation


http://startupvisa.ca/blog?page=2

Investment

8.Invest to upgrade the country’s communications and transportation infrastructure .

9. Increase funding for basic research and for our preeminent government R&D institutions


Law, Regulation and Taxes 12.Preserve the relative flexibility of American labor markets by

resisting efforts to regulate hiring and firing . 13.Make it comparatively more attractive to hire a person than

to buy more technology 14.Decouple benefits from jobs to increase flexibility and

dynamism 15.Don’t rush to regulate new network businesses 16.Eliminate or reduce the massive home mortgage subsidy 17. Reduce the large implicit and explicit subsidies to financial

services 18.Reform the patent system 19.Shorten, rather than lengthen, copyright periods and increase

the flexibility of fair use 62


63


Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new ... ideas were discovered. And every generation has underestimated the potential for finding new ... ideas. We consistently fail to grasp how many ideas remain to be discovered. ... Possibilities do not merely add up; they multiply. - Paul Romer


“The material conditions of life will continue to get better for most people, in most countries, most of the time, indefinitely.” - Julian Simon


“… look around you and see a world beyond the dreams of any colonial citizen. Now, as in 1776, 1861, 1932 and 1941, America’s best days lie ahead.” - Warren Buffett, 2011 letter to shareholders


Documents

Race Against the Machine “Talk Title”ebusiness.mit.edu/sponsors/common/2012-AnnualConf/AC... · 2012. 6. 1. · “Talk Title” Name . Title . CDB Annual Conference . May 23,