Obama, America, and the Great Inflection

Manufacturing in China is showing growth once more (Getty Images)

A while ago Amol wrote a column about something he called The Great Hollowing - the way that, because of rapid technological innovation and globalisation (with manufacturing increasingly done in the Far East - see picture), we are running out of jobs for the poor to do. In his New York Times column today, Thomas Friedman, author of The World is Flat, gives a similar process a similar name.

Here, quoted at length, is the key paragraph. The implications are huge:

"In their terrific book, “Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy,” Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology note that for the last two centuries it happened that productivity, median income and employment all tracked each other nicely. “So most economists have had this feeling that if you just boost productivity, the pie grows, and, in the long run, everything else takes care of itself,” explained Brynjolfsson in an interview.'

“But there is no economic law that says technological progress has to benefit everyone. It’s entirely possible for the pie to get bigger and some people to get a smaller slice.” Indeed, when the digital revolution gets so cheap, fast, connected and ubiquitous you see this in three ways, Brynjolfsson added: those with more education start to earn much more than those without it, those with the capital to buy and operate machines earn much more than those who can just offer their labor, and those with superstar skills, who can reach global markets, earn much more than those with just slightly less talent".