Chris Dixon

I think about every time I walk through Grand Central Terminal and see dozens of empty ticket windows. Imagine, not too long ago people were paid to sit in those windows 24 hours a day. Their jobs have been replaced by machines that don’t take holidays, never call out sick, process requests twice as fast and never give the wrong amount of change. This same technology has certain created more jobs than it has displaced. 

A key a dilemma is the distinction between value creation, which technology is definitely great at, and the mechanisms for value allocation and distribution, which don’t necessarily translate into “jobs”. Industrial society offered employment as a mechanism for individual value capture, but the dynamic structures enabled by new technologies have changed this dramatically.

In addition to an emphasis on creative intensity, there is an emphasis on abstraction. In a way, the first derivative is making something, the second derivative is designing it, and the third is perhaps the financial sector, capturing value through the abstract manipulation of real products and services turned into quantities and symbols.

High-volume, low-skill manufacturing will never return to America.

America made the mistake in the 60s and 70s of trying to compete on price with overseas factories. This led to a degradation of quality which only quickened the downward spiral.

Contrast this to Germany and Japan, whose manufacturing sectors focused on their strengths and did not try to compete on price.

American manufacturing will only thrive where specialization and knowledge can be leveraged and turned toward new markets and challenges.

A great example is the company Kyocera (short for Kyoto Cermanics). Kyoto has been a center for pottery and ceramic production for over 1,000 years. Drawing on that knowledge and the skilled labor in the area, Kyocera began producing industrial ceramics in the 1960s and was instrumental in the semiconductor revolution (ceramic casings are used to enclose CPUs). They also make those neat ceramic knives that you never need to sharpen.

If they looked at their skill-set and said “well, all we can do is make dinner plates and Chinese plates are cheaper so we’ll have to lower our prices” they would be out of business. Unfortunately, I think this is what happened to much of the Rust Belt in America. Too stubborn and slow to adapt.

Skilled manufacturing, including craftsmanship, is the only kind that will survive in “developed” countries (China included some day).

You are absolutely spot on with respect to this one Chris.
1.  This is a subject
which I plan to address in an upcoming article on my blog.  I have tentatively entitled it, “Why All
Politicians are Liars.” 

2.  While a direct
cause and effect relationship can be relatively easily proven in the physical
universe involving physical / inanimate objects, it is far more difficult to
prove such a relationship in the human / emotional universe.  In the realm of human / emotional concepts,
of which “job creation” and “job pursuits” are subsets, we distance
ourselves even further from potential solutions, and complicate the search,
when we politicize the discussion.

3.  The history of
technology, believe it or not, is a relatively recent concept.  In fact, a professor at Georgia Tech during
the 1970s and 1980s, Melvin Kranzberg, Ph.D., was known as the “Father of
the History of Technology.”  It is a
subject taught in the “social science” arena, not the hard core science
arena.

4. By now, you have a hint as to where I am going.  Job creation is about technology.  Technology
is about creativity, innovation, and invention.  I was in the technology, innovation, and
intellectual property field for years. 
The inventors with whom I and my firm dealt did not stop to think one
minute about any of the factors mentioned above.  They innovated and invented because that’s
who they are and that’s what drives them spiritually and emotionally, sometimes
to the exclusion of other things that drive other folks.

5. When you have a society where a sufficient number, or CRITICAL
MASS, of your citizens are inventors, scientists, and engineers, new
technologies result.  New
technologies create new businesses, and new businesses create jobs.  Check out the numbers of scientists and
engineers being produced by our universities as compared to past years.  As a result of my experience in the tech
start-up venture capital world, I will concede that fledging businesses or even
struggling businesses might consider some of the factors mentioned.  However, most good, profitable businesses
have savvy people at their helm who figure out the way to make more money, no
matter what the environment in which they find themselves.  They also work 80-90 hours per week, not 40.  They are not of the mindset that they let the
factors mentioned above influence their pursuit of profit.

6.  Technology waves
occur in cycles.

7.  Folks in the
technology arena claim that “what the world needs now” is another
earth-shattering, significant invention which advances the interests of all
humankind, no matter the socio-economic status or geographic location:  things along the order of the automobile, the
airplane, the locomotive, the computer, the personal computer, the Internet.  We have not had such a type of invention in a
very long time.  We are due.  In the mean time, the world struggles.

8.  American society
has become a society obsessed with sound-bites, the superficial, athletes,
entertainers, and media talking heads. 
Some months ago, I wrote a piece entitled, “Does Any One Have a
Real Job in America Any More.”  In
our transition from a manufacturing economy to a service economy, the product
(i.e. inventions and technology) production got shifted off shore for profit
reasons (which some deem treasonous), and we were left with ad men,
salespeople, fast food dispensers, and folks to collect your money.

9.  Bottom line:  we need more scientists, engineers and
inventors to start the process of creating jobs.

10.  The cover story
on Newsweek some weeks ago discussed how we are killing ourselves from a
scientific perspective, and recounted some of our earlier successes.  The Chinese are producing kids eager to
pursue scientific and engineering careers (in massive numbers).  We’re about to get our butts kicked by the
sheer numbers alone, unless we wake up and stop the partisan bickering over
non-issues.

There are two issues at hand wrapped into one post:

(1)

One is being able to carve manufacturing out..  As industries mature, the interfaces between processes / parts standardize, stabilize, and then modularize. This is described by Chris’s previous post…  One doesn’t need to have all the functions vertically integrated in one facility, and some of the necessary steps can take place elsewhere, potentially in other countries.

In practical terms, usually mass manufacturing is at the bottom of the “U” curve in the value chain:  one end of the U is R&D/design and the other is branding/marketing.  Both ends produce nice office jobs,  whereas the bottom of the U  (i.e. actually making laptops) provides blue-collar jobs & companies with razor thin margins.

It is true that enabling the manufacturing to take place elsewhere means that people in the US labor market are now in competition with their peers elsewhere who can perform such functions.  Being able to move manufacturing,  especially with improvements in inventory management, shipping,  infrastructure (energy, roads etc.) in the developing world all increase competition for this class of laborer.   This can be expected to put a downward pressure on wages & increase inequality.

(2)

However,  the neo-luddite argument of technology destroying jobs is false, and comes from a fundamental misunderstanding of economics.  It can be briefly stated as seeing modern economies as a zero-sum game, with a fixed pie to distribute. 

Let’s consider pre-modern societies: Most of the population used to work in farming and activities otherwise related to getting calories:  fishing, hunting, gathering et cetera.  

Nowadays, however, in most developed countries, less than %2 of the population now works directly in farming, fishing, hunting, and gathering.   Contrary to massive societal collapse,  this freed up people to do/make other kinds of stuff, like iPad games.

Miners & people who dug tunnels for railways complained about the steam engine, and there have been hundreds if not thousands of technological changes that made entire classes of jobs redundant throughout history.  Yet this only enabled people to offer even more sophisticated services to each other:

Most of our “needs” / “wants” are far removed from the basics. If people stopped wanting stuff,  we’d be in trouble…  but  in reality,  our wants overcome our actual needs so greatly that, we go around sleep-deprived,  without getting fresh air & exercise,  not spending enough time with our children,  eating too much etc. in pursuit of respect, success or whatever our insecurity at the moment is.  Human desire & need is endless (and so is human suffering),  and no technological change will lead to societal collapse due to making people redundant.

Our wants are ever increasing, from self-driving cars to space travel to taste recommendation engines.  There will always be an infinite number of new wants to satisfy,  even if you find yourself without a job due to craigslist. Simply look up an ad in it.  This is the basic driver of our economy.