Wednesday, August 13, 2014
It has been a tough time for white-collar middle-class workers, especially since the financial tsunami of 2008 when their wealth was first destroyed by the crash and other savings subsequently eroded by money printing.
The real long-term threat to the middle class, however, does not come from Capitalists with a capital C.
It is innovations by capitalists with a small c that have been displacing white-collar jobs all over the world. Entrepreneurs and innovators have been creating value and at the same time destroying obsolete technologies.
The information technology revolution since the 1970s has been replacing brain power, the same way diesel engines displaced workhorses.
Traditional schooling is meant to condition aspiring young people into being obedient and good at memorizing facts. Unfortunately, computers especially those super- computer clusters in the cloud are much more efficient at gathering and organizing data than humans. Computers also run programs exactly as they are told to.
White-collar jobs are disappearing not only because the economy is in bad shape but because technology has progressed to the point where it is cheaper to send jobs to the virtual space than to the office space.
The change began with lower-end roles such as typists and is moving up the value chain to sophisticated ones.
In 2011, IBM supercomputer Watson competed in the quiz show Jeopardy and won. Not only does the supercomputer have access to four terabytes of information, it can also understand human language in the context of humanlike interaction.
Last year, IBM deployed it for lung cancer treatment at a hospital and nurses are now working under machine guidance. Can lawyers read, understand and memorize court cases faster than computers? Can doctors keep up with all the latest discoveries better than computers?
American venture capitalist Nick Hanauer, an early investor in Amazon Inc, recently urged that the federal minimum wage be raised to US$15 (HK$117) an hour so as to bridge the widening wealth gap.
I'm afraid good intentions cannot defy the force of economic reality. Making hiring more costly may in the short run transfer some wealth but in the long run risks expediting the displacement of white-collar jobs.
Instead of giving people the false impression that the comfort zone will last forever, perhaps it would be more productive if we helped them join the creative class.
Simon Lee is a business consultant
http://www.thestandard.com.hk/news_detail.asp?pp_cat=15&art_id=148322&sid=42681360&con_type=1
