January 16, 2012 By Robert Bell
In 1800, 90% of Americans worked on the farm. A century later, in 1900, 41% worked in agriculture, and another hundred years later, it was down to 2%. The numbers have differed across the industrialized nations but the trend has been the same.
What made the difference? It was the rise of the machines. Over two centuries, farming shifted from small plots and hand or animal labor to immense holdings made feasible by increasingly automated machinery. The result was an abundance of food at historically low prices.
From 2000 to 2007, the US economy saw a boom – the fastest growth in gross domestic product and labor productivity since the go-go decade of the 1960s. Yet employment growth was weak. The prime working age population, 25-54, saw only three-tenths of one percent monthly growth in jobs. That was the slowest of any expansionary cycle since the end of World War II. Average household income, meanwhile, actually shrank slightly – the first time on record during an economic expansion.
What made the difference? According to two MIT researchers, it was the rise of intelligence. In a new book, Race Against the Machines, Erik Brynjolfsson and Andrew McAfee suggest that information and communications technologies (ICT) are now making business more efficient faster than labor markets can keep up.
Advances in agriculture took centuries to reshape employment on the farm. Industrial automation took decades to advance from low-skilled labor to skilled workers operating robots. Even ICT took some time to get going. When the mainframe computer in the “glass house” represented the state of the art, it had little impact. But when there is a computer on every desk and almost every home, mobile computers (aka phones) in every hand, and the Internet and intranets to tie them all together, the potential for change skyrockets.
E-commerce reduces demand for retail staff. Streaming video wipes out video rental. Kiosks in airports and hotels replace clerks. Voice recognition and speech systems replace customer support staff, and the enterprise resource planning systems in major organizations shove aside administrative staff by the hundreds of thousands.
These kinds of adjustments are a natural and normal part of economic life. But now they are happening so fast. Suddenly, it seems, we are all dancing to the tune of Moore’s Law, which forecast that the power of a silicon chip would double every 18 months.
And it is not just in the US or other industrialized nations. Bynjolfsson and McAfee point out that the low wages paid to factory workers in China have not protected them from the rise of the machines. “Terry Gou, the founder and chairman of the electronics manufacturer Foxconn, announced this year a plan to purchase 1 million robots over the next three years to replace much of his workforce,” they report in a recent article in The Atlantic.
Coping with this brave new world takes a new approach, if we are not to temporarily beggar a significant share of the world’s workers. Bynjolfsson and McAfee argue that the same technologies now making business far more productive should be used to update and improve the educational system.
Absolutely. But that is only one example of a trend we have seen in Intelligent Communities around the world. It is an example of how government, institutions and businesses must engage in highly creative collaboration to keep businesses competitive while ensuring a living wage for employees and a high quality of life for citizens.
That is a challenging goal. It takes strong leaders who are not afraid to collaborate. It takes leaders who truly understand the words of Benjamin Franklin, before setting his signature to the Declaration of Independence: “Gentlemen,” he said, “if we do not now all hang together, we will all hang…separately.”
About the Intelligent Community Forum
The Intelligent Community Forum is a think tank that studies the economic and social development of the 21st Century community. Whether in industrialized or developing nations, communities are challenged to create prosperity, stability and cultural meaning in a world where jobs, investment and knowledge increasingly depend on advances in communications. For the 21st Century community, connectivity is a double-edge sword: threatening established ways of life on the one hand, and offering powerful new tools to build prosperous, inclusive and sustainable economies on the other. ICF seeks to share the best practices of the world's Intelligent Communities in adapting to the demands of the Broadband Economy, in order to help communities everywhere find sustainable renewal and growth. More information can be found at www.intelligentcommunity.org.
Robert Bell is co-founder of the Intelligent Community Forum, where he heads its research and content development activities. He is the author of ICF's pioneering study, Benchmarking the Intelligent Community, the annual Top Seven Intelligent Communities of the Year white papers and other research reports issued by the Forum, and of Broadband Economies: Creating the Community of the 21st Century. Mr. Bell has also authored articles in The Municipal Journal of Telecommunications Policy, IEDC Journal, Telecommunications, Asia-Pacific Satellite and Asian Communications; and has appeared in segments of ABC World News and The Discovery Channel. A frequent keynote speaker and moderator at municipal and telecom industry events, he has also led economic development missions and study tours to cities in Asia and the US.
ICF co-founder John G. Jung originated the Intelligent Community concept and continues to serve as the Forum's leading visionary. Formerly President and CEO of the Greater Toronto Marketing Alliance and Calgary Economic Development Authority, he is a registered professional urban planner, urban designer and economic developer. He leads regular international business missions to US, European, Asian, Indian and Australian cities, and originated the ICF Immersion Lab program. John is a regular speaker at universities and conferences and serves as an advisor to regional and national leaders on Intelligent Community development. The author of numerous articles in planning and economic development journals, he has received global and Toronto-based awards for his work in collaboration and strategic development and sits on numerous task forces and international advisory boards.
ICF co-founder Louis Zacharilla is the creator and presenter of the annual Smart21, Top Seven and Intelligent Community Awards and oversees ICF's media communications and development programs. He is a frequent keynote and motivational speaker and panelist, addressing audiences of tech, academic and community leaders around the world, and writes extensively for publications including American City & County, Continental Airline's in-flight magazine and Municipal World. His frequent appearances in the electronic media have included both television and radio in South Korea, China and Canada. He has served as an adjunct professor at Fordham University in New York and is a Guest Lecturer at Polytechnic University's Distinguished Speaker Series. He holds a Masters Degree from the University of Notre Dame.