P.J. O’Rourke long ago quipped that what really ended the Cold War was Bulgarian blue jeans. One bets he was being somewhat tongue-in-cheek, but the brilliant satirist had a point. The quality of what was being manufactured on the wrong side of the Iron Curtain was much less than sub-standard, and unattractive.
Ok, but before readers get too full of themselves, imagine what we’d look like in the free world if we had to make our own clothes. It’s no reach to say that the denim stylings of the Bulgarians would look positively Parisian next to what most of us would create. Thank goodness for the division of labor that allows us to relentlessly specialize. That we all get to do what we do best is the “why” behind clothes that make us look better all the time. Put another way, Spanx are most definitely a creation of the modern, globalized times we live in.
More important with regard to labor division, thank goodness for the automation (yes, robots…..) that will enable human specialization on a level that will soon enough make the present seem primitive by comparison. Figure that robots don’t require vacations, breaks, personal days, and all manner of other reasons to not be on the job. Imagine how specialized we will be when we’re dividing up work with machines that are never not working? It’s safe to say that this future will involve work for a growing majority that doesn’t at all resemble drudgery. We’ll have jobs that, upon description, elicit “you get paid to do that?” from those old enough to remember when work was actual work.
All of this, and much, much more came to mind while reading Mark Mill’s thoroughly brilliant and cheerful new book, The Cloud Revolution: How the Convergence of New Technologies Will Unleash the Next Economic Boom and a Roaring 2020s. At a time when more and more of the deep in thought are promoting a trade-is-war narrative whereby by “countries” compete for “jobs” and other allegedly finite goods, the polymath in Mills offers a rightly optimistic assessment of what’s ahead. It’s going to be beautiful, and it will be precisely because the more “hands” (human and automated) producing alongside us globally, the better off we’ll all be. Amen.
It’s too easily forgotten that open borders to goods and services aren’t just wondrous because we have more of the world’s producers competing to meet our needs at ever-lower prices. What’s truly spectacular about open trade is that the odds of our doing the work most commensurate with our unique skills and intelligence soar. Division of labor is the path to labor specialization that enables relentless productivity increases simply because we get to do what we’re really good at doing.
As Mills sees it, the specialized path we’re on is going to gift us with a boom. Looked at numerically, “The 25 percent in the near future will live like the 5 percent today, and the future 5 percent will live like today’s 1 percent, and so on.”
What’s going to drive this great leap? As always technology. To some, the latter may read as trite, except that it’s anything but. Precisely because technology by its very name replaces human endeavor, it in the same way propels human endeavor to levels of productivity that were previously impossible to attain. In Mills’s words, technology doesn’t displace human effort as much as it “amplifies human labor.” Yes it does. Technology is what frees us from the aspects of work that slow us down so that we can spend our precious hours on what we do best.
Please think about what this means for the future. Mills observes that if our health holds up, we’ve got somewhere in the neighborhood of one million working hours in us over a lifetime. In which case, imagine what we can accomplish with those precious hours if machines are more and more freeing us from the activities that most limit our production? It staggers the mind to contemplate. At the very least, it’s easy to deduce from Mills’s assessment of where technology is taking us that the robots some errantly believe we should be fear will be the gift that keeps on giving to actual human workers.
Some might ask if Mills’s optimistic assessment will change based on the “robot” taking on human qualities. The answer is a resounding yes, but perhaps not the yes that some readers would expect. To Mills, the ideal robot is “anthropomorphic – human-like in appearance and mechanical function.” Whereas Mills defines the machine as “a device that performs a task,” his vision for robotics is expansive. What can mechanize and ideally improve on human action can only improve, and yes, amplify our living capacity to produce. Mills seeks in machines “dynamic logic, the ability of a machine to self-alter its behavior in real time, have productive capabilities, and even exhibit autonomy.” The more that machines roar, the more that the economy will. This fear of human-like machines is rooted in the mistaken belief that there are “limits to the planet’s tolerance for human flourishing.” Except that there are no limits to what we can accomplish other than realistically time, thus the importance of technology to speed up what we can accomplish with the limited time we have. Which brings us to a digression of sorts.
Mills refers to “time” as “the most precious of all commodities.” This is important not because some or many readers haven’t heard it, but because of what it modernly discredits. So many who should know better follow the Federal Reserve with great intensity as though the central bank’s relative willingness to “loosen” or “tighten” credit will be of economic importance. No, such a view is mindless. Credit is produced. We borrow money for what it can be exchanged for. Real resources. After which, per Mills time is yet again “the most precious of all commodities.” Yes it is, and the Fed can’t produce even an extra second. Not only will automation and robots author levels of growth that will astound us for their bounty, they’ll also finally put to bed a “Fed” narrative that never made sense, but that refuses to die. Credit on offer because of production (meaning the only kind of credit) is set to astound us in terms of its abundance, and central bankers will logically have nothing to do with it. The Fed can neither shrink us nor elevate us. This has always been the case.
Indeed, if there’s a strong disagreement with Mills in a book that I view with great reverence, it’s his assertion in the introduction that Milton Friedman “definitively documented” the policies that caused the Great Depression. Except that Friedman tied the latter to the Fed, and its actions that allegedly limited so-called “money supply.” The problem with such a view is that money in actual circulation is always and everywhere a consequence of production, which means there’s no way that the central bank could limit the supply of an agreement about value among producers that facilitates exchange of production. In other words, even if the Fed had been too tight in the 1930s, this wouldn’t have limited economic growth, or “money supply.” The only closed economy is the world economy. Just as half of all U.S. dollars in circulation are nowadays moving goods and services to higher uses outside the U.S., so would trusted foreign currencies have found their way to the U.S. in the ‘30s, assuming Fed machinations had been capable of limiting dollar supply stateside. Considering the boom that Mills foresees, readers can rest assured that the money necessary to move the fruits of the boom will be abundant in the U.S., and there’s nothing the Fed can do about it.
In writing about all this, we’re in a sense getting ahead of ourselves. Consider the book’s title. It’s The Cloud Revolution. Mills makes plain early on that this “Cloud” we’ve been hearing about is of much greater importance than we’ve perhaps been led to believe. As Mills puts it, “The Cloud may seem like a cooked-up PR term, but a new word was needed to describe something that is as different from the Internet as the latter was different from telephony.” Imagine what this means. Figure that the internet was and is thoroughly transformative. There’s no way to adequately describe how different living and working are and will continue to be thanks to the internet. Yet along comes an advance that we perhaps don’t understand, but that Mills sees as a substantial next leap on par with the internet itself relative to the telephone. In reading this assertion, your reviewer had to pause. It made me think that an optimistic book is maybe not optimistic enough? If what we know as the internet is soon to be lapped in a sense, what does the future hold?
The answer to the above question is easy and hard. It’s hard in the sense that if we knew exactly how things would unfold, we’d be billionaires; that, or soon enough we would be billionaires. While always looking into the future, Mills acknowledges that what’s to come logically has opaque qualities. It has to. Lest we forget, entrepreneurs acquire the descriptor precisely because they’re feverishly working to rush an entirely different future into the present. They see not only what us readers mostly do not, but they also see what most commercial powers similarly don’t see. To offer up but one kind of old example, we would likely never have heard of Jeff Bezos if the commercial greats of the 1990s hadn’t thought his internet-commerce idea nuts. Get it? Does anyone remember when Amazon.com was mockingly referred to as “Amazon.org”?
In which case, Mill’s optimism isn’t rooted in certainty about what exactly will propel our work and living standards to levels previously unseen as much as he’s certain that technological leaps will most certainly propel our work and living standards to levels previously unseen. He bases his optimism among other things on the Rule of Three when it comes to technological advance. Brilliant as Henry Ford was, Mills insults him not one iota by noting that he “could not have built his great enterprise but for the confluence of the internal combustion engine, petroleum refining, and the idea of an assembly line.” As for the iPhone, Mills similarly doesn’t insult the late Steve Jobs one iota by pointing out that the latter “could not have been built were it not for the availability and maturity of three technologies that had come of age, none of which Apple or Steve Jobs had anything to do with: the silicon microprocessor, a pocket-sized TV screen, and the lithium battery.” To be clear, Mills isn’t being critical of Ford, Jobs, or anyone else standing on the proverbial shoulders of giants. Someone has to see a different tomorrow through the advances of today. Ford and Jobs did.
Mill’s optimism about the future is based on the notion that the Cloud represents yet another major technological leap that tomorrow’s entrepreneurs didn’t create, but who will build on it in remarkable ways. Put another way, from the Cloud will come staggering advances. Inequality will soar, and this – as always - will be a good thing. As the wealth gap rises, the lifestyle gap shrinks as luxuries become common goods. It’s always been this way. In a book full of information that this reviewer will cite for years, Mills notes that radio density in households “went from 0.2 percent in 1920 to nearly 100 percent by that decade’s end” thanks to RCA Corporation, “both the Google and Apple of its time.” This helps explain why the 25 percent will soon live as the 5 percent do now, and the 5 percent will soon rise to 1 percent. Inequality is born of the mass production of what was formerly obscure, or what never previously existed at all. The surest sign of our living standards rising to levels previously unseen in the roaring 2020s will be the entrance into the Forbes 400 of individuals we presently haven’t heard of. Many will be at, or near the top. Seriously, did you think Bezos would be the world’s richest man forever? Think again.
Bezos et al being pushed from the top of the rich team picture doesn’t signal economic decline as the bailout crowd would have us believe as much as it signals progress. In dynamic societies, the descriptor that is “great” has ephemeral qualities when attached to individuals and corporations. Mills states clearly early on that the “purpose in this book” is “to counter the ‘new normal’ claim.” Most definitely. Huge periods of technological advance are anything but normal, or tranquil. Translated for those who need it, the myriad misguided individuals who attached their names to commentary about the unchecked and “forever” power of “Big Tech” are going to eat those words in the Roaring 20s. Bank on it.
As a consequence of changes in the commercial order, change in our living standard order will be profoundly great. Mills writes that “Most appliances and services in daily life by 1950 hadn’t existed in 1900 at all,” and it’s apparent that what we’ll be broadly enjoying in 2030 will render 2022 somewhat of a different country. In Mills’s words, “The amount of computer horsepower devoted to machine learning has been doubling every several months, outpacing a Moore’s Law growth rate.” Buckle up. Change is coming, and it will be fast.
Along similarly positive lines, how we work promises to change in ways hard to contemplate. Mills has long been a lockdown skeptic, and one reason (among many) has been his view that willingness among individuals to endure stay-at-home orders had a lot to do with work that could be done from anywhere. It’s all a reminder that if the virus starts spreading in 2000, there are no lockdowns to speak of. We know this because “the millions who were able to telecommute would have joined the millions who got laid off.” Technological advance presumably promises to make 2030 and 2040 as alien to 2020 as 2020 was to 2000. This broad – and happy - truth is something we must keep our eyes on. With work more and more becoming an anywhere concept for all, we cannot be so willing to give up freedoms that wouldn’t imperil our paychecks. Freedom is its own virtue, at which point force from the political class decidedly isn’t required when something allegedly threatens us. In truth, the more threatening anything is, the more superfluous is political force. Let’s hope the tradeoffs to brilliant technological advance aren’t nonchalance about the freedoms that set the stage for technological advance in the first place.
One fascinating driver of all this progress will be of the energy variety. It’s remarkable to read Mills’s descriptions of how things have changed over the decades on this front. Thanks to energy efficiency, we’re growing in our use of – yes – energy. As Mills puts it, more articulately channeling Stanley Jevons, “efficiency will, overall, always increase, not decrease, energy use.” To use but one amazing example, Mills writes that “A single iPhone at 1980 energy-efficiency would require as much power as a Manhattan office building,” yet “the world today has billions of smartphones.”
Will “renewable” energy power the future? Mills doesn’t turn up his nose as much as he asks readers to remember Jevons. As he puts it, “Even if all the nations fulfill current promises to deploy more renewables (and, for the record, none have, so far, kept those promises), two decades from now not much more than one-fifth of global energy will come from renewables.”
What about electric vehicles? Mills thankfully doesn’t dismiss them as much as he asks readers to be reasonable about their enthusiasm on the matter of usage. Usage of a consumer product begets usage, which likely means that growing consumer interest in EVs will beget growing usage of automobiles more broadly. Which means that “even if the total number of EVs were to reach 300 million by, say, 2030, that would constitute just 20 percent of all the 1.5 billion cars that will be on the world’s roads by then.” In the estimation of Mills, petroleum “will remain a significant energy material in transportation machines for a long time.” Good.
Will the technological boom “leave behind” those whose talents don’t lie in STEM pursuits? After all, Mills bases his optimism on technological advance. Joyously the author busts the silly STEM myth. Lest readers forget, automation and robots amplify our talents as opposed to suffocating them. Applied to STEM, a raging economic boom born of technological advance will require less technological genius for those lucky enough to be of working age in the coming decades. There’s already evidence of this. Mills points out to readers that at Google, “a STEM degree was last on the list of the top eight qualities or skills found to be important for employee advancement.” In a broader sense, Mills adds that each year there are “roughly 50 percent more STEM graduates than there are STEM job openings.”
The bet here is that the next “economy” in the U.S. will be called “The Entertainment Economy.” Mills seems to agree as he spends a lot of time closer to book’s end on the extraordinarily happy truth that the “entire arc of technological progress has been to decrease the share of economies (and the share of people’s time) devoted to ‘essential’ tasks.” He then spends quite a bit more time on the rise of entertainment “work” (think videogaming, among other forms) that past generations could never have reasonably contemplated. Yes! This is so crucial. If it were all about “jobs,” we would just abolish the tractor, the computer, the internet, and most certainly, the Cloud. Everyone would be working and everyone would be miserable. Thanks to technological advance that renders the essentials an abundant certainty, more and more of us can quite literally entertain others for a living. Yes, we can do what we can’t get enough of, or what we would happily do for no pay, for pay. This yet again is the source of rising living standards that will propel more and more of the statistically average into lifestyles that will be staggering for their bounty. It’s not just that indefatigable machines will render want a very dated concept, it’s that those same extra “hands” will free more and more of us from work that has nothing to do with our talents. Technological progress will make “laziness” and “retirement” yesterday words. Productive workers are rich workers.
The above truths in a sense brought on some minor disagreements with the author. The view here is that if he was going to spend any time on birthrates or demographics, it should have been to dismiss with great prejudice all the conservative handwringing over both. Once again, the only closed economy is the world economy, which means interest in country birthrates ignores how all production is a consequence of global cooperation. After which, consider the robots! The number of “hands” and minds participating in the global economy is set to skyrocket. Humans are undoubtedly capital, but the simple truth is that it’s in the countries where progress is hard to discern that birthrates are high. In the rich countries, birthrates are logically falling.
In chapter 28 Mills contemplates and dismisses the at-times popular notion (Tyler Cowen comes to mind) that we’ve essentially run out of advances or ideas, that in Mills’s words “there are far fewer or perhaps even no discoveries left to be made.” Mills once again dismisses the silly notion, yet at the same time I wanted him to talk about economic activity since 1971. It’s not that progress has stopped, or that innovation has stopped, but the severing of the dollar’s link to gold in 1971 set the stage for massive amounts of daily currency trading (to mitigate the instability of a dollar lacking definition), a massive increase of wealth flowing into “real” inflation hedges, and most cruelly of all, a major departure of genius talent to facilitator financial roles. To be clear about the talent flow, this should in no way be construed as a hit on Wall Street. Wall Street and other financial centers are essential drivers of progress. At the same time, this is a statement that the look, shape and activities of Wall Street would be different if politicians hadn’t forgotten that the sole use of money is to “circulate consumable goods.” Precisely because Mills is a major thinker, and a credible thinker, he’s positioned to remove the “fringe” reputation that devotion to sound money has rightly, but much more wrongly acquired in modern times.
A few more things. About government in research, Mills replies “Quite the contrary” to the idea that government should stay out. That’s difficult to countenance. He argues that government is essential to “long-term projects,” but as he knows from Silicon Valley AND the oil patch, investors are much more than patient. If there’s value in the long-term, let’s please not muddy the long-term with government. Furthermore, in busting the myth about a future of working from home a hundred pages earlier, Mills observes that if the genius of work-at-home were “indisputable, a majority of profit-seeking businesses would have mandated remote work long before the coronavirus outbreak.” Indeed. What’s true about remote work is true about investment. If it’s valuable, the profit-motivated will find it.
Mills also offers stats that during the Soviet era, “the Russian people had only 40 percent of the per capita wealth of Americans.” The bet here is that he knows 40 percent is way too high by many orders of magnitude. Goodness, even in modern times of relative economic freedom Russia’s economy remains a small fraction of ours. What could it have been in the 1970s?
Still, these are minor disagreements that perhaps were taken out of context in the first place. The Cloud Revolution is nothing short of spectacular. And so is our future. As Mills opines near the end of an extraordinarily engrossing book, we’re at the beginning of “the most exciting and promising time in history.” Yes we are. Mark Mills artfully shows us why we are.
