The Techno-Future’s Promise

In his new book, WTF: What’s the Future, and Why It’s Up to Us, Tim O’Reilly, founder and CEO of O’Reilly Media, argues Silicon Valley and the innovation it’s fostering can be a fount of amazement or a source of dismay. O’Reilly joined AEI’s podcast to discuss how Americans should respond to the coming changes, and whether our government is up to the task. Below is a transcript of the conversation:


Do you think your ideas fall neatly into left-right boxes?


Absolutely not. I think that we need to reinvent politics and policy for the 21st century in the same way that we expect our technologists to reinvent things. We so often have a kind of framing blindness where we rethink the world in terms of the familiar. We did connect the taxi cabs in 2005, only three years before Uber came along, and it was a screen in the back of the cab showing ads. And then somebody goes, “Wait, we can do this whole new thing — matching people up in real-time using their smartphones.”

And that kind of breakthrough, which we see periodically — we see it with Amazon Echo, you know suddenly you can have a speaker that’s listening to you all the time and it gives you this access to a new world, or self-driving cars — we could do the world differently, so let’s do policy differently too. And the thing that I think is the biggest change, first of all, is for policymakers to realize that the world is changing and we can do it differently, that it’s subject to our control. But that control is going to require change, deep change.



To cope with the coming changes, will we need big, bold, sweeping proposals like universal basic income?


No, I don’t think we need that. When I say rethinking in a big way, I don’t necessarily mean things like Universal Basic Income; that may or may not be a good idea. I mean thinking about, for example, what are we going to invest in education? What does that actually mean for today?

One of the fabulous statements that I quote in the book is this one from Hal Varian, Google’s chief economist. He said, “If you want to understand the future just look at what rich people do today.”

What are rich people doing? Let’s see. They send their kids to schools with very small class sizes, they have concierge medicine, and I think both of those things are possible with technology. And we would put lots of people to work if we had said, “Oh yeah, we want all of our kids to have this environment where they have access to knowledge where teachers are mentors. So, we are going to need to bring all of these kinds of people in and we are going to do school for ordinary people like we do for rich people.”

What would that look like? Take health care: There are already people working on concierge medicine in health care. All the pieces are there. Paul Farmer is doing this in Haiti for Christ’s sake with community health workers. Now, imagine a community health worker upskilled with AI and telemedicine, and the equivalent of Google Glass, able to make house calls, because we already know that intervening with the heavy users before they show up in the emergency room actually saves money in the system.

We could completely rethink the structure of our health care, and instead we’re kind of going, “Well how are we going to pay for the same bloated, inefficient system the way it always worked?” And that’s what I mean. Uber didn’t say, “Let’s do away with taxis,” they said, “Let’s figure out how we can do that thing more efficiently.”

How can we do education more efficiently? How do we think about work? How do we deploy people to work on things that need doing when there’s clearly a market failure? I heard that Larry Summers once refuted the efficient market hypothesis by saying, “There are idiots, look around,” and I refute the jobless future the same way; there’s work to be around, look around — we’ve got crumbling infrastructure, we have so many things wrong in our society. What’s keeping us from working on them?



A lot of attention lately focusses on the “Frightful Five” tech companies: Google, Amazon, Apple, Facebook, and Microsoft. Do you think that we need to either highly regulate them or somehow break them up?


You know, I don’t actually think that they should be broken up. In the book actually, I talk a lot about the responsibilities of the platforms to their ecosystems. And I think there’s an enlightened self-interest. I believe that Goldman Sachs used to call it long term greedy — how do we make things better for the long term as opposed to the short term? And these platform companies really do matter in the economy and they need to understand that it’s not good for them to take too much of the value. They should be thinking, “Am I feeding my ecosystem? Am I continuing to grow?”

So the job of regulators, for example, might be to measure that. We find in tech that you get what you measure. And what if we, for example, had new metrics for the contribution of — there’s a concept out of energy accounting called Sankey diagrams measuring how energy flows through the economy. For example, my son-in-law has done some amazing Sankey diagrams for the entire US. How does value circulate through companies and to whom? You know, the economics profession has been focused on the idea that we need to incentivize production, and I think we actually need to understand how value circulates and gets redistributed. And that to me is a clear focus for economic research and policy research, because our fundamental problems today are not the production of more value, it’s actually the distribution of value — so it gets to all the right places in the economy, the distribution of work.


There’s some concern that a lot of these tech-enabled jobs of the future won’t be accessible to many people. Are we going to be creating all these jobs which a large percentage of the population just can’t do?


I don’t really buy that. I mean, first of all, here’s a great example — you may have heard about “the knowledge.” It’s short for the knowledge of the streets of London. I mean it’s an incredibly complex exam that black cabbies would have to train for multiple years to be able to master, like being a human GPS. It’s like, “Given this point in London, and this other point in London, give us the turn-by-turn directions to get from the one point to the other.” And now anyone can do that because we have used technology to upskill people to what was formerly a complex task. And guess what, we’re putting a lot more people to work doing that job.

Now, imagine how we start doing that in health care. We say, “We’re going to use technology to upskill people so that more people can do things that a doctor can do.” And I go wow, we can put millions of people to work delivering better health care at lower costs using automation. Or even in a smaller way, although this does not quite fit Daron’s idea of complex tasks, but look at what happened when Amazon, from 2014 to 2016, put 45,000 robots in their warehouses; they packed in more products, they didn’t say they were going to do the same thing — “just cut the cost” — they said, “We’re going to do more, we’re going to have more products that we can get out for next-day delivery.” And now they are doing same-day delivery in a lot of different zip codes. And as a result, they hired 250,000 more people, not to mention the hundreds of thousands of on-demand delivery drivers driving through Amazon Flex, which nobody talks about and it’s actually heading to being as big as Lyft.


American Enterprise Institute
November 9, 2017