Irving Wladawsky-Berger

The Growing Value of Social Skills

I recently read a very interesting paper, The Growing Importance of Social Skills in the Labor Market, by Harvard professor David Deming.  Deming’s paper shows that over the past several decades, labor markets have been increasingly rewarding social skills, that is, interpersonal skills that facilitate interactions and communications with others.  He presents evidence that since 1980, social-skill intensive occupations have enjoyed most of the employment growth across the whole wage spectrum, and that employment and wage growth have been particularly strong in jobs that require both high cognitive and high social skills. 

Deming’s paper builds on the work of MIT economist David Autor, a leading authority on the impact of technological change on the US labor market.  A few weeks ago I wrote about a paper he published this past summer on the history and future of workplace automation.  In that paper, Autor summarized the sharp polarization of job opportunities that’s taken place in the US over the past two decades, noting that job opportunities have significantly expanded in both high-skill and low-skill occupations, while they have significantly contracted for mid-skill jobs. 

The reason for this polarization is that automation has been most successful when applied to mid-skill routine tasks, that is, tasks or processes that follow precise, well understood procedures that can be well described by a set of rules.  The occupations most susceptible to automation have included blue-collar physical activities such as manufacturing and other forms of production, as well as white-collar, information-based activities like accounting, record keeping, and many kinds of administrative tasks.  As a result, these occupations have experienced the biggest declines in employment opportunities and earnings. 

On the other hand, non-routine tasks are much harder to describe by a set of rules that a machine can follow.  These include manual jobs in fast-food restaurants, janitorial services and health-care aides that require relatively low skills and education, as well as high-skill jobs that involve expert problem solving and complex communications requiring strong cognitive skills and a college education.

Why Blockchains Could Transform How the Economy Works

The October 31 issue of The Economist featured the blockchain in its cover: “The Trust Machine: How the technology behind Bitcoin could change the world.”  Its two articles on the subject explain what blockchains are about, as well as why we should care about an exotic technology that involves concepts from cryptography, game theory and distributed computing. 

Right up front, the Economist distinguishes between three different notions that are often muddled up when discussing blockchains: 

• Bitcoin, the best known and most widely held digital currency, whose users can transact directly with each other with no need for a central authority, - be it a bank or government agency, - to certify the validity of the transactions.
  

• The blockchain architecture underpinning bitcoin, whose protocols were specifically designed to control the creation and transfer of bitcoins. 

• The general concept of blockchain, a distributed database architecture with the ability to handle trust-less transactions where no parties need to know nor trust each other for transactions to complete. 

Bitcoin has had a mixed reputation, due to its wild fluctuations in value and past links to illicit activities.  And, bitcoin-specific blockchain concepts like mining might well be perceived as too wasteful of computing power and energy by all but the most libertarian of bitcoin supporters.  But the advanced technologies and architectures underlying blockchains are being increasingly accepted as having important implications far beyond bitcoin and other cryptocurrencies.

The blockchain holds the promise to revolutionize the finance industry by bringing one of its most important and oldest concepts, the ledger, to the Internet age.  Beyond finance, the blockchain “offers a way for people who do not know or trust each other to create a record of who owns what that will compel the assent of everyone concerned.  It is a way of making and preserving truths.”

Two-Speed IT Architectures

I recently read an interesting McKinsey article, Organizing for digital acceleration: Making a two-speed IT operating model work.  The article argues that born digital  Internet companies, - e.g., Amazon, Google, Facebook, - are setting the standards in the quest to understand and optimize the customer experience, challenging traditional companies to keep up.  These older companies have to both leverage the back-end systems, processes and overall capabilities that have served them well over the years, while adopting innovative consumer-facing technologies to enhance their customers’ experiences.

The article starts out by summarizing the best practices of born digital companies:

• Provide the appropriate information and platforms so customers can find what they need quickly and reliably. 
• Align technology and production systems with business goals. 
• Limit the size of application-development teams. 
• Focus on agile product development to enhance customer engagements. 
• Encourage product managers to think about digital experiences rather than discrete applications or components. 
• Collect and learn from consumer data.
• Engage in frequent testing and experimentation.
• Don’t be afraid to fail.
  

Technological Unemployment and the Future of Work

Few topics are as important, - and as challenging to anticipate, - than the future of work given our justifiable fears of rising technological unemployment.  How are job markets likely to evolve in our 21st century digital economy?  This question has been widely discussed for years, but, - at the end of the day, - we don’t really have good answers.

One such discussion took place this past September at the The World Summit on Technological Unemployment in New York.  Its agenda featured top experts on the subject, including Larry Summers, Robert Reich and Joseph Stiglitz.  I moderated a panel on Technology and the Future of Work, where MIT economist David Autor and NY Times reporter John Markoff talked about their most recent work.  The Summit explored many good ideas, but there were no definitive answers.

Autor’s most recent paper on the subject, Why Are There Still So Many Jobs? The History and Future of Workplace Automation, frames the topic through a number of important questions, including:

• Why hasn’t automation already wiped out a majority of jobs?;
• Will mid-skill, mid-pay jobs continue to decline?; and
• What’s the impact of AI, robotics and other advanced technologies?