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Robert Reich: The “iEverything” and the Redistributional Imperative

New technologies aren’t just labor-replacing. They’re also knowledge-replacing.

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Image from Flickr via Phil Roeder

By Robert Reich
By arrangement with Robert Reich

It’s now possible to sell a new product to hundreds of millions of people without needing many, if any, workers to produce or distribute it.

At its prime in 1988, Kodak, the iconic American photography company, had 145,000 employees. In 2012, Kodak filed for bankruptcy.

The same year Kodak went under, Instagram, the world’s newest photo company, had thirteen employees serving 30 million customers.

The ratio of producers to customers continues to plummet. When Facebook purchased “WhatsApp” (the messaging app) for $19 billion last year, WhatsApp had fifty-five employees serving 450 million customers.

A friend, operating from his home in Tucson, recently invented a machine that can find particles of certain elements in the air.

He’s already sold hundreds of these machines over the Internet to customers all over the world. He’s manufacturing them in his garage with a 3D printer.

So far, his entire business depends on just one person—himself.

New technologies aren’t just labor-replacing. They’re also knowledge-replacing.

The combination of advanced sensors, voice recognition, artificial intelligence, big data, text-mining, and pattern-recognition algorithms, is generating smart robots capable of quickly learning human actions, and even learning from one another.

When more and more can be done by fewer and fewer people, the profits go to an ever-smaller circle of executives and owner-investors.

If you think being a “professional” makes your job safe, think again.

The two sectors of the economy harboring the most professionals — health care and education – are under increasing pressure to cut costs. And expert machines are poised to take over.

We’re on the verge of a wave of mobile health apps for measuring everything from your cholesterol to your blood pressure, along with diagnostic software that tells you what it means and what to do about it.

In coming years, software apps will be doing many of the things physicians, nurses, and technicians now do (think ultrasound, CT scans, and electrocardiograms).

Meanwhile, the jobs of many teachers and university professors will disappear, replaced by online courses and interactive online textbooks.

Where will this end?

Imagine a small box—let’s call it an “iEverything” – capable of producing everything you could possibly desire, a modern day Aladdin’s lamp.

You simply tell it what you want, and—presto—the object of your desire arrives at your feet.

The iEverything also does whatever you want. It gives you a massage, fetches you your slippers, does your laundry and folds and irons it.

We need a new economic model.

The iEverything will be the best machine ever invented.

The only problem is no one will be able to buy it. That’s because no one will have any means of earning money, since the iEverything will do it all.

This is obviously fanciful, but when more and more can be done by fewer and fewer people, the profits go to an ever-smaller circle of executives and owner-investors.

One of the young founders of WhatsApp, CEO Jan Koum, had a forty-five percent equity stake in the company when Facebook purchased it, which yielded him $6.8 billion.

Cofounder Brian Acton got $3 billion for his twenty percent stake.

Each of the early employees reportedly had a one percent stake, which presumably netted them $160 million each.

Meanwhile, the rest of us will be left providing the only things technology can’t provide – person-to-person attention, human touch, and care. But these sorts of person-to-person jobs pay very little.

That means most of us will have less and less money to buy the dazzling array of products and services spawned by blockbuster technologies—because those same technologies will be supplanting our jobs and driving down our pay.

We need a new economic model.

The economic model that dominated most of the twentieth century was mass production by the many, for mass consumption by the many.

Workers were consumers; consumers were workers. As paychecks rose, people had more money to buy all the things they and others produced—like Kodak cameras. That resulted in more jobs and even higher pay.

“Redistribution” has become a bad word.

That virtuous cycle is now falling apart. A future of almost unlimited production by a handful, for consumption by whoever can afford it, is a recipe for economic and social collapse.

Our underlying problem won’t be the number of jobs. It will be—it already is—the allocation of income and wealth.

What to do?

“Redistribution” has become a bad word.

But the economy toward which we’re hurtling—in which more and more is generated by fewer and fewer people who reap almost all the rewards, leaving the rest of us without enough purchasing power – can’t function.

It may be that a redistribution of income and wealth from the rich owners of breakthrough technologies to the rest of us becomes the only means of making the future economy work.

Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written thirteen books, including the best sellers Aftershock: The Next Economy and America’s Future and The Work of Nations: Preparing Ourselves for 21st Century Capitalism. His latest, Beyond Outrage, is now out in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

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17 comments for Robert Reich: The “iEverything” and the Redistributional Imperative

  1. Comment by Tyrone Grandison on March 17, 2015 at 2:25 pm

    Great piece.

    Echoes what I have been seeing and saying for a while now.

    Would love your thoughts on this blog post http://www.tyronegrandison.org/blog/what-is-it-about-the-sharing-economy-that-draws-minorities-to-it

  2. Comment by Todd S. on March 17, 2015 at 2:28 pm

    Gene Roddenberry was an exceptionally forward thinking person as evident in many aspects of Star Trek. It is noted in the series that the Federation has dissolved all currency as there is no need for it in the future once the “Replicator” is invented which could provide anything anyone wanted, including food. He envisioned your iEverything in the early 60’s and accounted for it in the story line!

  3. Comment by Todd Hotchkiss on March 17, 2015 at 2:41 pm

    i read Jeremy Rifkin’s book, The Zero Marginal Cost Society, and I’m ashamed to admit that it didn’t make a dent into my brain. It deals with just this exact problem, and posits a replacement paradigm- a Post Capitalist economy. Have you read it? If so, can you explain it to me? 🙂

  4. Comment by Adam on March 17, 2015 at 2:54 pm

    People are rational…population will decrease (and all the challenges that come with it). Look at Japan where this is already happening. People will redefine what relationships mean, and rationally decide that procreation isn’t in their personal financial interests.

    I say bring it on. The population problems our planet faces require us to move in this direction.

  5. Comment by Питащият on March 17, 2015 at 2:56 pm

    That sounds pretty strange against the background of world poverty . I think we are still far from Aladdin’s lamp. And remember for the Luddites riots . Today these riots against the machines look ridiculous . The outcome of this situation will be found . The question is at what price. This worries me.

  6. Comment by Gary Reber on March 17, 2015 at 3:31 pm

    While Robert Reich envisions a dire result as the technological revolution advances and less and less human labor is required to produce and distribute the products and services needed and wanted by society, with just a tiny few reaping ALL of the financial rewards, he poses the same old redistribution approach that results in socialism, instead of making EVERY citizen individually productive through their personal ownership stakes in the wealth-creating, income-producing capital assets resulting from technological invention and innovation. Rather than address the issue of concentrated ownership, as he alludes to in this article without ever using the therm OWNERSHIP, his ONLY solution is a redistribution of income and wealth from the rich owners of breakthrough technologies to the rest of us.

    I wish Reich would use his communication talent to advocate for making EVERY person a productive contributor to societal development through their personal ownership stakes in the productive capacity of our future. This can be accomplished without the requirement of past savings or a reduction in wages (if one is employed) or benefits using insured, interest-free capital credit to finance technological invention and innovation with the credit extended paid off out of the future earnings generated by the investments. In this way, we can build a future economy to support general affluence for EVERY child, woman and man, while at the same time generating, over the short-term (say a generation), virtual full employment and simultaneously creating new private property sector capital owners, who will benefit from growing purchasing power and financial security, and not dependent on a job that is being replaced by “machines” or a welfare State of elites determining who gets what.

    The proposed Capital Homestead Act would achieve this objective. Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.

  7. Comment by James Johnson on March 17, 2015 at 3:52 pm

    Citizens right this minute need to form giant ESOP and own all means of production, sales, and distribution. Then we can all go on permanent vacation, and leave the work to the robots and software. It can be done. Citizens just buy from the ESOPs and we will control everything!

  8. Comment by David Salow on March 17, 2015 at 8:10 pm

    I don’t think there’s any question that the evolution of societies winds up with all the wealth at the top – immediately (in relative terms) before its collapse.

    I’ve read plenty of commentary about “what’s wrong” with the current direction, nay, evolution, of the global economic condition but no real solutions. Injecting labor where it wasn’t doesn’t solve anything any more than crying about it, which is never in short supply.

    Mr. Reber proposes individual ownership/producership. This is an interesting concept. The problem, especially for global solutions, is that the resistive force is much greater than we can conceive. The haves will first see their empire destroyed before giving ground on the construction of a survivable organic economy.

  9. Comment by Christine H on March 17, 2015 at 8:27 pm

    When the Department of Defense becomes the largest employer in the world, we’ll be begging for wars just to keep our people fed.

    Oh, wait. It already is.

  10. Comment by Russell Day on March 17, 2015 at 9:42 pm

    The world is a big place, almost.
    World Citizenship ought not be just the status of the few.
    Legalizing work for all regardless of the nation of origin is one thing that would ameliorate some of the dramatic disparities between situations of the past and a present that is a future for only these you speak of.
    it is clearly in the interests of the ones who have achieved such incredible wealth from something as unnecessary as these apps. These are not tools that do much.
    Think of the exoskeletons that workers ought be wearing to process chickens? Many are needed. Who will make them? Aren’t Mechanics required to fix them. Mechanics have to fix planes and cars all the time and a welder is never out of work. And what of the bridges?
    There were reasons I called my nation a company, country and work of art. Russell

  11. Comment by dawn young on March 18, 2015 at 3:28 am

    e of the U.S. dollar began.

    For his part, legendary British economist John Maynard Keynes, who drafted much of the plan, called it “the exact opposite of the gold standard,” saying the negotiated monetary system would be whatever the controlling nations wished to make of it. Keynes had even gone so far as to propose a single, global currency that wouldn’t be tied to either gold or politics. (He lost that argument). The answer then . is the answer now Keynes modern monetary theory

  12. Comment by Todd Singleton on March 18, 2015 at 7:03 am

    Oh, look above… Gary Reber went into an “ownership society” rant. Gary, you and those like you are a cancer. The entirety of the US population cannot rely on “ownership” or investment income. It’s a myth wrapped in a farce inside a lie. People need work. Productive work. Not sit on your rear behind a screen or better, doing nothing while money flows in. Thanks for being a joke. Stop being a problem.

    “insured, interest-free capital credit to finance technological invention and innovation with the credit extended paid off out of the future earnings generated by the investments”.

    Long live guaranteed perpetual Wall St. returns and investment without risk! Hey fool… You do realize all those bad bundled mortgages were insured don’t you? Ya, that went well for AIG and home builders everywhere (your “owners”). Let’s do what already failed again. Pure genius.

  13. Comment by Ravi on March 18, 2015 at 9:22 am

    What most people don’t realize is that technology is growing at an exponential rate. If today’s computers can do one unit of work, in ten years time they will be capable of doing 1000 times at the same cost. The cost of producing goods will keep coming down and it will reach zero. Most people will have no jobs and therefore no income. At the same time it will cost less and less to sustain everyone in the world.

    The only viable solution in the long run is to abolish money altogether and ensure everyone is taken care of by the society. This will totally free up everyone to do what they really want.

  14. Comment by Pathfinder on March 18, 2015 at 12:29 pm

    What would happen if there was no motivation to work? Why would anyone risk thier life savings to start a business, invent, or innovate? Or educate themselves for that matter. A healthy amount of discomfort motivates us to better ourselves. I think socialists forget about human nature at thier (and our) peril.

  15. Comment by david mathur on March 19, 2015 at 5:00 am

    There is no need to fear. If technology can help humanity provide safe drinking water, improve quality and productivity of agriculture and livestock there will be jobs for everyone. The reason is develop the technology we need people to wok in labs, adminstrative staff etc. And if such solutions comes about in future, then, for example, as told by an Israeli water expert we can support three times the current world population happily if whole world adopts israeli technology in creating clean water. Reich has generalised future work place/income distribution by what a few social media companies have done. Best of luck

  16. Comment by David on March 30, 2015 at 5:28 pm

    Awesome article. I’ve been making this point for years to anyone who would listen. We will arrive at a new paradigm, but there will be a WHOLE LOT of moralizing about “hard work” between now and then.

  17. Comment by Steven E. Weisberg on September 22, 2015 at 11:40 pm

    Dear Robert

    Thanks, so much for this eloquent article on the state of society, production, and consumption. Reading it, I was struck by its frightening implications. The fact is, I’ve read it before, and will refrain from complaining about my own economic straits. All of us, however, need to reevaluate our professional options.
    All the best,

    Steve

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