My read-along to Ryan Avent’s The Wealth of Humans continues. I’ve now finished Part 1, which is comprised of Chapters 1, 2, and 3.

I have several more impressions:

Wealth of Humans, Ch 1

1. Pages 30-31: The author discusses the pace of technological change. Over the last 60 years, the pace has been slower and more incremental, unlike the rapid pace of advancements at the turn of 20th century. There are economists who pessimistically believe the slower pace is permanent because there are few easily exploitable insights (like electricity) left to be discovered.
   • I disagree with the pessimists (the author does as well on page 32).
   • Pessimism of this nature assumes there are no Unknown Unknowns. In other words, we know all that we don’t know. Otherwise, how could we assume there’s no major insight hiding in a blind spot somewhere?
   • Pessimism demands that the totality of knowledge can be–and has already been–calculated, which to me seems impossible.
   • I can imagine individuals making similar claims during the Renaissance or 1890, before major waves of technological innovation.
2. Page 34: the author discusses the term “general purpose technology: an advance that can be used to do things more effectively across many facets of life.”
   • I hadn’t heard this term before, but it makes sense that widely applicable technologies are more transformative than incremental or niche items. See Network Effect.
   • I wondered: is society more fractured today than it was previously? Could this make it more difficult to produce general purpose tech?
   • For instance, before television, only television had to be produced. Now to transform television, think of all the avenues that would be affected: cable, satellite, streaming, phone apps, etc.
3. Page 37: The author describes a process wherein society adapts to enable the application of new technologies.
   • I had a hard time following the author’s train of thought. He writes about “society” as if there is a group of planners somewhere allocating capital and people. I’m not sure who this “society” is…I do know that there are lots of people out there making decisions that come together to form society.
   • For instance, society doesn’t turn people into chemists. People choose to become chemists because they are interested in the field and/or because there is a profitable market for that skill.
   • Student demand for a career field influences the development of education and curricula, not “society’s” desire to exploit heretofore esoteric technological ideas. How many universities fund majors where no one is enrolling (or paying)?
   • The advancements in the Industrial Revolution occurred during a time when most people didn’t attend college…maybe less standardized schooling is the solution for increased innovation!

Wealth of Humans, Ch 2

1. Page 57: “…one of the troubling dynamics within labour markets over the past 15 years is the downward mobility of college-educated workers; those with degrees have often been forced to take work for which they are overqualified, in the process pushing those with less education into competition for even less skill-intensive, and less lucrative, work.”
   • If downward mobility is a problem, maybe too many people are getting college degrees. There is an imbalance between the supply of graduates and corresponding jobs.
   • Cultural and governmental guidance keeps telling people to get as much education as possible, with little thought as to the nature of the degree or projected prospects for future employment.
   • Students can get loaded up with college debt and may never be asked to explain their career plan or think about its likelihood. That’s a recipe for disaster if you’re a highly-leveraged Philosophy graduate.
   • Can you imagine a bank giving a mortgage to someone without considering income levels or employment? (OK, maybe that’s a bad example…)
2. Page 58: The author talks about wages during the Great Recession. Wages fell in Britain but not in the U.S.; however, the U.S. had more layoffs.
   •  This reminds me of the sticky wages concept. Labor can become relatively (if not nominally) more expensive in bad economies because even if economic demand falls workers are (understandably) resistant to taking pay cuts.
3. Page 58: “From the workers’ perspective, falling wages are hardly ideal. Low or falling pay is dispiriting.”
   • I agree! But is taking a pay cut worse than getting laid off?
   • With a job, at least you are still learning and polishing your skills. Also, it’s much easier to find other jobs when you already have one.
4. Page 61: The author notes that there has been wage stagnation back to at least the 1970s, meaning real (inflation-adjusted wages) have not increased much.
   • It’s hard for me not to picture a correlation between wage stagnation and increased cost of doing business from the regular regulatory barrages from the 1960s until today. Of course I have no on-hand proof of this and could be dead wrong about any relationship!

Wealth of Humans, Ch 3

1. Page 68: The author describes Baumol’s Cost Disease.
   • The disease basically says that worker wages in all economic sectors rise over time. Wages rise even if the workers in a given sector are not more productive. For instance, an orchestra violinist cannot play a song “more efficiently, with fewer notes” today than she could 50 years ago.
   • However, to keep workers from bailing to other industries, wages have to rise.
   • I was intrigued to see this concept, as I’d been first introduced to it only a couple weeks ago. Serendipity!
2. Page 70: “…higher education…cost has risen steadily and dramatically, at greater than the rate of inflation…but the returns on a degree are [not] increasing.”
   • Have fun in college all you new graduates!
3. Page 70: “Tuition and fees have risen in America and have been introduced in other countries, such as Britain, where they didn’t exist before.”
   • Just because costs are not labeled “tuition” doesn’t mean they didn’t exist previously. I doubt British professors were teaching for free.
4. Page 77: “In a very low-wage world, more people will opt out of work. That will inevitably strain the social safety net…Societies will face a reckoning: either they will decide that this dynamic is unavoidable and should be made to work as effectively as possible, or the haves will reduce aid to the have-nots, leading to intense political conflict between those two groups.”
   • I can think of a third scenario: enough people quit working, and an entitlement mentality grows so large, that those who don’t work are so numerous and demand so much relative to those who pay for benefits that the non-workers can’t be supported even with very high levels of taxation.
   • There’s a finite amount of money to pay for things. If too many people stop contributing, there’s not enough to go around anymore. No one eats for free for very long.
   • Reduce incentives too much and no one does anything. How many hours might be worth working with 50%+ tax levels? Maybe it’s better to just work 4 days a week and go fishing on Fridays. Worker gets lower blood pressure, government gets 20% less taxable income.

I’ve begun reading The Wealth of Humans by Ryan Avent. The book was recommended to me by a family member who’s brilliant. Not reading the book would be an especially dumb move on my part.

It’s taken me a while to absorb the life lesson of listening to people wiser than I am (as those who know me know well). I’m happy to report that reading this book is a step in the right direction! Ignorant, inconsiderate, and illiterate is no way to go through life, as Dean Wormer might have noted.

I’ve made it through the Introduction so far. That might not sound so impressive on the surface, but I can already feel my critical thinking neurons tingling.

The central thesis of this book is stated on page 5: “…three trends—automation, globalization and the rising productivity of a highly skilled few—are combining to generate an abundance of labour: a wealth of humans.”

The thesis reveals the twist of the title: “wealth” in the sense of surplus, not riches. This abundance creates a problem for the economy: how to provide jobs and a sustaining lifestyle for the masses that might be displaced by the technological revolution.

The book’s thesis and related discussion are important and timely. However, while reading the Introduction, I couldn’t help but notice that the author presents a fair number of points that are hard for me to swallow.

Please indulge me as I list a litany of Festivus-style grievances:

1. Page 10: The author wonders why a fourfold increase in living standards hasn’t resulted in less work (stylized as a “fifteen-hour work week”):
   • It seems to me that the term “work week” is very strict, applying only to “wage-earning” time. However, “work” should include time that would have been previously spent commuting, navigating with paper maps, doing laundry by hand, washing dishes manually, mowing the yard with a push mower, etc. Fewer demands on a person’s time, or any nature, equates to less work.
   • The increase in the standard of living has been achieved with a static standard workweek of 40 hours. A 4x increase in standards compounded by a 63% reduction in work hours (40 to 15) would in reality be an exponentially higher increase.
   • I would think benefits can’t be manifested both ways. Enjoy the fruits of increased production with the same hours worked or enjoy the same production with decreased hours worked. I’m not sure many people would trade iPhones and HD TV for a 15-hour work week and increased free time without the fun toys or disposable income.
2. Page 11: “Communism proved a poor way to organize an economy.”
   • Add to that widespread misery and 100 million murders and you should get an understatement of the century award.
3. Page 11: While discussing U.S. deregulation efforts that began in the 1970s, the author asserts “the tax burden on the rich fell”:
   • This is true in marginal tax rate terms, but not in percentage of taxes paid or tax receipt terms.
   • What is the point of taxation? Is it to secure revenue for government programs or is it to punish people?
4. Page 12: “What does the state owe a middle class whose incomes have not grown for much of the last 2 decades?”
   • How about getting out of the way?
   • It’s amazing how wage stagnation correlates with the growth of the entitlement state.
5. Page 13: “But radicalism will become an increasingly real and powerful force in global politics until governments begin answering the difficult questions posed by the digital revolution.”
   • Why is this the government’s job? What about their past performance suggests expertise in answering complex questions?
   • Why is the government presented as neutral and without an agenda?
   • Both the political Left and the Right have expressed dismay with the performance of government (see the campaigns of Donald Trump and Bernie Sanders). So it seems to me the last answer would be to give more power and authority to government, the entity everyone is dissatisfied with.
   • If the government could somehow manage its current level of responsibility effectively, maybe we can see about adding to its powers.
6. Page 18-19: The author posits that “all wealth is social.” He also expresses the idea that wealth primarily descends from society and culture (at varying levels, from countries down to companies), not individual effort:
   • While I agree that no individual can take credit for all of a particular culture, they can take credit for the parts they contribute. If someone invents a catch phrase, do they have to defer credit to the people who invented English hundreds of years ago?
   • What is society but a collection of individuals?
   • A firm’s culture doesn’t create itself. People create it. How do you think Apple’s culture was created? Steve Jobs created it, an individual. To advance an idea that Apple didn’t need Steve Jobs, or Microsoft didn’t need Bill Gates, because someone else would have filled in for them is silly.
   • Most successful companies were started small by a group of a few individuals and grow large over time, adopting the values of the few individuals who founded the company.
7. Page 20: The author states the following while discussing the wealth of companies: “Culture generates the wealth”:
   • This is just not true. Apple’s culture doesn’t generate wealth, its products and services do. The culture made it possible for people to create those items.
   • Culture doesn’t make anything, but it can facilitate people to use their natural talents to produce value for the company, consumers, and society.
   • I’ll restate, what is a company but a collection of individuals? Companies don’t exist in thin air. Even within a company individuals are compensated at different rates according to their worth to the firm and their level of production.
8. Page 21: The author wonders how society should share social wealth:
   • How are people—society—not already not benefiting from these technologies? People are already enjoying the fruits of this wealth.
   • For instance, Bill Gates is the richest man in the world. But he’s worth a fraction of the value his innovation has provided to billions of people around the world with Windows and Microsoft Office products.
   • Yet it seems this is not enough for some. Gates’s personal wealth must also be “shared,” not just his creations.

It’s clear I have some disagreements with the author. However, one metric on the writing quality is to what degree it engages the reader. On the score, so far, The Wealth of Humans is high quality. We’ll see how future chapters stack up!