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on 13 May 2017
This is an economists view of the effect of the latest digital technologies on the economy. They characterise the current revolution as a second machine age with the first being the application of steam power to industrial processes started by James Watt with a long consequent tail of dependent innovations that ran right through to the twentieth century changing society, work and economy. The analysis is a bit cumbersome. As engineers we are used to putting concepts from disparate areas and building something that was just not possible before. They look at the effect of the current technology revolution on work, income inequality and try to explain these changes. The most interesting sections for me were when they began to look at how human society might respond and how to educate the workers of the future so that they can work with machines rather than compete against them. This seems to encouraging Montessori style self-directed learning to encourage ideation, large frame pattern recognition and complex communication. They highlighted the failure of graduate education in this respect and this has made me look at my own teaching and assessment methods for future classes I give.
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on 22 May 2017
Chose this to learn more about the current world and the world we will start to see. It was very insightful and well structured. Concepts previously foreign to me were explained very succinctly and to the point. Had me engaged the whole way through.
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on 1 July 2017
This book manages to be optimistic about the ways that humans can find ways to adopt technologies to improve the way that people live together. It is short enough, and written so clearly, that I felt as though I could follow the arguments easily.
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on 3 December 2015
A lot of people picked this as a top book for 2014, but it wasn't as overwhelmingly clever as I was expecting, and didn't rock my world view. Still interesting and definitely worth it, though.
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on 29 June 2017
Very relevant - captures what is happening with the economy and society well and explains the implications clearly. Strongly recommend
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on 15 March 2015
The book to read to understand the years to come!
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The thesis of the book is simple but profound, the documentation impeccable with a wealth of data, statistics, graphs, and figures while the writing is clear, concise, informal, smoothly flowing, inviting, and well structured.

The focus of the book concerns our impressive technological progress and explains why the scale and pace of digital technologies is bound to accelerate in the future. The centrality of the book relates to the two economic consequences of this progress namely bounty and spread. Bounty is the increase in volume, variety, and quality and the decrease in cost of the many offerings brought by modern digital technologies. Spread, the negative and troubling aspect of this progress is increasing wealth inequality, progressive unemployment, and reduction in social mobility. Spread has been demonstrated to increase in recent years. It is destined to accelerate in the second machine age unless we intervene. The book stresses that the economic goals should be to maximize the bounty while mitigating the negative effects of the spread. The choices we make will determine the world we are going to live in.

In order to understand why digital technologies are presently unfolding we have to obtain an insight into the nature of technological progress in the era of digital hardware, software, and networks. Its three key characteristics are exponential, digital, and combinatorial.

Exponential growth eventually leads to staggeringly big numbers which defy our intuition and imagination. The critical building blocks of computing - microchip density, processing speed, storage capacity, energy efficiency, download speed etc. have been improving at exponential rates for a long time and they presently are at an inflection point.

The digitization of just about everything. The unique economic properties of digital information: such information is non-rival, and it has close to zero marginal cost of reproduction. In plain English we might say that digital information is not 'used up' when it gets used, and it is extremely cheap to make another copy of a digital resource. - Making things free, perfect, and instant might seem like unreasonable expectations for most products, but as more information is digitized, more products will fall into these categories.

Digital technologies are general purpose technologies for they are pervasive, improve over time, and able to spawn new innovations; additionally digital innovation is recombinant information in its purest form.

Unlike the steam engine or electricity, second machine age technologies continue to improve at remarkably exponential pace, replicating their power with digital perfection and creating even more opportunity for combinatorial information.

Production in the second machine age depends less on physical equipment and structures and more on four categories of intangible assets: intellectual property, organizational capital, user generated content, and human capital. Digital technologies have very wide application e.g in photography, music, the media, in finance and publishing, in retailing, distribution, services, and manufacturing.

Both theory and data, however, suggest that the combination of bounty and spread is not a coincidence. Advances in technology, especially digital technologies, are driving an unprecedented reallocation of wealth and income. Digital technologies can replicate valuable ideas, insights, and innovation at very low cost. This creates bounty for society and wealth for investors, but diminishes the demand for previously important types of labor, which can leave many people with reduced incomes and progressive unemployment.

For about two hundred years, wages did increase alongside productivity. This created a sense of inevitability that technology helped (almost) everyone. But more recently, median wages have stopped tracking productivity, underscoring the fact that the decoupling of productivity and employment is not only a theoretical possibility but also an empirical fact in our current economy. The median income fell by by 10% from 1999 to 2011 even as overall GDP hit a record high while the distribution of wealth is skewed towards the wealthy: for the first time since before the Great Depression, over half of the total income in the United States went to the top 10 percent of Americans in 2012. The top 1 percent earned over 22 percent of income, more than doubling their share since the early 1980s. The share of income going to the top hundredth of one percent of Americans, a few thousand people with incomes over $11 million, is now at 5.5 percent, after increasing more between 2011 and 2012 than at any year since 1927-1928.

I shall conclude the review by drawing from the book of two other eminent authors cited in the book under review instead of delving in the correct but rather sketchy remedial measures suggested by the authors:

In 2012 economist Daron Acemoglu and political scientist James Robinson published 'Why Nations Fail', an account of hundreds of years of history aimed at uncovering, as the book subtitle puts it, 'the origins of power, prosperity, and poverty,'

According to Acemoglu and Robinson, the true origins are not geography, natural resources, or culture. Instead they are institutions like democracy, property rights, and the rule of law; inclusive ones bring prosperity, and extractive ones - ones that bend the economy and the rules of the game to the service of entrenched elite - bring poverty. Something like this we witness presently taking place in the United States.

I join Acemoglu and Robinson, Brynjolfsson and MaAffee in their plea that not only in USA but globally we strive for inclusive and not extractive societies.
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on 4 March 2014
The future……. We are on the second half of the chessboard.

Headache for clients
It is headache for our clients. For a while we thought it was awareness. Management teams not being aware of the technology changes. We were wrong. They are very aware. They just don’t know what to do with it.

Awareness gap
That does not mean that the whole organisation is aware. There seems to be a massive gap between the awareness of the management team and the rest of staff. Which creates a lot of issues, particularly when you want your organisation to be fluid, agile and responsive.

Opportunity for SMEs
We do find that owner-managers of small companies are very unaware. In fact there is an element of head in the sand and hope it will go away. Which is a pity, because what small business have is agility and fluidity.

The books we use
Dependent on the angles we use a wide range of books. “What technology wants” is a classic. ‘Future files” is a classic. So is “Future minds”. “Future babble” which we use as the anti-book (you can’t predict the future) is a classic. I suspect “The future of the mind” (next on my reading list) will become a classic.

Speed of change
What we never seem to be getting across in our sessions, is the speed of change. Big companies actually think they have enough time to respond. They even get the need to disrupt their own business model. The just don’t get exponential part of change. And the need to react NOW. Which is why we introduced “The second machine age”.

We are on the second half of the chessboard.
Anyone that was taught chess has heard the story of the inventor of chess and the Persian king. He asked as a reward that, starting with one grain of rice, and it to be doubled every square. With 64 squares on a chessboard, if the number of grains doubles on successive squares, then the sum of grains on all 64 squares is: 1 + 2 + 4 + 8... and so forth for the 64 squares. The total number of grains equals 18,446,744,073,709,551,615. weighing 461,168,602,000 metric tons, which would be a heap of rice larger than Mount Everest. This is around 1,000 times the global production of rice in 2010.

Moore’s law is everywhere.
It has happening to computers. It is happening to biology. Engineering. Material science. Robotics. Knowledge. Data. Artificial intelligence. Physics. Sensors. Energy. Speed. Printing. And it is happening to your business. Moore’s law is everywhere.

Weird
And things get weird when we are on the second part of the chessboard:

- Twelve years ago one computer hit 18 teraflops. Ten years later 64 million units were sold of the Playstation3, which had the same capacity.
- The iPhone 4S is as powerful as the 10 year old Apple Powerbook
- A human doctor would have to read 160 hours a week to keep up
- Users spend collectively 200 million hours each on Facebook. That is 10 times as many man hours needed to build the entire Panama Canal
- More pictures are taken every 2 minutes, than in all of the 19th century.
- And straight from “What technology wants”; The technetium contains 170 quadrillion (a quadrillion is one thousand million millions) chips. The number of neurons in your brain is similar to the number of transistors in the global network. The number of file links is similar to number of synapse links in your brain. The planetary electronic membrane surrounding the worlds is comparable to the complexity of the human brain. With 3 billion artificial eyes (webcams, phones, etc.) plugged in

Innovation
Each new development becomes a building block for future innovations. The number of possible (re-)combinations become infinite. Which means innovation will explode. Is exploding.

Business implications
The business implications are enormous. You need to invest in innovation. You need to invest in technology. Which will cost you. For example, for every dollar invested in hardware, you need to invest 9 dollars in software, training and business process. Not to forget the time in which you will have to write it off as speed of development keeps increasing. Depreciation as we know it becomes obsolete?

Free
What is more serious for business is that analog dollars become digital pennies. Which brings us to “Free” by Chris Anderson. The other side of the chessboard puts enormous pressures on pricing and margins. An eye opener for me was the question by the authors on how square that with
economic policy. How do you make “free” part of GDP? Is it value? For example Google saves an average of 15 minutes per query. There is a need to review that in this context. The Bhutan approach (Gross National Happiness) might be an option. It might no be as mad as it sounds.

Labour market
The same “free” effect is start having an impact on the labour market. If you use Google to drive a car, if robots can make cars, and if computers can answer calls and are starting to win Jeopardy and chess, what other types of work can be taken up by machines? Research suggest that 47% of all jobs are now at risk by computerisation.

Dark
The book goes a bit dark after that. Because of these pressures, there will be a long tail in the labour market. The happy few who will have a job and have it all. A lot will have no job and no prospects, made obsolete by machines. With all the cost to society you can imagine. Which makes Gross National Happiness as a measure much more important than you think.

Darker
It goes dark on the Internet of things. It has elements of “Over-connected” when it starts talking about what can happen when everything is connected. Learned a new term called “cyberbalkanisation”, which is as bad as it sounds. Terminator and Skynet are mentioned.

So how do your prepare? Ideation!
Invest in proper education. Watch Ken Robinson on TED. Ideation will become a key skill. Allow the entrepreneurs to play. They are the job creators of the future. Between 1977 and 2005, existing firms as a group were net job destroyers, losing an average of approximately one million jobs annually. Startups, in sharp contrast, created on average a net three million jobs per year in the USA.

Singularity event
And maybe, maybe we will have the singularity event in 2045 as predicted by Ray Kurzweil and the GPH will sky rocket.
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on 11 June 2014
After reading great futurist books like The Singularity is Near,Abundance: The Future Is Better Than You Think and The Human Race to the Future: What Could Happen - and What to Do I was expecting another eye-opening book on the technologies that will transform society in the coming decades. Instead, the book is merely a summary of a few selected technologies already mentioned in Abundance (like IBM's Watson supercomputer) or that anybody following tech news regularly would have read about countless times, like self-driving cars.

I was hoping for a book that explains more precisely how artificial intelligence, automations and robots will replace people in most jobs, and an in-depth analysis of what jobs will disappear soon and which ones will remain safe for the foreseeable future. I was looking forward to read about how the peer economy, 3-D printers and personal domestic robots will completely change the way we produce and consume. Unfortunately the book does not address any of these. The authors just explain, repetitively and in plain language, that machines will make consumer products cheaper while taking away people's jobs. But who doesn't already know that when it's been discussed countless times in the news?

Chapters 13 and 14 (one fifth of the book) are policy recommendations on how to make the USA more like northern Europe, by raising the standards of education, decreasing socio-economic inequalities, improving the infrastructure, taxing pollution, taxing more the rich and less the poor, or using a value added tax (VAT) system. I don't know if Erik Brynjolfsson was feeling nostalgic about his ancestral Scandinavia when he wrote that, but that is hardly relevant to the Second Machine Age. Even though the USA could benefit from that, Scandinavians will not be immune to the rise of automations regardless of how advanced they are in these regards.

As a side note, on page 241, it says that the United States is the only one of 34 OECD countries not to have a VAT. That is not true. Japan used to have VAT, but it scrapped it for a consumption tax in 1989. A Professor of Management at the MIT Sloan School of Management ought to know that. Besides, the state of Michigan does use VAT (known as "Single Business Tax" or SBT).
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TOP 100 REVIEWERon 19 February 2014
`The Second Machine Age' co-written by two authors Erik Brynjolfsson and Andrew McAfee, is a fascinating work that shows how the advancement of digital technologies already has and will have an enormous impact on the economy; the authors managed to show how such exponential growth will result with redistribution of world income, present to which effects will it lead on the issues of employment and education, and generally on the future of human race.

Brynjolfsson and McAfee have called their book "The Second Machine Age" due to some parallels that could be drawn between Industrial Revolution, time of extraordinary change in the past, with times in which we currently live; last few years and present days they consider as the beginning of period with significant changes that only from a time distance would be possible to well assess. What is great is that although their book is full of economic indicators, figures and case studies the book presentation prevents reader to feel bored or tired even for a moment.

As starting point for their conclusions they took the simple and well-known general principle of Moore's law that tells about the doubling of computer power every year and a half, claiming that everything we see around us is just the product of such nonlinear development. Thus it can be concluded, although it is difficult to imagine, what kind of exponential growth in science and technology is ahead of us, its consequences are difficult to conceive even today, let alone it was difficult to imagine a few years ago.

The authors goes a step ahead by giving their own advices how to make transition to the Second Age in the best and least painful way in order to avoid the difficulties that those misfits will soon encounter. Though in some places their book discusses things that have possible connotation of something bad or sinister, Brynjolfsson and McAfee managed to maintain a fun and optimistic tone through their work, though their book is anything but superficial, entering deeply in essence making the book interesting both for those interested in economics and those who are interested in technology.

So `The Second Machine Age' can be considered as an excellent preparation for not completely certain though tempting future, a kind of a tranquillizer for surviving age of digital technology with unlimited potential that inevitably comes.

And given all those reasons, this book should definitely be read because Erik Brynjolfsson and Andrew McAfee with `The Second Machine Age' made an equally entertaining and informative work.
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