Jobs: A Million Little Googles
All of this has happened before, and it will all happen again.
—J. M. Barrie, Peter Pan
No one likes cleaning the toilet, but unfortunately, advancements in the technology to do so automatically have been slow in coming. iRobot—the company that makes the Roomba automated vacuum—released the Scooba floor cleaner in 2011, but it’s too big to squeeze behind a toilet, never mind the bowl itself. The field clearly still has a long way to go.
When coming up with new types of jobs for robots to do, creators often focus on the three Ds: dull, dirty, and dangerous. Cleaning the toilet hits at least two of those, which is why someone, somewhere, is putting a great deal of thought and effort into the situation; we just haven’t heard about it yet. Or, at least, we should hope somebody is working on it. A robot toilet cleaner is inevitable, and I’ll be first in line when it does come out. Moore’s Law, do your thing.
Machines have been doing what we don’t want or can’t do for as long as humans have walked the earth. A machine, by its simplest definition, absorbs energy of one sort and transforms it into a more useful form. Blarg the caveman benefited from a form of mechanization when he used his wooden club to beat dinner into submission: Force + Mass = Yum! Since then, machines have made it easier to craft pots and plates, harvest crops, traverse distances, lift heavy objects, cool the air, open cans, direct traffic, go up and down floors in buildings, wash dishes, dry hair, brush teeth, wax floors, make coffee, and on and on. Machines also have made possible the seemingly impossible: printing huge volumes of books, flying through the air, walking on the moon, and peering inside bodies without cutting them open.
Technology has radically and, yes, exponentially redefined what we humans do and can do. Only two hundred years ago, nearly three-quarters of Americans, for example, worked on a farm. Machines have all but replaced people there, with only about 1 percent of the workforce still engaged in farming.1 As mechanization arrived, farmers and farmhands moved to factory jobs, then to office work. In each case, the majority had no idea what the future held in store. Only a prescient few farmers might have seen that their jobs were becoming obsolete and that they would have to learn how to operate an industrial lathe or machine press. In turn, a small minority of factory workers anticipated that they eventually would need to wear a shirt and tie and work at a desk with a computer.
The same is true today except—as we well know by now—our machines are becoming much better really quickly. In recent decades, they’ve acquired virtual brains, which means yesterday’s simple automatons are now capable of doing much more. The humble thermostat, for example, can tell when you’re not home and lower the temperature accordingly. An automated investment algorithm can buy and sell stocks without your ever knowing. Your computer or phone routinely suggests what you might like to see, do, or purchase. Anyone keeping a list of what machines and robots can’t do—and, in many cases, do better than humans—is presiding over a quickly dwindling list.
What we actually do is undergoing a similar process of upheaval. The jobs of the Office Epoch are rapidly yielding to automation and robots, just like machines made the Farming Epoch of yesterday obsolete. Some estimates figure that by the end of this century, machines will have replaced humans in nearly three-quarters of the jobs we’re doing now.2 This trend doesn’t apply just to human factory workers, who some say are largely obsolete already. It covers pretty much any task that involves repetition or that doesn’t include spontaneous and creative thought.
In early 2013, a robot doctor started making the rounds at Daisy Hill Hospital in Newry, Northern Ireland. Controlled by a human more than twenty miles away, the machine enables doctors to teleconference with bed-ridden patients. While a human doctor is still in the loop, the automaton—which resembles one of the terrifying Daleks from Doctor Who—obviates the need to have an actual physician there, which means one less job. The Federal Drug Administration began approving such machines the same year. The da Vinci “robot surgeon,” meanwhile, has been in use since 2000, assisting doctors with operations ranging from hysterectomies to hernia repair. The machine doesn’t perform surgery autonomously yet, but its software is capable of doing so. It’s easy to imagine a sophisticated, rock-steady robot doing this kind of work better than a human prone to nervous, shaky hands.
In Harbin, China, an entirely mechanized restaurant, complete with robotic cooks and waiters, opened in 2012. In Beijing, chef Cui Runquan debuted his Noodlebot the same year. The humanoid machine slices noodles much like a car’s window wipers operate, with a constant back-and-forth motion impossible for a human to maintain for long periods of time. “It is the trend that robots will replace men in factories,” Runquan says. “It is certainly going to happen in sliced-noodle restaurants.”3
For its part, Google is working hard to make self-driving cars a reality. Riding in one at the Consumer Electronics Show in 2008 and watching the steering wheel turn itself as the vehicle careened around the test course was one of the most sublime experiences of my life. But this isn’t just another of the company’s pie-in-the-sky experiments; automakers have jumped on the bandwagon. Audi and Toyota are working on autonomous cars, with Nissan pledging to bring “multiple affordable, energy-efficient, fully autonomous-driving vehicles to the market by 2020.”4 A lot will change when this happens. Taxi drivers, for one, will have to look for new lines of work since we’ll be able to order up an automated cab with our smartphones. Even the idea of car ownership may be thrown into flux too. Who will want the trouble and expense of owning a vehicle when you can have one pick you up and take you wherever you need to go with a few taps on your phone? If we don’t own cars, we won’t need to pay insurance on them, which will affect the insurance industry and the people in it who raise our rates for a living.
At the Yotel in the Hell’s Kitchen neighborhood of New York City, a machine greets guests. There’s no front desk but rather a bunch of self-serve kiosks, like those popping up in supermarkets, drugstores, and other retailers. The machine takes your relevant information, including credit card details, spits out a room key, and tells you to have a nice day. At the other side of the lobby, a giant robot arm—the kind used in car-manufacturing plants—lifts and places luggage into a cupboard-like storage unit for people who have checked out but need to store their belongings. In my case, the check-in and check-out process was significantly more efficient and pleasant than a regular hotel, which is undoubtedly unnerving front-desk employees in the know.
In Atlanta, the Monsieur robot is putting a similar fear of God into bartenders with its ability to make any one of some three hundred cocktails, and in just seconds. At the pharmacy at the University of California at San Francisco, a computer receives prescription orders, while robots package and dispense them. South Korea is planning to open a fully automated robot theme park, complete with rides, by 2016, which may force Korean carnies to the unemployment line. Even those few people who still work on mega-farms might be displaced further. In France, wheeled robots are pulling weeds from around lettuce and pruning vines in vineyards.
Virtually no one is safe—not even us book writers. The San Diego–based Icon Group International already has hundreds of thousands of robot-written books to its credit for sale on Amazon. Most aren’t any good, but . . . there’s Moore’s Law again. Someday, this book and others like it, which seek to summarize the effects of technology on people, will probably be written—ironically—by robots.
Perhaps we all should get jobs cleaning toilets since that field still seems wide open to humans. We could end up like the once-mighty horse: Just two centuries ago, horses powered everything from labor to transportation, with one horse or mule for every three people. Today, that ratio has dropped to one for every ten people simply because we don’t need as many of them anymore.5 Now most horses get to lounge around and eat hay and perhaps go for a run a few times a day. (Come to think of it, being a horse might not be so bad.)
The rise of robots and automation is understandably causing a good deal of angst. British economist John Maynard Keynes summarized it well back in 1930 when he spoke of the “new disease” of technological unemployment. New advances at the time—such as better methods of steel production, the spread of the automobile and frozen foods—hinted at the “means of economizing the use of labor outrunning the pace at which we can find new uses for labor.”6 People have worried about automation and robots taking their jobs for the better part of the past century, but with technology advancing so quickly, those fears may well be coming true. Like our farming forebears, we have no way of knowing what’s going to happen next.
Or do we?
JUSTIN BIEBER AND POLKA
With plentiful data from several sources that generally agree with one another, exponential change in employment is relatively easy to measure. The key figure is productivity or the average measure of the efficiency of production. Economists use that number to determine how much humans must work to produce one widget or unit of service. In the first decade of this new millennium, US productivity growth reached its highest level since the 1960s—nothing short of miraculous—with similar increases happening in Europe.7 Rapid advances in technology easily explain the “miracle,” however. Productivity, or how much one worker can output, generally increases in one of two ways: Either more workers are hired so that each individual’s workload goes down, or new technology makes that person able to do more.
Additional workers certainly can’t explain the miracle. America experienced zero net job creation in the aughts.8 The Great Recession ended with what many economists described as a “jobless recovery.” The recovery itself was easy to identify because of the presence of one of its sure signs: Businesses once again started buying computers and other technological equipment. Such spending almost always dwindles during a recession. The rebound was harder to proclaim, given the lack of another sure sign: the resumption of hiring. In 2013 the unemployment rate was still higher than in 2007, but other signs pointed toward recovery.9 Companies had enough confidence to spend on new equipment but not on new people. What was happening?
As Sherlock Holmes would say, once the impossible has been eliminated, whatever remains must be the truth. In this case, businesses were thinking they could produce the same or more widgets by adding machines rather than people. Suddenly, Keynes’s warning from a century ago looks prophetic. In Race Against the Machine, economist Erik Brynjolfsson and MIT research scientist Andrew McAfee raise precisely that specter: The rate at which machines are displacing human jobs has outstripped the pace at which we’re creating new jobs. The transitions from farming to factory work to office employment resulted in veritable tsunamis of new and better jobs, as did the early stages of the digital revolution. But the accelerating wave of technological growth means we aren’t thinking up new, better jobs fast enough. The terrifying alarm is sounding for everyone from humble office workers to the highest policy makers. What should we do in this encroaching age of human obsolescence?
It’s actually not as bad as it sounds, since the solution is relatively straightforward. One of the side effects of fast technological advancement is the even faster growth of combinatorial development, which all that exponentialism makes possible. Remember the technological “stacking” we saw in chapter one. Virtually every new product or service available today resulted from numerous prior developments working in conjunction with one another.
Just as rap and hip hop take beats, riffs, and other samples from existing songs and mix them with new sounds and vocals, so too does technology. YouTube, for example, isn’t just a place where people post mash-up music videos—say, cats dancing to Justin Bieber vocals over polka beats. The site itself is a mash-up. It exists because its developers took advances in broadband network capabilities, video viewing technology, and user interfaces—to name but a few—and combined them into something new and useful. Every new product and service is a variation on this theme. As technological advancement continually makes new goods and services possible, the possibilities become infinite. “Combinatorial explosion is one of the few mathematical functions that outgrows an exponential trend,” write Brynjolfsson and McAfee. “That means that combinatorial innovation is the best way for human ingenuity to stay in the race with Moore’s Law.”10
The angst over what humans will be doing in the future, therefore, isn’t coming from a lack of possibilities but rather from our inability to imagine them. It’s an amazing contradiction of human nature: We’re incredibly imaginative, but we can be remarkably short-sighted especially when it comes to thinking about our own future. As with food production, we can be remarkably Malthusian in our thinking when it comes to jobs. Stanford University economics professor Paul Romer sums it up succinctly: “Every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. The difficulty is the same one we have with compounding. Possibilities do not add up. They multiply.”
Jonathan Medved is a master multiplier, but he looks a little like Santa Claus—or at least what jolly Saint Nick might resemble on the other 364 days of the year. Decked out in a colorful Hawaiian shirt and leaning back in his chair, hands folded over his slight belly, Medved mirthfully explains the success of Israel’s high-tech sector, a hotbed of exactly the sort of multiplying opportunity that Romer means. Medved finds a good deal of irony in it, given that “President Whackjob wants to wipe us off his map.” He’s talking about Iran’s Mahmoud Ahmadinejad, but others no doubt will follow.
“This place is risk central. We live risk, we eat risk. That’s real risk, and I worry about that,” says Medved, punctuating the point with a hearty chuckle. “The risk of starting a company and losing my job or somebody some money, that just doesn’t compute. I’m not cavalier about other people’s money or jobs, but here that doesn’t qualify as risk.”11 (Two weeks after my visit, the Tal Hotel, where we talked, was closed down because of missile attacks from Gaza.)
Medved is only in his forties, so, despite his graying beard, he’s not the right age to play Santa Claus. But as one of Israel’s top venture capitalists, he’s certainly in the right line of work. Like many of those in whom he invests, he is himself a serial entrepreneur. He has helped sell startups to eBay, Alcatel, Corning, and VMWare, and he launched a number of companies onto the NASDAQ stock market, including Compugen and Accent Software. He cofounded Vringo, a venture capital company specializing in mobile social and video applications, as well as Israel Seed Partners. His latest business is OurCrowd, a crowd-funding organization for angel and accredited investors. When someone has a great idea, they see Jon Medved. If he likes it, he makes Christmas—or Hanukkah if you like—happen by dispensing the money.
You can drive from one end of Israel to the other in five hours. It’s smaller than New Jersey, and, at just about eight million people, it has a population smaller than New York City’s. Yet, as Medved stresses, Israel is a giant in the world of technology. The numbers prove it. Only two nations—America and China—have more companies listed on the NASDAQ. With one startup for every 1,844 people, Israel has the highest density of such companies in the world. Per capita venture capital investment, meanwhile, is 2.5 times greater than in the United States, thirty times that of Europe, and eighty times more than China. In absolute dollars, Israeli companies attract as much funding as their UK counterparts or France and Germany combined. As in Silicon Valley, this forward motion is happening despite global economic fluctuations or—in a situation largely unique to Israel—frequent armed conflicts. The country’s share of the global venture capital investment market doubled during the first few years of the new millennium, despite the bursting of the tech bubble, a war with Lebanon, and ongoing clashes with Palestinian groups.12
The result is a country awash in entrepreneurs. Waitresses, bar patrons, shop clerks, and even street performers are either involved in a startup or know someone who is. The startup wave, seeded and nurtured by government programs decades ago, has also helped attract big multinationals. With so many tech-savvy, risk-hardened, entrepreneurially minded citizens, the country represents a gold mine of talented employees for the likes of IBM, Intel, Microsoft, Google, Apple, Motorola, and others, all of which have set up research-and-development centers in the country. Despite all this, few people know how much of consumer technology is designed in Israel, from the processors in our computers to the websites we use to shop.
All of this innovation has had a stunning effect on the country’s economy. When established in 1948, Israel had a standard of living comparable to America in the 1800s.13 But with its strong push into the high-tech sector over the second half of the twentieth century—helped of course by strong US aid—it experienced sixty-fold economic growth in just five decades. Now Israel ranks among the most highly advanced economies in the United Nations’ Human Development Index.
At the core of its success lie humble startups and the plucky entrepreneurs behind them. They come from all walks of life, ages, and professions. Musician Yoni Bloch, who felt that music videos weren’t interactive enough, started Interlude, a sort of online choose-your-own adventure video maker. Michael Schulhof, former president of Sony America, co-founded Anyclip, a Google-like contextual search engine for video. Parko, a crowd-sourced app that helps users find parking spaces, is the brainchild of the young Itai David, ironically driven to our meeting by his father.
Most of the startups are tiny, with only a handful of people working on them. Sometimes they consist of just a single individual. The majority will fail; some will be bought; a few may break out and become big businesses. Few are seeking or getting big venture capital money because most of the tools they need are cheap and available online. Many are receiving investments to the tune of one hundred thousand dollars rather than the millions they might have required years ago. It’s another testament to the price-performance improvements both to hardware and software that this is happening on a business level.
Given the small domestic potential and generally hostile conditions, virtually every startup is focused on the global market. Israeli kids tune in to the same Western zeitgeist touchstones as any teenager growing up in Idaho or Winnipeg. They watch Breaking Bad, listen to Jay-Z, and line up for the latest iPhone. Put all that together, and it’s often impossible to identify Israeli startups as such: Abesmarket.com, the Waze app (purchased by Google in 2013 for a billion dollars) or Microsoft’s Kinect look like they could have been created by Westerners for Westerners.
Whatever the fate of each individual startup, their founders are more than likely—whether they succeed or fail—to go back to the well again. Some who flame out may go work for a big multinational until they’ve restocked their savings account, then try again. Medved guesses there are five or six thousand serial entrepreneurs in Tel Aviv alone. Many have had duds, but plenty have also had a hit or two, which makes it easier to trust them with money. Dov Moran started M-Systems in 1989. The company invented the USB flash drive and was ultimately acquired by Sandisk for $1.5 billion. Moran then went and started Modu, an ambitious company that wanted to build the world’s smallest mobile phone. “It was a total failure and must have lost hundreds of millions of dollars,” Medved says. “But now he’s back with a whole bunch of companies and I just wrote a check today to one of them.”
It’s this acceptance of risk by all parties that defines Israel’s economy. The ultimate payoff is that by making things the rest of the world wants, they’re also creating jobs. Investors, meanwhile, are pouring money into the country. Sure, they lose some of it, but they wouldn’t keep coming back if the return ultimately wasn’t there. The big companies are also piling in, hoping to take advantage of the huge talent pool. In Israel, everyone is winning and there are more than enough jobs to go around, with the politicized exception of the marginalized Arab minority. But by and large, no one is worried about robots; the country is ironically one of the world’s biggest makers of them, per capita.
For the most part, Israelis are doing exactly what they need to do to stay ahead of the machines. They’re focusing on jobs that stress leadership, team building, and creativity or skills that robots don’t yet have and likely won’t for a while, if ever. Virtually every new startup is harnessing the combinatorial power of technology: Interlude is using all the same elements that YouTube did, plus YouTube itself; Anyclip is incorporating advances in search algorithms with faster broadband speeds and processing capability; Parko is harnessing developments in GPS, motion sensing, and wireless networks. In this ongoing war against the machines and their efforts to make humans irrelevant, Israel is becoming the template for how to fight back.
“The ability to compete becomes tied to the ability to innovate,” Medved says. “If you can’t be part of the innovation economy, you’re going to be a laggard. The good thing about innovation as a resource is that it never runs out.”14
GARAGE INC.
But can this successful recipe be applied elsewhere, and can it work in a bigger country? The answers to both questions is “yes,” and it’s already happening. In the United States, the tech sector is adding jobs three times as fast as the country’s economy as a whole, and not just in hubs such as Silicon Valley and Seattle. Nearly every US county—98 percent of them—had at least one high-tech establishment in 2011, with each job in the sector creating more than four jobs in the wider community thanks to significantly higher wages than in other fields. Demand for jobs in the sector, meanwhile, is expected to outpace growth over the rest of US industry in the near-term future.15 The United States has shed much of its manufacturing capability over the past few decades, but ultimately it’s startups that have driven the broader economy overall. Amazon, Apple, Facebook, Google, and their kin—all started in garages and dorm rooms by plucky entrepreneurs—have added thousands of jobs and created entirely new industries.
More importantly, the speed at which these companies grow, like the technology they use, has accelerated dramatically. While blue-chip “bricks-and-mortar” firms such as Procter and Gamble or McDonald’s took decades to build, technology-oriented startups are becoming huge in no time at all today thanks to the tools that enable them and the potential of a global market. Both Google and Facebook took fewer than ten years to become stock market giants, and Facebook bought Instagram, the photo sharing service, for $1 billion just eighteen months after the startup launched. Stories like these aren’t isolated. They’re becoming increasingly common and are inspiring more and more people to become entrepreneurs.
In Canada, the startup revolution is also in full swing. According to a report from the Canadian Imperial Bank of Commerce, half a million people were in the process of starting their own businesses as of June 2011. That’s more than ever before, and it looks like just the beginning. As senior economist Benjamin Tal wrote:
Irreversible structural forces suggest that the next decade might see the strongest startup activity in the Canadian economy on record. The gradual shift to a strong culture of individualism and self-betterment, the role of technology in driving the transition from boardrooms to basements, the more global and interconnected markets that require greater specialization, flexibility and speed, as well as small-business friendly demographic trends are among those forces that are likely to support a net creation of 150,000 new businesses in Canada in the coming ten years.16
When measuring self-employment and entrepreneurship, it’s important to note the difference between necessity and opportunity. In Canada, only a fifth of new businesses began because their proprietors had no other options on the table. The rest quit their existing jobs with an eye either to having a more enjoyable career or to striking it rich as the next Google or Instagram. This high proportion of opportunity-driven entrepreneurship is good. As Tal says, “With more business owners starting operations by choice, their likelihood of success may increase,” which is why the country’s net success rate is going to rise to a whopping third of businesses. Opportunity-driven entrepreneurship also closely correlates with a country’s particular economic situation. Those better off generally have higher numbers of voluntary entrepreneurs, while self-starters in poor countries usually have no other choice. Europeans, for example, are nearly three times more likely to be improvement driven than necessity driven, while in Africa the ratio is almost even.17 With the economic fortunes of the developing world improving, ratios in those countries will naturally move in the right direction.
The Canadian statistics are intriguing for other reasons too, especially when the life expectancy issues discussed in the previous chapter come into play. Not only are more educated people entering entrepreneurship—about a third had university degrees—they’re also getting older. People aged fifty and up were the fastest growing group of entrepreneurs, accounting for nearly a third of all new startups, with the affordability and availability of technology combined with well-developed skills and connections cited as the reasons. (Vampires!)
Startups—whether they’re in Israel, Silicon Valley, Canada, or elsewhere—aren’t like traditional businesses because they’re not easily definable. Anyone who’s had a great idea knows that it doesn’t always come with an easy way to make money. Many entrepreneurs have to bend and flex those ideas, with numerous business models thought up and discarded along the way. Colin Angus, chief executive of iRobot—the company that makes the Roomba robot vacuum cleaner and the Scooba that unfortunately doesn’t clean behind my toilet—once told me that he went through dozens of business plans. His original was to sell toy dinosaurs. But iRobot hit the jackpot by building bomb-disposal robots for the military before moving back into the consumer market with vacuums.18 The principals of InteraXon, a tiny startup in Toronto that makes the Muse brainwave-reading headband mentioned in the previous chapter, originally thought their technology could control computers and televisions. They’ve since re-oriented to making meditation tools that connect to tablets. Every startup goes through this sort of trial-and-error process, often called a “pivot.”
This necessary flexibility means it will be harder to pin down exactly what the companies of the future do and therefore what their workers do. It’s already happening. Take Google, for example. Sure, it runs the world’s most popular search engine, but it’s also into maps, e-mail, operating systems, online storage, broadband networks, robot cars, wearable computers, and life extension. What kind of company is Google again?
Big operations are having to work more like small ones in order to be flexible, with internal functions subdivided into self-contained units that essentially function as their own operations. Google is a particularly smart big company because it has its toes in a hundred different pools, thereby operating like a hundred different startups. It may make most of its money from search today, but who knows what the future will bring?
It’s even more evident the further down the chain we go. Small businesses are having to morph and change, collaborating with one another and then going their own ways on an increasingly frequent basis. “It will be even more difficult to identify exactly what a small business is,” says Tal. “It is also likely that domestic home-based firms will increase their partnership with non home-based firms to collaborate on individual projects. More small businesses . . . will become virtual corporations, stopping and starting on a project-by-project basis.”19
On an individual basis, we’ve all heard how people these days have to have multiple careers. You may start as an accountant, but you probably will have to morph into an electrician or a computer programmer someday. That forced evolution and flexibility are accelerating to the point where people may have to change careers and “pivot” every day. As Brynjolfsson and McAfee put it, “the coming century will give birth to thousands of small multinationals with low fixed costs and a small number of employees each.”20 In other words, we’re all becoming our own multifaceted corporations, or millions of mini-Googles.
THE EARTHSHIP ENTERPRISE
Stronger economics and longer lives clearly are providing more people with the comfort levels they need to take the plunge and to try doing things that are personally satisfying. That says something profound about human nature. It shows that, when our basic needs are taken care of, we are naturally enterprising. This isn’t unlike any point in history, but what’s different now is that both push and pull effects are happening. Both opportunity and need—the encroachment of robots—are nudging more of us toward this true entrepreneurial nature.
This trend is having big social effects. A 2013 report from the United Way organization found that nearly half the people in and around Toronto, my home city, were “precariously employed,” or working nonstandard jobs that are insecure and without benefits.21 Union representation, meanwhile, is also down, as it is in the United States, where membership is the lowest it’s been in nearly a century.22 Entrepreneurship—by its very nature a form of “precarious” employment—explains some of this, but so too does the rising inequality discussed in chapter two. Either way, government policy will have to adjust to this push and pull. Modern economies are shifting away from the cozy setup of the previous paradigm, in which big companies employed people in secure jobs and supplied medical benefits while unions made sure workers’ rights held firm. If those long-held standards erode, governments will need to adjust rules and regulations on a variety of matters, from unemployment insurance and availability of benefits for self-employed people to mortgage loans and pension contributions.
This all happened before, most notably during the Industrial Revolution. Inequality spiked then too, and entrepreneurs reaped all the riches while rank-and-file workers suffered. In response, unions formed at the grass-roots level and governments invested in education and therefore the preservation of the equality of opportunity. Similar mechanisms will need to manage the transition to a world in which robots and entrepreneurialism are the norm. Further investment in education seems like a no-brainer, but unions will have to evolve as well. Rather than representing workers in certain industries in certain countries, they may need to go global. As the epigraph to this chapter suggests, what has happened before is likely to recur. In the 1920s, unions largely organized themselves around specific trades, such as carpentry or glass blowing, which gave them power since they controlled guilds and apprenticeships. But their influence ebbed as big corporations arose and hired workers directly, which forced a reinvention. In the late 1930s, unions transformed and began organizing workers on a company level, rather than by skill category. They came to the key understanding that companies had to compete against one another. Any deals the unions struck with managements couldn’t put those enterprises at a disadvantage. This system worked well in a non-globalized world.
Now, large corporations are competing in a worldwide market. Western companies are locked in battle with Eastern ones, many of which don’t have the same cost structures, which is a natural advantage for those relative newcomers. As a result, the majority of union workers in Western countries today are employed by their respective governments, which are effectively the last bastions not open to foreign competition. Workers elsewhere, meanwhile, haven’t seen wages or conditions improve much.
Today’s unions must come to understand the global forces at work and then adapt to them. Just as businesses have gone global, so too must unions, thereby repeating the same sort of transformation they underwent in the mid-twentieth century.
The situation seems gloomy now, given the rising inequality and the stagnation of the middle class. If you read the daily news, it’s easy to think pessimistically that the fixes to these problems will never come. But humanity has overcome issues like these before, and there’s no reason to believe we won’t do so again. We just might not be able to see the solutions yet. The technological tools enabling entrepreneurship are getting better and easier all the time; it’s the public policies that inevitably need to follow. Human enterprise will continue to spread unevenly since not everyone will get these policies right. Some countries, such as Israel, will gallop faster into accepting this particular aspect of human nature, while others will inevitably take the slow road.
One of our greatest traits is our knack for enterprise, for thinking up new and better things or ways of doing things. That capacity has proved limitless so far, and it’s not going to trail off any time soon. The suggestion that some people just aren’t entrepreneurs—that only a small percentage of the population qualifies as such—is also probably not true. As we’ll see in the next chapter, everyone is enterprising in some way and therefore has the potential to become an entrepreneur. If they aren’t now, it’s probably because it’s not yet easy enough. If the average person won the lottery today, she might continue working at her dreary job just to fill the hours, but it’s also a safe bet that she’d do something enterprising with the money; maybe a trip around the world or renovations to the house. But the ease and freedom from a windfall of money like that would inevitably spark her imagination in some way. Some people aren’t as imaginative as others, but everyone is enterprising. They just need the means to express it.