Brett Hutley's Blog » global inequity

Developers as Capital

brett — Tue, 06 Dec 2011 14:43:01 +0000

I've just been reading this Forbes article called "The Rise of Developeronomics". The author argues that because increasingly software is the core value proposition that differentiates companies from each other, that software developers are more and more becoming the wealth creators in society. The author recommends investing in software developers as a way of leveraging your own capital. This article builds on an earlier article by David Kirpatick called "Now Every Company is a Software Company".

The article is making the point that programmers are becoming a core economic factor for successful companies, so much so that large companies are buying smaller companies purely for their programming teams. He points out that companies such as Google nurture young programming talent as a strategic investment.

Of course the message is hugely appealing to me as a software developer. My own opinion is that technology is exponentially increasing the potential "value space" for possible investment. For example, consider the introduction of Facebook. With that particular advance in social networking, it opened up all sorts of opportunities for individuals and companies to promote themselves and establish new kinds of dialogues with their clients. With this advance, a large number of opportunities were created, which in turn leads to more specialised development that wasn't possible before the large-scale take up of social networking. Thereby creating a lot more potential work for a larger number of programmers.

If companies don't keep up with the introduction of new technologies, they run the risk of falling behind their competitors. Not only those competitors who are able to utilise technology to make their workers more productive, but also those competitors that make better use of social networks and internet search to gain new customers and retain older ones, and data modeling and analysis to determine new markets and optimise existing ones. It seems to me that not only are developers the creators of wealth, but we are currently living in a technological arms race.

Were the Luddites Right?

brett — Mon, 07 Nov 2011 13:36:14 +0000

The Luddites were a 19th century anti-industrialisation movement (and militia), who believed that their jobs were at risk because of the industrialisation of manufacturing. They proceeded to try and destroy mechanical looms in a vain attempt to turn back the rising tide of industrialisation. These days anyone seen as a "Luddite" is perceived to be backward and anti-technology.

But were the Luddites right about the consequences of technological progress? The Luddite Fallacy states that the argument that technological progress decreases the amount of jobs is fallacious, because increases in productivity does not mean that employers will keep their production constant. Rather, employers will increase their production to suit available demand.

The Economist has a post that points out that the Luddite Fallacy is only a fallacy as long as new technology increases capital, without reducing the need for human labour. But what happens if technology increases the capital and replaces the need for unskilled human labour?

The Luddites may have been a revolution or two short of the mark, springing from the industrial rather than the computer revolution, but maybe they weren't wrong about the long-term consequences of technological progress, believing that it would destroy jobs, and cause greater income inequality. Smashing the looms is obviously not a solution to the socio-economic problems of the structural changes to our society, but neither is burying our heads in the sand.

Race Against The Machine

brett — Sun, 06 Nov 2011 15:52:11 +0000

I just finished reading the Kindle book Race Against The Machine, a book I thoroughly recommend. This was the driver of the NPR article I blogged about recently.
The book is mostly oriented towards the US, although the issues they discuss seem to be prevalent across all major economies. The authors make the case that technological improvements are severely impacting every job market except those for highly-skilled individuals.

They argue, as I have argued, that the current employment crisis is caused by structural factors such as increased productivity due to technology, rather than cyclical or stagnation factors. We are simply living in a world where the educated and skilled are able to contribute to the economy in a disproportionate way, and the less educated/skilled are forced to compete for the fewer and fewer jobs that are currently too expensive to automate. This leads to money flowing from the workers to the owners of the business, which is an unsustainable situation for the long term.

The authors point out that to a large extent, we operate in a "winner take all" society. Technology enables the best and fastest-moving in the business to capture the bulk of a market. That in turn provides a strong incentive for those with capital to further invest in technology, creating a self-perpetuating cycle. Not only is this situation self-perpetuating, but increased capital allows winners a disproportionate advantage in the race to take advantage of another business opportunity.

The positive news is that as we use technology to expand the frontiers of innovation, this will in turn create an exponential increase in the possibilities for further innovation.

Global Apartheid

brett — Fri, 25 Jan 2008 17:52:36 +0000

There's a great interview in Reason Magazine with economist Lant Pritchett about how stopping immigration is effectively holding countries' citizens hostage. He argues that constraining people within artificial borders bounding countries which are economically unviable is one of the biggest sources of global inequity. Very interesting read.