The upshot of Krugman’s argument is this: income inequality has been increasing for years in the United States, but one of the major drivers that no one talks about is the increasing use of robotics in manufacturing and other industries to do jobs traditionally done by human laborers.
One conclusion Krugman reaches is that even the highly-paid, highly-skilled workers who have dominated the share of income growth in the U.S. over the past several years will be increasingly affected going forward by the rise of the machines:
About the robots: there’s no question that in some high-profile industries, technology is displacing workers of all, or almost all, kinds. For example, one of the reasons some high-technology manufacturing has lately been moving back to the United States is that these days the most valuable piece of a computer, the motherboard, is basically made by robots, so cheap Asian labor is no longer a reason to produce them abroad.
In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.
Indeed, we’ve seen this taking shape even on Wall Street, where investment banks like UBS are laying off credit derivatives traders and replacing them with computers that trade off signals generated by internal algorithms.
That example reflects another of Krugman’s assertions: the robotics revolution may be a major driver of increasing income inequality.
Krugman writes in another post:
If this is the wave of the future, it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won’t do much to reduce inequality if the big rewards simply go to those with the most assets. Creating an “opportunity society”, or whatever it is the likes of Paul Ryan etc. are selling this week, won’t do much if the most important asset you can have in life is, well, lots of assets inherited from your parents. And so on.
I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn’t seem crucial back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned Marxism — which shouldn’t be a reason to ignore facts, but too often is. And it has really uncomfortable implications.!
Finally, Krugman offers a few alternative explanations for the increasing shift of income distribution toward capital and away from labor that don’t feature robots so prominently. One is the idea that monopoly power – made more ubiquitous by growing business concentration in the United States which allows big producers to control prices more effectively – may be a bigger culprit.
Krugman thus concludes by writing that “the starting point is to realize that there’s something happening here, what it is ain’t exactly clear, but it’s potentially really important.”
Remember the threat of digital video piracy, the scourge of Hollywood?
A new report suggests that it’s dropping fast, thanks to licensed streaming services, chiefly Netflix.
Netflix utterly dominates online-video traffic, according to a new study by Sandvine, accounting for 33 percent of peak traffic in North America. Amazon, its closest rival, has only 1.8 percent, and Hulu has 1.4 percent.
The real alternative to Netflix is BitTorrent, a popular file-sharing protocol through which users upload and download copies of movies and TV shows. Because it’s a technology for file sharing rather than a centralized service or piece of software, BitTorrent has proven very hard for movie studios to shut down.
But BitTorrent is down to 12 percent of all traffic in North America. It’s easy to see why: With Netflix’s wide selection, relatively low monthly price compared to cable-TV subscriptions, and speed of delivery, few people opt to wrestle with the complexity and delay of file downloads.
In Europe, BitTorrent is at 16 percent of traffic, and in Asia, where video services are less available, it’s 36 percent.
By 2015, Sandvine CEO Dave Caputo forecasts that peer-to-peer file-sharing traffic will drop below 10 percent of network use.
It’s not a given that BitTorrent use indicates illegal downloading of a video file—some game developers use it to distribute legal copies of their software, for example—but it is heavily used for video downloads.
The banking industry often employs two-step security measures—similar to Google Authenticator—as an added layer of protection against password theft and fraud. Unfortunately, those systems have just been rendered moot by a highly-advanced hack.
The attack, know as the Man in the Browser method, works like this. Malicious code is first introduced onto the victim’s computer where it resides in the web browser. It will lay dormant until the victim visits a specific website—in this case, his bank’s secure website. Once the user attempts to log in, the malware activates and runs between the victim and the actual website. Often the malware will request that the victim enter his password or other security pass into an unauthorized field, in order to “train a new security system.” Once that happens, the attacker has full access to the account.
Luckily, the method is only a single-shot attack. That is, the attacker is only able to infiltrate the site once with the user-supplied pass code. But, once in, the attacker can hide records of money transfers, spoof balances and change payment details. “The man in the browser attack is a very focused, very specific, advanced threat, specifically focused against banking,” Daniel Brett, of malware testing lab S21sec, told the BBC.
Since this attack has shown that the two-factor system is no longer a viable defense, the banking industry may have to adopt more advanced fraud-detection methods similar to what secure credit cards. When compared to having your account silently drained, standing in line for the teller suddenly doesn’t seem like that much of a hassle. [BBC News via Technology Review]
Image: jamdesign / Shutterstock
It’s that time of year when we all reflect on the past, search our souls and determine what we want for the next year. I’ve been reflecting on what it means to work with a company that controls so much of the market, provides such a broad set of capabilities and delivers such a large percentage of monthly revenues to publishers. Of course, I’m thinking of Google and what their dominance in the ad market means for a publisher’s future and its ability to remain relevant to marketers.
What do we know about Google? They are this great company that gives consumers some of the best digital products available on the Web: search, email, maps, Android, apps and more. This has catapulted Google to the rank of second most valuable brand, behind only Apple, according to Millward Brown. This seems to be great for consumers, but what about the businesses who are now reliant on Google for search and display revenue, advertising technology and various business applications like Google docs, Android OS, Chrome, etc.?
Many of the businesses I meet with hold Google in high regard because of the products they represent and the amount of revenue they provide. However, these businesses are equally concerned about Google’s consumer stranglehold, their influence over the ad ecosystem and their focus on automation, all of which lessens the publishers’ worth in the value chain as a whole. Google’s market dominance stretches well beyond search, which in itself is obviously enormous. This expansive dominance should be alarming for every marketing-related business, including publishers, advertisers and agency and marketing services technologies. Here are a few stats on Google by category that will likely frighten even the largest of these businesses:
- 65.38% Share of Search, Oct-11 Hitwise
- 44.1% Share of Ad revenue, Oct-11 PCMag
- 43.8% Share for Video, Oct-11 Comsccore
- 30.03% Share for Travel, Oct-11 Comscore
- 22.38% Share for Automotive, Oct-11 Comscore
- 18.69% Share for Shopping, Oct-11 Comscore
- 16.29% Share for Health, Oct-11 Comscore
If these stats weren’t enough to dampen your holiday spirit, Google now is even prioritizing their own products above the paid search listings on their search engine. This creates a major conflict for the advertisers that have made Google what it is today and may force those clients to pay even more if their advertising is to remain competitive in this new bidding landscape. Google clearly is leveraging its position of power with consumers to launch new products and ensure their own success. The latest example of this is the promotion of their Chrome browser on the Google homepage. As you can see from the chart below, Chrome is rocketing to the position of #1 browser, a rank it is projected to achieve by June 2012.
Google is now a major threat to every business in the publishing and advertising marketplace. In the short term, while they may appear to be a superior partner that provides revenue and marketing innovation, I believe that over the long term they are eroding the value of each and every business in the media sales and publishing value chain. And, worst of all, they are charging heavily for the privilege. I’d estimate that for every dollar spent by an advertiser in the media buying process, Google captures upwards of 25% in tolls (via their various ad services, DFA, Invite, DFP, AdX, Motif, Admeld, etc.), thereby minimizing revenue and profits for publishers and other vendors along the way
So as you reflect on 2011 and consider whom you want to partner with in 2012, give some thought to the short versus the long term. What is your value proposition to clients? And who do you ultimately want to run your business … the Grinch or You?
Have a great holiday and Happy New Year!
The views expressed here reflect the views of the author alone, and do not necessarily reflect the views of 24/7 Real Media, its affiliates, subsidiaries or its parent company, WPP plc
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Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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