Donald Trump? Blame Silicon Valley

(Photo by iStock | The Revoluzionne)

A lot has been written about what caused the phenomenon that is Donald Trump. Blaming Silicon Valley may sound like click bait, but hear me out. The supporters of Donald Trump are angry. Angry with their government, with China, with their prospects for the future. They are angry with the world.

It’s easy to ignore those angry people as a bunch of bigoted fools tricked by generations of republican politicians into voting against their own interests, but I think that would be too quick. There is of course enough bigotry, foolishness and trickery around to fill a football stadium, but that doesn’t make the masses angry with the world.

This graph does:

Labour productivity growth (FT)

This is the scariest economic graph that I know of. Without productivity improvements, there is no sustainable economic growth. And without economic growth, society becomes a zero sum game. And in a zero sum game, if somebody wins, somebody else must lose. Trumps supporters are angry because they are tired of losing. And they have been losing. Real wages for Americans without a high school diploma have dropped by 20% in the last 25 years. Trump promises he’ll make them win again, so much that they will get tired of winning.

There are many things that can drive economic growth — from working longer hours, to trade and investment, but ultimately only innovation can keep delivering. And this is where Silicon Valley, the self proclaimed world capital of innovation comes in. Here people talk about ever accelerating progress and discuss what to do when the robots can do all the work. A unconditional basic income for all is usually offered as a solution.

As interesting as this perspective is, it just is not supported by the facts. If the robots were taking over our jobs, we might see increases in unemployment, but we’d definitely see exploding productivity. As things are, workers with a high school diploma or less are stuck in a rut, feel like the country is on the wrong track and start voting for Trump.

Silicon Valley’s breakthroughs are breathtaking when viewed from close up, but rather narrow when compared to the agricultural revolution, the car or the introduction of the washing machine. When the next unicorn says they are going to disrupt an industry, they mean they’ll do the same thing, but slightly more efficient and it will run on a smart phone. The app economy is a $100 billion industry in a $100 trillion world economy. The steam engine affected everybody.

An app like Uber doesn’t actually make drivers that much more productive. It makes it possible for anybody with a smart phone to do the job that previously belonged to a skilled professional, the taxi driver. And this seems true for a lot of new companies. No new economic activity is created, just old money streams being moved around.

We have the basic tools in place to make a difference. Giving all people a super computer in their pocket that allows them to instantaneously exchange messages with anybody else plus access to all human knowledge using state of the art artificial intelligence is no mean achievement.

But neither was the invention of the steam engine by Hero of Alexandria more than two thousand years ago. The old Greek used the steam engine to automatically open temple doors and both astonish and entertain the masses. Just like we’re using the mobile revolution to make it easier to share cat pictures and play silly games on the subway.

We can and should do better. Rather than having our best minds think about optimizing click rates on ads or figure out how to squeeze as much money from in app purchases in free games, we should put them to work on the much more interesting task of the Next Big Thing that is actually Big.

Contributed by Douwe Osinga.

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