The Second Machine Age

Demographic dividend refers to the two or three decades when a country has more people who are young and in the working age-group. By 2020, India is set to become the world’s youngest country with 64 per cent of its population in the working age group. This is the time when China and the West are faced with the burden of an ageing population that is living longer. Before you start to believe in the hype about becoming the supplier of talent to the world, pause and look at the technological leaps that have been quietly happening around us.I suggest you read the book The Second Machine Age by Erik Brynjolfsson & Andrew McAfee.  The book can be divided into two halves. The first half lifts your spirits. It tells us how digitization changes everything. Digitization of a product or service changes the economics of it all. In some cases, the digitization is so pervasive that we have forgotten what it was like before the shift happened.  When we say "camera", most people below a certain age automatically think of a digital camera. They have always clicked away and mailed the photos without having to worry about running out of film and the cost of printing copies for hundreds of friends. This shift turned a $30bn company Kodak go bankrupt while leaving 145,000 people unemployed. Thats the bad news.There has never been a better time to be a worker with special skills or education. Ironically, there has never been a worse time for people with ordinary skills. Digital technology can do more and more of lower level tasks at a faster pace and with no errors. IBM’s Watson computer defeated the most skilled humans in the quiz game called Jeopardyhttp://youtu.be/WFR3lOm_xhEWhere the book makes you really sit up and take notice is where they talk about the change in skill requirements. Machines will quietly replace jobs that require low level skills. The labor market will also be one where the top talent will get disproportionate pay while the others will experience shrinking of money and opportunities.Take the world of authors. While JK Rowling is a billionaire, thanks to the Harry Potter series, she is an exception. Digitization and globalization made it easy for people all over the world to read her books and watch the movies. Her success inspires many others to write books. Yet, the next rung does not earn anywhere close to the billions that Rowling has. The gold medal winners in Olympics earn millions in endorsements while even the silver medal winners are quickly forgotten.Just the other day Facebook was the hottest new thing. Today the superstar is WhatsApp. Digitization makes it possible to have more than 450 million active users — meaning they use the service at least once a month — compared to 1.23 billion for Facebook. Those users send 500 million pictures back and forth per day, about 150 million more than Facebook. Facebook pays $19 billion to buy a company that has only 52 employees. Talk about creating value. We know that for every WhatsApp, there are millions of app developers who make less than minimum wages. There is no middle class when it comes to skills.The implications of such an economy are clear. Countries have no choice but to invest in continuously upgrading their investments in education and especially higher education. Without which the demographic dividend will soon become a demographic nightmare with millions of educated-unemployed. Routine information processing tasks are being taken away by machines. There is no middle class when it comes to skills.We already see the early warning signals. A study by TISS showed that only 10% of fresh graduates are actually employable, while a study of MBA and engineering graduates reveals only 25% of them to be employable. Is that not a frightening waste of human capital? The message is clear. Invest in education that teaches creativity and interpersonal skills – not just routine information processing tasks.Don’t miss the last four chapters of this book.http://youtu.be/8NWXyNhVJ5gI loved the book. The future will belong to people who will not depend on the formal educational system but have learned how to reskill themselves on their own. This is a must read book.-------------------Join me on twitter @AbhijitBhaduriRead about The New Digital AgeFirst published in my blog for Times of India