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Current time:0:00Total duration:11:42

Video transcript

we talked about the dissemination of information being a force of convergence on the global scale but what on what about on the individual scale we're talking about not when we're talking about knowledge dissemination on an individual scale we're really talking about education on some level so once again this is a topic very close to my heart so let's just go through a few thought experiments here so in general you have and you have income income and that income in order to produce it you need capital you need capital and you need you need labor for example if you're running a farm you need land and you need animals and you need some equipment but you also need people to run the equipment and manage the farm if you're running a software company you need a building you need computers you need servers I guess as computers as well but you need people to program the computers and to sell the and to sell the software and to develop it and whatever else so these are the two things that you need in order to produce output which you would recognize in terms of income but then the question is how does that income get split doesn't how much of it goes to the capital and how much goes to labor and the idea here is is that if you have dissemination of knowledge and if knowledge work becomes more and more and more valuable so if knowledge work so let me put a little little aura around this so this is the aura of knowledge if this is knowledge work and it's less and less of a commodity then maybe labor has more leverage here on the other hand if you have these hugely capital intensive industries where labor is kind of this monotonous unskilled work then maybe capital has more of the leverage now let's just think about and and Piketty tends to be a little dismissive of this happening on a large scale he says it might be happening in pockets it might be happening in pockets in terms of you know managers and finance or maybe in certain industries like the software industry but in his mind this isn't this knowledge dissemination isn't going to make Labor important enough in order to offset this hole in more and more income going to capital and especially after generation generation potentially leading to dynastic wealth but the one thought experiment once again I my goal here isn't to give my point of view it's really to just give you things to think about and for you to come to your own point of view is is to think about the comparison between the present day and the Gilded Age which the book makes if we look at the Gilded Age so let me write this here so the Gilded Age so this is the end of the 19th century the late 1800s the Gilded Age what were the what were the forces of growth in the Gilded Age where was a lot of the income being generated from well this was really the peak of the Industrial Revolution you have things like railroads railroads you have oil I guess you could say you know energy oil you have manufacturing manufacturing all of these industries are incredibly capital intensive capital is very important you can't even do these things without capital and in all of these labor is a bit of a commodity that hey you just need people to kind of you know nail the the railroad ties in and things like that you need people to just you know work on the rig you need people to work on the assembly line and the Industrial Revolution was really a process of taking these crafts and turning them into more and more you know one-off almost you could call it commodity labor now let's think about the present day and we could probably I think it's fair to call it the information age information information age and what are the what are the growth industries in the information age well one that's close to my heart I'm making this video in the middle of Silicon Valley is software actually that's that's part the one that really stands out to me is a major growth area but there's you know kind of bio tech biotech we could go on and on and on and what's common about all of these well they're not necessarily as capital intensive as what we see here in particular for about if we're talking about software it's not very capital-intensive at all you just need some computers and a place to program and you could in theory do it inside someone's house and this is really more about highly highly highly skilled labor same thing with biotech it does need capital but that capital isn't for railroads and or it isn't for you know hugely I mean there is some equipment but it's mainly for people it's mainly for researchers and people to run the clinical trials and and and for whatever else and so we are it seems like we are in an age where labor is going to become more and more invaluable more valuable but not just commodity labor not just someone to kind of you know work one shift at the factory but highly highly highly skilled labor now just because this is happening this more because this is happening this could be a driver of more and more income going to labor but that by itself wouldn't necessarily drive off inequality for example you might have a situation and there's some date signs that maybe it's this happening where if you look at if this is the pool of folks that the people who are able to participate in this these high-growth sectors where labour adds a significant amount of value that that's actually a small percentage of this population so the small percentage of the population is going to take advantage could potentially take advantage of these and if of these dynamics but if the rest of the population doesn't have the skills necessary then they're going to essentially be left out of this growth and so that could still drive inequality it won't be driving inequality because of income going to more an income going more and more to capital because of our being greater than G because returns of capital or greater than growth it wouldn't be because of that it would be because of this differentiation and labor we're highly highly skilled labour is getting a disproportionate share of the income relative to other labor so the question is is can we get more people to participate this and once again this is an issue of education can we get this pool as a percentage of the population to become a much larger pool of the population so more and more so more and more of the world more and more of the world can participate in that so once again this is just something to think about I don't know the answer to this but there are some dynamics in play and we're definitely in a different type of world than we were in the Gilded Age another way that you could think about it and this isn't from the book but this is just a way that I sometimes think about it if you think in the industrial revolution you have the world was kind of a the world was kind of a pyramid that down here you have your labor then and you use a lot of folks there but it was relatively unskilled and then in the middle you kind of have your white-collar jobs you could white-collar jobs you this is the folks who are kind of manipulating information filing papers etc etc the office jobs and then at the top of the pyramid during the during the Industrial Revolution really going into the 20th century you had you had a I guess you could say your capital owners your owners of capital and then you had also very small you had a very small I would say creative class so this is creative creative creative class and so this would be folks like this would be folks like engineers and artists and people doing research and so this this is essentially the dynamic you had but now when we go into the Information Age automation is making labor is making labor less important and even white-collar jobs information processing and so there's a there's there's two different realities that we could potentially go to there's one where essentially you have you still have a relatively small class of people who own capital or own most of the capital or in a creative class and then you have a small you have a actually let me just so if I just take that triangle that same triangle right over there so you still have so you still have a small group of people who fall into the top of the triangle and because automation is taking care of these middle to you only the small sliver of people who are participating in here and so everyone else here is essentially going to be left out so these folks are going to be left out which isn't a good recipe for anyone but there's another there's another reality where well what if we could expand this top triangle where we can have a larger and larger creative class and if these people can participate in the high-value labour jobs I guess you can say then they are going to be in a position to capture more and more of the income and then they will also be in a position to have more and more capital you see that happening in Silicon Valley you know people who get a neat software job at Google or Facebook or Apple not only you know they're getting that through their labor but because that that income is larger than their expenses their start they're able to start to accumulate capital and also become capital owners so there's a reality that if we play our cards right in education and once again this is close to my heart maybe instead of going to this world where we leave all of these people out we can go to a world we can go to a world that looks more like this where we don't need a lot of Labor because of automation more kind of I guess you could say commodity labor we don't need a lot of kind of the traditional white-collar jobs information processing and then most people if we can get education to be good enough can now participate in these really high value jobs where labor has a lot more leverage where the returns to labor are larger than the returns to capital and because the returns to labor are larger you're going to have those people also they're going to get more share of income and they're also going to be able to start to accumulate capital so getting to this reality where you're having a larger and larger percentage of people who are essentially capital owners capital owners and software engineers and artists and people doing R&D in my mind this is predicated on improving on improving education so to get from here to here and to avoid going to this top one it really is about about having a more a more talented labor pool or more educated labor Poole and if we pull this off then we get into what would be considered kind of a Star Trek reality a Star Trek reality people don't really view Star Trek from economic point of view but in Star Trek you might realize that there aren't a lot of people kind of tilling the fields here there aren't a lot of people just kind of doing desk jobs at Star Trek everyone in Star Trek is either doing R&D there are explorers or they are or they are artists so once again just something to think about that education that knowledge dissemination could be a very very powerful force of convergence and keep us from going into another Gilded Age