The Big Switch Is a Good Thing

In his new book “The Big Switch,” blogger and journalist Nick Carr says, “In the YouTube economy, everyone is free to play, but only a few reap the rewards.” But the reason so many people play in the new economy is because the many can reap rewards, even if those rewards don’t come in a monetary form.
While Carr spends most of the book describing the move to utility computing and comparing that transition to the earlier switch to utility-based electrical power, he makes an important social argument as well: He suggests that the switch to utility computing — also sometimes known as grid-based or cloud computing — will shrink the workforce, lead to increasing income inequality, and destroy the middle class.
But Carr’s arguments left me unconvinced that the big switch is a bad thing. Instead of considering the job market as a whole, he focuses narrowly on the publishing and broadcasting industry. And he doesn’t offer backup to the assertion that income inequality is always and obviously bad. Increasing income inequality can mask gains in well-being from factors other than money, and the social, participatory web arriving as part of the switch to utility computing offers great riches to the masses.
A shrinking workforce, a dwindling middle class?
Carr largely bases his argument that utility computing will lead to a shrinking workforce on the example of the publishing and broadcasting industry:

Early last year, the US Department of Labor released a revealing set of statistics on the publishing and broadcasting business. Employment in the industry had fallen by 13% in the six years since 2001, with nearly 150,000 jobs lost. These were years when many media companies had been shifting from physical media to online. Yet the report revealed that there had been no growth in internet publishing and broadcasting jobs. In fact, online employment had actually dropped 29%.

On the other hand, we’re seeing vast growth in information technology jobs, due at least in part to the big switch to web-based computing. The Labor Department is forecasting employment in “network systems and data communications” to grow by 53.4 percent between 2006 and 2016, while employment in the category of “computer software engineers, applications” is projected to grow by 48.7 percent.
Carr asserts that computerization is “extending the replacement of workers by machines from the blue-collar to the white-collar world, but it shows no sign of creating broad new categories of employment.” But don’t “network systems and data communications” and “computer software engineers, applications” represent broad new categories of employment? Granted, a laid-off print media journalist is unlikely to be able to take on such a job, but that doesn’t mean the jobs don’t exist.
Carr argues that the middle class will shrink even as a small class of super-wealthy benefit from the uncompensated labor of the many (what he has previously called sharecropping the long tail):

The arrival of the universal computing grid portends a very different kind of economic realignment. Rather than concentrating wealth in the hands of a small number of companies, it may concentrate wealth in the hands of a small number of individuals, eroding the middle class and widening the divide between haves and have-nots.

While there is research that suggests that higher economic inequality leads to more distrust, decreased social capital and higher levels of crime, not everyone agrees that more income inequality necessarily indicates a problem. Also, the presence of a few wildly rich people doesn’t inevitably mean the disappearance of the middle class.
It’s natural to feel annoyed when some people get really rich; we seem hard-wired to pay attention to our relative status. But I’d like to see some discussion of whether the income inequality Carr describes is bad, or merely bothersome and envy-making.
Wealth for all
Focusing too much on income can make us blind to decreasing inequality in other aspects of life. In an essay in its special holiday edition, The Economist reports that quality of life across different income strata may be becoming more similar, as even those with little money can afford what used to be reserved for the very rich:

You can see this levelling at work in markets for transport and appliances. You no longer need be a Vanderbilt to own a refrigerator or a car. Refrigerators are now all but universal in America, even though refrigerator inequality continues to grow. The Sub-Zero PRO 48, which the manufacturer calls “a monument to food preservation”, costs about $11,000, compared with a paltry $350 for the IKEA Energisk B18 W. The lived difference, however, is rather smaller than that between having fresh meat and milk and having none. Similarly, more than 70% of Americans under the official poverty line own at least one car. And the distance between driving a used Hyundai Elantra and a new Jaguar XJ is well nigh undetectable compared with the difference between motoring and hiking through the muck. The vast spread of prices often distracts from a narrowing range of experience.

This same effect is why some web optimists see the opportunities brought by the social, participatory web as mainly a good thing. It used to be that if you wanted to have your writing published, you’d need to have a job with a newspaper or magazine. Now anyone can publish their writing on blogs. It used to be if you wanted to have thousands of people watch your films, you’d have to get lucky in Hollywood. Now you can upload your video to YouTube. It used to be if you wanted to become a radio talkshow host, you had to convince a radio station to give you airtime. Now you can record your own podcast.
So even as some startup founders get wildly rich, the many benefit by gaining access to opportunities previously reserved for a privileged few. That other people are making tons of money shouldn’t distract from the very real nonmonetary benefits that people enjoy online.
In a recent interview, Wired called Carr “Captain Buzzkill.” But Carr’s book didn’t kill my techno-utopian buzz, and it made for an enjoyable and thought-provoking read. I came away with two ideas: first, the book “The Big Switch” is — as I expected from having read Carr’s blog — well-researched, well-written, and well-filled with ideas designed to annoy. Second, the big switch to a global web computer that Carr identifies is a good thing — at least insofar as it brings to the many the numerous experiences and opportunities previously only reserved for the few.