Tim O’Reilly is no dummy. Neither is James Manyika.
You may recognize O’Reilly’s name. Manyika, probably not. O’Reilly coined the terms “open Source” and “Web 2.0” among other notable accomplishments. He’s world famous, mostly for being really smart.
Manyika is Senior Partner at McKinsey, a top private think tank and consulting firm operating worldwide. He directs the McKinsey Global Institute (MGI), McKinsey’s business and economics research arm, and one of its three global co-leaders. You gotta be smart to have that title.
McKinsey featured Manyika and O’Reilly talking about how work will change in the “next economy”. I don’t remember either participant defining what “next economy” meant. But I do remember the common ground they found: They both agreed the next economy, whatever it is, will have to address pressing social problems:
Tim O’Reilly: Economic growth is good because of two things. One, if you have population growth, you need the economy to grow at least as fast as the population to keep living standards even. Economic growth is good because, presumably, it increases the wealth of a population if economic growth exceeds the population’s rate of increase—but only if that wealth is distributed properly.
James Manyika: Absolutely.
Tim O’Reilly: One of the big changes in our economy, over the past few decades, is that it has become much more of an extractive economy in which corporate profits are going up. We have sort of abandoned the idea that growth is only good if it leads to prosperity for all. It’s not good if it leads to prosperity for a very small number of people, who then don’t spend the money, and instead it just sits on the sidelines.
James Manyika: Oh, absolutely. In fact, that’s one of the challenges that, if we’re creating a list, we’re going to add to the list—this idea of how do we grow and develop and innovate and, at the same time, include everybody and have the benefits of all that go to everybody? I think it’s quite striking, for example, that even through periods in the past decade when productivity has been good, the share of the national income that’s gone to wages has actually declined.
One other thing. Both O’Reilly and Manyika agree: technology and globalization are key to rising prosperity. I agree too.
That’s why any fundamental change not supporting a globalized economy with global trade is not going to get public support. The elites know what is driving prosperity no matter how unequal that prosperity is. The solution isn’t killing productivity drivers, it’s fixing the problems they cause.