The End of Work

by John Tamny

  On May 25, 1989, the first Magellan GPS portable navigation devices went on the market. These space-age gadgets weighed 1.5 pounds and cost three thousand dollars.12 Thanks to the venture buyers of the nineties, GPS systems are now standard on the iPhone and Android, and free apps like Waze not only get you from point A to point B but also guide you around the traffic jams.

  In 1970, Texas Instruments released the first pocket calculator, and those at the front of the line paid four hundred dollars for the miraculous gizmo.13 Today you can access a calculator for free by entering “calculator” in the Google search bar. A few years earlier, IBM had introduced its first mainframe computers. The price of the simplest version was more than a million dollars.14 Today, exponentially more powerful computers can be had for less than two hundred dollars.

  In 1999, most people hadn’t heard of wireless Internet, or “Wi-Fi.” Bret Swanson, the head of Entropy Economics, recalls that the maximum capacity of Wi-Fi then “was 11 megabits per second. By 2003, when it started to go mainstream, the top capacity was 54 megabits per second. Today, it has surpassed 1 gigabit per second, or 100 times faster than in 1999 and 20 times faster than in 2003.”15

  As recently as the early 1990s, cellular phones were status symbols carried around by the rich. Motorola introduced the first one in 1983—the size of a brick, with lousy reception and a battery that lasted half an hour. This phone cost $3,995, and you paid through the nose for each call.16 Despite the price, the rich proudly talked on them while the rest of us looked on in awe. Today, of course, we have vastly more powerful phones with computers, Wi-Fi, and built-in GPS, and the prices of these advanced gadgets are falling by the day.

  These are just a few of countless examples that illustrate the importance of the venture buyer, sometimes called the “early adopter.” Entrepreneurs hope to grow rich by being the first to figure out what consumers will want, but that’s difficult because consumers often don’t know what they want. No one was demanding computers, GPS systems, smartphones, or Wi-Fi before they were invented. Venture buyers dipped their toes into the water, and their purchases had a profound influence on how we live and work today.

  Try to imagine our economy without computers, GPS, and mobile phones. Greg Milner, who has written the history of GPS, contends that this technology’s “true economic influence” is so massive—in the trillions of dollars—that it “resists qualification.”17 He’s right. For example, Uber, with its market capitalization of more than $60 billion,18 is impossible without GPS and smartphones. And how many people are financing their education by driving for Uber?

  Smartphones are a crucial part of Apple, the most valuable company in the world. Once again, thank the venture buyers. Without them, economic evolution comes to a halt and so do the dreams of those who want to match their passion and intelligence with their professional work.

  That brings us back to the government. The more it helps itself to its citizens’ disposal income, the less venture buyers have to spend. But spending is spending, isn’t it? What difference does it make whether the government or private citizens act as venture buyers? It makes a big difference, actually. As the Senate’s tardy switch from the Black-Berry to iPhones and Androids reveals, governments can’t be early adopters. It’s too risky. Economic evolution depends on venture buyers who risk their disposable income on the consumer goods of the future, along with countless other items that will be forgotten.

  The federal government made use of private-sector technological advances to craft a primitive version of the Internet, but the Internet’s commercial potential went undetected by its creators. The military developed GPS with combat in mind, but without private-sector risk-takers, no one would have heard of Uber.19

  Politicians talk about running the government like a business, but the government isn’t a business and can’t act like one. Unlimited funds and the absence of a profit-motive make it difficult to kill what’s not working. The money keeps flowing in no matter what. The situation of a private business is quite different. As Ludwig von Mises explains, “the wealth of successful business men is always the result of a consumers’ plebiscite, and, once acquired, this wealth can be retained only if it is employed in the way regarded by consumers as most beneficial to them.”20 Consumers and businesses make mistakes all the time, but they correct those mistakes or find themselves corrected.

  When governments spend in “size” fashion, the economy is deprived of the advances that power growth. Average workers suffer, because the variety of work available to them depends on booming economic activity. What were the options for a worker in 1900 compared with the options in 2000? What were the options in 2000 compared with the options today? Growth begets variety and with it the expanding opportunities for people to match their talents and passions with their work.

  Venture buyers are also essential to our health and wellbeing. In December 2015, Jimmy Carter announced the disappearance of his brain cancer. The former president had obtained the new and enormously costly drug Pembrolizumab, which treats cancer by boosting the body’s immunity.21 Carter’s medical version of venture buying helped pharmaceutical entrepreneurs take another step toward making this drug affordable for everyone.

  History shows that the high prices of new goods—the goods that venture buyers are testing for the rest of us—invariably come down. Falling prices stimulate desires for the new goods and services that are the occasion for new forms of work.

  For instance, some people are terribly devoted to dogs. If disposable income is rising, there’s a market for professional dog walkers. In fact, by 2016 dog walking had become a $907 million business employing more than twenty-three thousand people. Ryan Stewart of Queens, New York, earns $110,000 a year working twenty-five hours a week doing what he enjoys. “It’s full-time pay for part-time work,” he says. “I think everyone would want that. I’m doing something that I love, and I have time to go to school at night.”22

  Stewart knows one dog walker who earns $150,000 per year and another who earns two thousand dollars per week in thirty-five to forty hours. All that for taking care of pets. Stewart adds that foreigners stop to take pictures of dog walkers because it’s still a very American profession. It’s no surprise that this form of work would reach the world’s richest country first.23

  While some can’t get enough of dogs and the outdoors, others love wine. The famous hotel Ritz Paris has just finished a two-year, $450 million renovation. The owners spared no expense as evidenced by room rates that start at $1,100 per night. But the Ritz’s guests want more than fancy rooms; they want the best of everything, including wine. The hotel has accordingly stocked its wine cellar with fifty thousand different vintages, all of them curated by thirty-five-year-old Estelle Touzet, the hotel’s sommelier.24

  Yes, lovers of wine can now make it a profession. The 2012 documentary Somm follows four certifiable wine geniuses as they prepare to take the master sommelier examination, one of the world’s most difficult tests. The candidates sip wines from around the world and with amazing precision identify the year, country, and region in which they were made, the best food pairings, and just about everything else.

  There are only 230 master sommeliers in the world, and their extraordinary intelligence about all things wine means they’re eminently employable. But not all sommeliers have the “master” designation, so it’s not just the few who have been the beneficiaries of a booming economy that has turned what was once a hobby of the rich into a profession.

  If anyone doubts that the consumption of the rich eventually benefits us all, consider this: Costco is now the biggest importer of French wines in the world. The giant discount retailer has directed its considerable buying power to wine. Annette Alvarez-Peters, Costco’s lead buyer, is not a master sommelier, but she is the most powerful wine buyer in the world.25

  The pay in the wine business is not bad. In 2014 the median income for sommeliers—a profession that likely didn’t exist at all one hundred or even fifty years ago
—was sixty thousand dollars for men and fifty-five thousand for women. Income for advanced sommeliers was seventy-eight thousand dollars, and for masters the median came in at $150,000. For consulting alone, introductory sommeliers charge $250 per day, while masters can command a thousand dollars or more.26

  With its affluent readership, the Wall Street Journal employs car-mad reporter, Dan Neil, to write about the world’s best cars. Neil’s “job” in August 2016 was to travel to England to test drive the Aston Martin Lagonda, an exclusive “super saloon.”27 Years before Neil starting writing about cars for the Journal, Laura Landro was staying at the world’s best hotels and reviewing them for the newspaper. Neil and Landro were forerunners of a new profession they’re calling “influencers.”

  No one had heard of this profession a few years ago, but Marie Claire magazine’s Jo Piazza reports that influencers can now make “serious bank” for posting their fashion and food likes on Instagram, Twitter, and other social media sites.28 Kylie Jenner launched a line of cosmetics in 2015 and within eighteen months hit $420 million in sales with the help of 99 million followers on Instagram.29

  You don’t have to be a celebrity like Kylie to enjoy this lucrative, high-living career. There are no barriers to entry. Giant cosmetics companies are starting to notice what I call “pajama entrepreneurs.” The New York Times reports, “Some cosmetic companies have flown groups of influencers to Bora Bora; Necker Island, the private enclave of Sir Richard Branson in the British Virgin Islands; and Kauai in Hawaii for lavish, all expense paid vacations. In exchange, most influencers agree to post a certain number of YouTube videos or Instagram posts about the company’s products.”30

  Chiara Ferragni, the thirty-year-old founder of the influential blog The Blonde Salad, is arguably the queen of this modern profession, which exists solely because the people who populate our increasingly prosperous planet are interested in what she and other influencers wear. Ferragni employs some fourteen people for a blog that generates revenues in excess of seven million dollars annually.31

  Generating billions of dollars’ worth of fashion sales, Ferragni and other influencers have become so important that they are now ranked in tiers. According to Piazza, many of the top-tier influencers have become so expensive that opportunities have emerged for the mid-tier, who have “only” a million Instagram followers. Even if you have only twenty-five thousand followers interested in what you wear, you might command two thousand dollars for each post, supplementing your income with five hundred dollars for each hashtag.32 In the connected and prosperous new world that technology has brought about, people will pay you for posting what you’re passionate about.

  The venture buying of the rich sends crucial market signals to entrepreneurs about how the non-rich will be able to buy in the future. That the superrich generally get around on private jets suggests that someday we’ll all fly privately. Better yet, venture buyers drive the economic evolution that will allow most of us to combine work, fun, and our unique skills and intelligence.

  But reduced government spending is necessary for work to evolve from tedious toil to what it would pain us not to do. Government spending blinds the economy simply because it blunts the impact of the “venture buyers” necessary for growth. It also reduces our buying power such that there are fewer “I can’t believe I get paid to do this” jobs like sommelier, dog walker, and influencer.

  CHAPTER NINE

  Why We Need People with Money to Burn

  “We are all blessed by the genius of relatively few.”1

  —Warren Brookes

  “If you don’t love something, you’re not going to go the extra mile, work the extra weekend, challenge the status quo as much.”2

  —Steve Jobs

  You may be familiar with the rapper Armando “Pitbull” Perez because of his hit songs. But his music is only part of his story.

  The son of Cuban immigrants, Perez has extended his brand to fragrances, clothing, and even vodka—fairly typical ventures for an ambitious and energetic pop star. But his most interesting venture is not one you’d expect from a rapper: the Sports Leadership and Management charter schools—“SLAM!” for short.

  The first SLAM! school opened in an impoverished Miami neighborhood in 2013, and others are open or planned in Tampa, several other Florida cities, Atlanta, and Las Vegas. “SLAM! is not about being a professional athlete,” Perez explains. “It’s about the business around it, teaching the kids you can be a physical therapist, an agent, a lawyer, a broadcaster. There’s a whole business around sports.”3

  Perez’s schools are designed to introduce youth to the expanding range of career possibilities in areas of interest to them. It’s too early to know if SLAM! will achieve its goal of launching disadvantaged kids on satisfying and successful careers in sports and entertainment, but this ambitious project shows why wealth is crucial to the evolution of our economy. Rich people like Perez make experimentation possible, and without experimentation, there would be no economic progress.

  The Washington Post once confidently asserted, “It is a fact that man can’t fly.”4 Thank goodness the Wright Brothers not only ignored the naysayers but also had enough revenue from their bicycle shop to invest the considerable sum of one thousand dollars in their seemingly impossible aviation project.5

  When the venture capitalist Ed Tuck set his mind to making GPS technology available to the general public, his search for investors led to eighty-six rejections before he found someone to help him bring Magellan GPS systems to market.6 But consider the unseen. How many advances have never seen the light of day because the wealth to back them wasn’t available?

  It’s hard to believe, now that Apple is the most valuable company on Earth, but when Steve Jobs returned from exile in 1997 to run the company he had co-founded, it was “less than ninety days from being insolvent.”7 Bill Gates, one of the world’s richest men, invested $150 million in Jobs’s return to Apple.8 How many more investments might Gates have made, how many more world-changing companies might he have saved, how many more global problems might his foundation have solved with the billions that he and Microsoft have handed over in taxes over the years?

  Amazon’s billionaire founder, Jeff Bezos, was part of an investor group that placed $32 million with the start-up Uber back in 2011.9 Uber, itself a direct result of previous investment-driven advances in smartphones and GPS, now employs tens of thousands around the world. Bezos, the world’s richest man,10 is an aggressive investor. Imagine how much more capital he could put to work if the tax man weren’t constantly lying in wait.

  Some people are ideologically committed to the principle that the rich should part with some portion of their wealth through taxes. I’m asking you to leave ideology aside for the moment and recognize that private capital matched with ideas is the most powerful engine of economic growth we know of. And economic growth is what produces the liberating new jobs that have enriched millions of lives and could enrich millions more. Untaxed wealth doesn’t lie idle. It’s either saved, directly invested in ways that put it in the hands of innovators, or spent on goods and services, giving more people the ability to match their work with their passion. Each dollar taxed away makes it marginally more expensive for the rich to invest their capital in risky new advances. Innovators need that capital because experimentation is very expensive.

  Peter Thiel, the billionaire co-founder of PayPal and one of the original investors in what became Facebook, knows the perils of investing in the ideas of the future. In his book Zero to One, he explains that “most venture-backed companies don’t IPO or get acquired; most fail, usually soon after they start. Due to these early failures, a venture fund typically loses money at first.”11 This is why much lighter taxation on existing wealth would benefit everyone.

  With less of their wealth taxed away, the rich would have greater capacity for risks. The more they’re taxed, the more careful they have to be with what’s left to maintain their wealth. Indeed, taxes on the rich hurt those
who aren’t well to do much more than they hurt the rich themselves.

  Thiel is a good example. He’s constantly experimenting with new ideas. He even believes death itself can be cured.12 But experimentation is enormously expensive, and the disappearance of common killers like cancer and heart disease will require gigantic investments. More money provides more chances to fail expensively on the way to success.

  But what good are all of Peter Thiel’s investments in technology for those of us who want to marry work and passion but find technology terrifying? Just remember how technological advances have ushered in a more economically advanced society overall. We hear all the time that technology is a job killer, and it’s true that the automobile, computer, GPS, Wi-Fi, and smartphone have rendered plenty of old forms of work obsolete. But the prosperity wrought by technological advances has given us more jobs to choose from. Thanks to growth-inducing innovations, people without technological skills can pursue work that didn’t exist when society was poorer. A hundred and fifty years ago, half of all Americans toiled on a farm.13 I don’t know many people who would go back to those days if they could.

  Technology has indeed destroyed lots of jobs, but it has also freed almost every family from having to produce its own food. Without technological progress, your odds of finding work that matches your unique skills and intelligence would be greatly reduced. But that’s not the whole story. The tradeoffs that technology has brought have been brilliantly advantageous for us all.

  Technology improves our efficiency at work, our ability to meet and transact with people around the world, and even our health. It is only logical, then, that technological innovation drives enormous wealth creation as more and longer-living people interact with each other. And as wealth grows, so does demand for goods and services of all kinds that have little direct connection with technology. In short, the wealth that springs from technology is what Professor Enrico Moretti of the University of California at Berkeley calls a “jobs multiplier.”