Opinion | The rapid pace of technology is hollowing out the middle class

In the book The New Division of Labor: How Computers Are Creating the Next Job Market, the authors reckoned routine tasks would be handled by computers while more complex tasks would be the domain of humans. The book was written in 2004 and one "complex" task the authors cited was driving a car through traffic. But in 2010 Google announced its driverless car and successfully demonstrated it.

For Andrew McAfee, principal research scientist at the Massachusetts Institute of Technology, this signalled a turning point in thinking about technology. "We had moved so fast from a world where this was not going to happen to a world where this had clearly happened," he told delegates at the CLSA Investor Forum yesterday. The upshot was his book co-authored with Erik Brynjolfsson, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies.

The authors argue that the impact of technology on particularly the US economy is underestimated. Since the end of the second world war, the health of the US economy could be gauged by considering real GDP, labour productivity, private employment and median household income. The four indicators more or less moved in lockstep for three decades after the war. In the '80s median wages began to decouple from the rest and in the early 21st century jobs started to tighten. Meanwhile, productivity and real GDP maintained a higher trajectory. This they attribute to increased spending by employers on computers and technology rather than workers. Corporate profits have never been higher but the returns for labour are getting lower. And we now have machines that can diagnose breast cancer faster and more efficiently than highly trained doctors. Machines are now capable of unsupervised learning.

The pace of digital encroachment into what used to be human skills has profound implications. Not least of which is the hollowing out of the middle class. A large stable middle class was important for building a prosperous, healthy and stable society, says McAfee. But what happens when the middle class comes under pressure? "I can't tell a happy story about that," he says, adding that he thinks it's going to be a major challenge for countries around the world.

What then does the future hold? More digital innovation. The people who can master the technology and the data - the geeks - will continue to astonish us with their creations.

"After that things get quite unclear to me."