The Watcher Cat

The Watcher Cat

Monday, March 6, 2017

The Player Piano Plays On...

At the risk of being unkind, I think it's fair to say that Lawrence Summers never misses the chance to disappoint:
Imagine that 50 people can produce robots who will do the work of 100. A sufficiently high tax on robots would prevent them from being produced. Surely it would be better for society to instead enjoy the extra output and establish suitable taxes and transfers to protect displaced workers. It is hard to see why shrinking the pie, rather than enlarging it as much as possible and then redistributing, is the right way forward.

This last point has long been standard in international trade theory. Indeed, it is common to point out that opening a country to international trade is like giving it access to a technology for transforming one good into another. The argument, then, is that since one surely would not regard such a technical change as bad, neither is trade, and so protectionism is bad. Gates’s robot tax risks essentially being protectionism against progress.

None of this is to minimize the problem of job destruction and rising inequality (although it is a major paradox that we seem to be seeing unprecedentedly rapid job destruction by machinery while at the same time observing extraordinarily low productivity growth). Rather, it is to suggest that staving off progress is a poor strategy for helping less fortunate workers. In addition to difficulties of definition and collateral costs, there is the further problem that in an open world, taxes on technology are likely to drive production offshore rather than create jobs at home.
My italics, his emetics.

Summers is representative of that group of managerial-cum-economist pseudo-intellectuals who keep fighting the last war, over and over, despite the fact that they've already lost. According to Michael Morgenstern in The Economist:
In a widely noted study published in 2013, Carl Benedikt Frey and Michael Osborne examined the probability of computerisation for 702 occupations and found that 47% of workers in America had jobs at high risk of potential automation. In particular, they warned that most workers in transport and logistics (such as taxi and delivery drivers) and office support (such as receptionists and security guards) “are likely to be substituted by computer capital”, and that many workers in sales and services (such as cashiers, counter and rental clerks, telemarketers and accountants) also faced a high risk of computerisation. They concluded that “recent developments in machine learning will put a substantial share of employment, across a wide range of occupations, at risk in the near future.” Subsequent studies put the equivalent figure at 35% of the workforce for Britain (where more people work in creative fields less susceptible to automation) and 49% for Japan.
. Stephen Hawking made the same point late last year in the Guardian. The Financial Times puts the percentage of lost jobs in the U.S. from 2000 through 2010 due to automation at 85%.

And what does Summers note? He recommends the same failed nostrums of the 1980s through the present--retraining for the cataract of new jobs that will magically be created, the cataract of new jobs that never seems to come, as America's towns grow more hollowed out and the "rust belt" increasingly lives up to its name.

And it's not like this was that hard to foretell. Kurt Vonnegut's Player Piano was published in 1952, set in the fictional city of "Illium" (Troy, to you and me). While the details didn't fit his depiction, the overarching blight has, and the lack of any efficacious response, is just as he saw it.

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