The always great Mike Konczal over at Next New Deal told us, The One Where Larry Summers Demolished the Robots and Skills Arguments. If you’ve been following my economic writing for the last couple of years (And really, why would you?) then you know that I have very mixed feelings about this. But first I should point out that there are two issues here, not one. So let me start with the “skills” issue because it is so stupid and evil, there really is no need for nuance.
The skills argument goes something like this: the reason that people don’t have jobs is that they just don’t have the skills that the modern economy needs. First of all, this just isn’t true. I know all kinds of smart, technologically sophistocated, and well educated people who are struggling in this economy. Just to name one: perhaps the most brilliant engineer I’ve ever worked with — and I’ve worked with a lot of great ones — is struggling as a “independent contractor” at Cisco with relatively low pay and pretty crummy benefits. It just isn’t the case that the people with the right skills are cleaning up as would be the case if the “skills” argument were true.
The skills argument was also made during the Great Depression. Yet when World War II came, suddenly people had the skills that were necessary. Now it is certainly true that modern corporations don’t want to have to do even the slightest amount of training because they’ve gotten used to the government and the workers themselves doing all of that at their own costs. But mostly, the “skills” argument is just an excuse for companies not hiring. It is a way to push the problem into the future: make workers go into debt while they spend years getting the supposedly marketable skills, only to find themselves just as unemployable. It’s not only disingenuous, it is cruel.
What surprised me in Konczal’s article was this sentence, “There’s been a small, but influential, hysteria surrounding the idea is that a huge wave of automation, technology and skills have lead to a massive structural change in the economy since 2010.” I have my concerns about automation, as I discussed in, Robots, Patents, and Inequality. But it is outrageous to suggest that any issues are recent and even more to say that our current economic slump is due to robots and not, you know, the bursting of the housing bubble. What’s more, as Ha-Joon Chang has noted in the past, “The washing machine has changed the world more than the internet has.”
The problem I see regarding any improvements in technology is the way that the rich have been able to game the economic and political system so that they can keep all the productivity increases as a result of this. This is a large part of the story of the total lack of economic gains for workers over the past four decades. But clearly, this is not a question of the technology itself. It is part of political dysfunction. Technology is not changing any faster today than it was fifty years ago. But strong labor unions, social norms, and many other things made sure that workers saw their lives improve at that time.
There is another issue that is related to this, but which isn’t currently a big problem. It is the “CD effect.” It is the way in which technology can allow a small group of people to capture a much larger share of the market. So whereas without CDs, many solo violinists could be employed, it is only necessary for one to be employed. Now this doesn’t happen in exactly this way, and the economics of it is actually fairly complicated. But I think we need to free ourselves of this philosophy that claims that whatever the “natural” market value of someone is is also what they are worth. This is an argument that Greg Mankiw likes to make. It may be true in the land of Ayn Rand utopias, but in the real world, it is a very bad thing. It leads to economic monocultures that are unstable and certainly not nutritious for those in the economy.
So yes, I admit, our economic problems are not robots and other technologies. But our insistence at looking at the economy in a fundamentally conservative way makes the effects of technology bad for the economy, when it ought to be great for it. Technology is not the culprit. But we are allowing the power elite to manipulate society to use technology against us.