Economics, Pethokoukis, U.S. Economy

How to stop the robots from taking all our jobs

Image Credit: Cleveland Fed

Image Credit: Cleveland Fed

For more than 200 years, the Luddites have been wrong. Technological advances have created a far wealthier West and millions of new jobs. As machines became more capable, so did humans, moving up the value ladder. But must it always be so, specifically the impact of automation on employment? “There is no economic law that says that everyone, or even most people, automatically benefit from technological progress,” write MIT’s Erik Brynjolfsson and Andrew McAfee write in Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy.

The disconnect in recent years between, on the one hand, rising stock prices and corporate profits and, on the other, falling median incomes and lackluster job growth, seems to give some credence to the idea that the Luddites weren’t wrong, just early. Financial Times columnist Edward Luce, for one, seems persuaded that “the spread of the robots will leave a large and growing chunk of the US labour force in the lurch.” Health care and education are just two low-productivity sectors that seem fertile ground for the future penetration of both robots and digital technology.

Assuming the answer isn’t to smash the machines, or at least unplug them, what can we do to create an economy that provides plentiful jobs and rising incomes? The good news is that the right policies to deal with technological acceleration are pretty much the same as if you’re combating technological stagnation. Brynjolfsson and McAfee offer a list of ideas, mostly centered around education and entrepreneurship, that work either way and could appeal to both the left and the right.

Among them: 1) pay teachers more so better students want to become teachers; 2) hold teachers more accountable for performance by eliminating tenure; 3) encourage more high-skill immigration; 4) create special visas for entrepreneurs; 5) teach entrepreneurship throughout higher education; 6) create a database of “startup-in-a-box” templates; 7) lower governmental barriers to starting a business; 8) upgrade the nation’s transportation, energy, and communication infrastructure; 9) increase government funding for basic research such as that carried out by DARPA and NIH; 10) resist efforts to regulate hiring and firing; 11) lower payroll taxes; 12) decouple benefits, such as health insurance, from jobs; 13) don’t rush to regulate new innovation business structures such as crowdsourcing; 14) eliminate inefficient, crony capitalist distortions such as the home mortgage deduction and the Too Big To Fail big bank subsidy; 15) shorten copyright periods and increase the flexibility of fair use.

In addition, it may become more important for people to generate income from capital, not just labor, if machines depress wages over the long run. That’s right, a return to the Ownership Society. A good first step would be to transform the income tax into a consumption tax by no longer taxing capital income. And we should make it easier for average families to own stock. But that’s becoming harder to do with many companies going private. Noah Smith,a finance professor at Stony Brook University, recommends reforming regulations like Sarbanes-Oxley “that make it risky and difficult to go public.”

Another option, suggested by economist Tyler Cowen, are so-called universal 401(k) plans where government would help fund tax-free retirement accounts for lower-income Americans, matching personal contributions to those accounts. “A fiscally responsible universal 401(k) plan would not make everyone happy. Libertarians and conservatives would be suspicious of government-created accounts. Liberals might not like freezing or reducing future expenditures on Medicare and Social Security.”

If we are really racing against the machines, time to leave the starting blocks.

39 thoughts on “How to stop the robots from taking all our jobs

  1. A comment on the future from a reader of H. G. wells:
    If this goes on, there will be nothing left for people
    to do except write poetry and make love !

    A comment from a member of a very advanced society
    to the Hero of E. E. Smith’s SF novel ‘Skylark of Space’

    There is never any reason for a human being to perform
    the same task more than once.

  2. Great list! One thing that’s missing are Employee Stock Ownership programs (ESOPs). They have some amazing tax benefits; S-corp ESOPs only pay taxes on the percentage of profits not owned by the employees. Their inventor, Lewis Kelso designed them to deal with technology amplified returns on capital reducing the value of an individuals labor.

  3. Only Joe and Jane Commoner are losing jobs now, so the robots are not a problem.
    Only after strong artificial intelligence begins taking jobs from those at the top of the profit pyramid will countermeasures be adopted.

    • it will be like what is going on with the movie industry and the record industy ..and the pyblishing industry sense -readers have becamoe popular ..

      when the machines and 3d printers are able to be used by milions of people who compete against the big companies with neith the overhead ..or the mindset to maximize profit.. there will be attemps to make it more expensive to do so

  4. the 13 suggestions are great, but what ever gave you the idea that the government was in the business of putting itself out of business? the gang of 535 is the largest special interest group in the u.s.

  5. “Libertarians and conservatives would be suspicious of government-created accounts.”

    That would seem to be a mis-reading of libertarianism and conservatism. Libertarians might oppose government-subsidized retirement savings accounts strictly on opposition to subsidization, but they would likely support it in comparison to other forms of subsidization. I know of no conservative principle that would oppose the idea; in fact it seems very much along the lines of the kind of social security reform that conservatives have been fighting for, for decades.

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