At Atlantic Derek Thompson has written the best post on the effects of automation on jobs that I’ve seen in a long time. He makes and offers evidence to support the following points:
- The U.S. economy is in a productivity recession.
- Companies don’t seem to be investing in technology nearly as much as they used to.
- Globalization is a much bigger deal than automation for work and wages.
- The U.S. economy’s creative-destruction engine is broken.
Or, in other words, there is very little evidence that robots are taking our jobs.
He also cites a fascinating case study:
In the short run, the digitization of retail has created jobs. But it’s replacing in-store salespeople—not easily automated, since who wants a robot clothing assistant?—with warehousing and transportation workers. There are nearly 2 million truck drivers and 300,000 warehouse laborers and stocking clerks in the United States, and there are rather direct efforts underway to make a great number of these jobs obsolete. Amazon has expanded its armada of warehouse robots to more than 40,000, and self-driving cars have the attention of practically every auto and technology company in the world. So, e-commerce has created jobs—ones that are quite vulnerable to automation.
Note, too, that the warehousing and transportation jobs that have been created while eliminating sales clerks are much more organized than the sales clerks ever were, arguing against yet another narrative.
If robots aren’t the job-killers that some are arguing they are, what’s happening? I would argue that the following factors explain practically everything:
- Globalization
- Immigration, particularly of low-skilled workers
- Out-sized expectations of the returns of capital
- Poorly constructed public policies, particularly of the NIMBY sort
“self-driving cars have the attention of practically every auto and technology company in the world.”
The reason that trucking companies are interested in this technology is the possibility of expanding the number of hours the truck can be in service. Right now hours of service rules cap a solo driver at no more than 11 hours a day and 70 hours a week. That’s under-utilization of capital, and if the truck can be driven 2-3 times that amount, then the truck “rider” becomes a lot more productive. There might be fewer trucks on the road, but if truck transportation becomes more efficient, it can spark more demand.
The most demanding parts of a trucker’s job are not the driving part that is being automated; its the loading and unloading. The hours of services rules cap the driver’s total work day at 14 hours, implying that 3 or more hours a day can be usual for loading and unloading.
The only piece that makes sense right now depends on the technology getting to a point that the regulations can be modified. If the technology is too uncertain or if the regulations are still going to require an alert driver as measured by the same hours of service rules, then the technology revolution is probably going to get stuck at better cruise controls and warning systems.
A.
And, he gets reelected in 2018 and achievesmmost of his campaign promises.
From my perspective I’d only take issue with two points here.
A broken creative-destructive engine? I might use the term tired or frustrated rather than broken. Tired of the headwinds of slower growth, regulatory burden, crony capitalism and more uncertain returns. Even disdain for success unless you are in a politically fashionable line of business. Then you get subsidy, like Elon Musk. Otherwise the prevailing attitude seems to be “Thanks for the efforts, now give us the spoils.”
As for outsized expectations for return to capital, that’s like opinions that “you make too much money.” I think entertainers make make too much money, but so what?
As for the raw mechanics. The returns to fixed income investments, which dwarf in capitalization equities, one can hardly say returns have been robust. Thank you central banks of the world. You have hosed savers and contributed more to inequality than all other issues combined.
Equities should be thought of in three flavors: illiquid private, public and effectively permanent ownership. Private equity returns have steadily declined over the years as increasing amounts of capital have been attracted. Public equity returns have been a byproduct of central banks, and an (irrational) willingness on the part of investors to believe in outsized valuations. That’s not an expectation of capital return in the sense cited. It’s gambling. As for return on capital to business owners. That can be thrown into the heap af academic yammering from the sidelines. One doesn’t have a seat in the critics section until he or she pulls out their checkbook and puts their money where their mouth is.
I could have said “risk averse”. Definitionally, they mean the same thing.