No, Robots Aren’t Killing the American Dream – The New York Times

In good times, robots are seen as heroes. In bad times, they’re the villains. They’re neither. Robots are as good or bad as our public policies allow.

the data indicate that today’s fear of robots is outpacing the actual advance of robots. If automation were rapidly accelerating, labor productivity and capital investment would also be surging as fewer workers and more technology did the work. But labor productivity and capital investment have actually decelerated in the 2000s.

the problem with automation isn’t robots; it’s politicians, who have failed for decades to support policies that let workers share the wealth from technology-led growth.

The response in previous eras was quite different.

Productivity and pay rose in tandem for decades after World War II, until labor and wage protections began to be eroded. Public education has been given short shrift, unions have been weakened, tax overhauls have benefited the rich and basic labor standards have not been updated.

As a result, gains from improving technology have been concentrated at the top, damaging the middle class, while politicians blame immigrants and robots for the misery that is due to their own failures. Eroded policies need to be revived, and new ones enacted.

Source: No, Robots Aren’t Killing the American Dream – The New York Times

The Basic Income Is the Worst Response to Automation | RealClearFuture

The future doesn’t come that fast, and we will get a chance to see it coming. The best response is to encourage people to respond to technological progress and to seek out the new jobs that will become available as the old ones fade away.

no matter how sophisticated the system, no matter how advanced our machines seem to be, relative to what we’re used to, somebody still needs to do the work of keeping them running. We need someone to monitor them, maintain them, and regulate them, someone who understands how they work and how they connect to other systems

the basic income, as an economic program, is a plan to lure a large group of people into withdrawing from the economy and living in a state of economic helplessness and stagnation, separate from a technological elite who enjoy wealth and influence

Source: The Basic Income Is the Worst Response to Automation | RealClearFuture

Donald Trump and the US economy: 10 charts for tracking his progress — Quartz

10 charts to track his progress putting plans into action, updated continuously.

As president, his pledge to “Make America Great Again” will be judged largely along economic lines, whether it’s bringing back factory jobs, boosting wages, or renegotiating trade deals. … we don’t have to rely on guesswork or partisan punditry to evaluate his progress; we’ve got reliable data to gauge Trump’s success

  • Real GDP growth
  • Unemployment
  • Labor force participation
  • Poverty
  • Trade balance
  • S&P 500
  • Wage growth
  • Budget balance
  • Public debt
  • Coal mining jobs

Source: Donald Trump and the US economy: 10 charts for tracking his progress — Quartz

Donald Trump is right: Free trade is broken, but his “fix” would only make things worse. — Quartz

Starting with Ronald Reagan, one after another, American presidents of both parties have oversimplified and overemphasized the benefits of free trade, without pausing to study its costs, and who was paying them

Trump has correctly identified a problem. But by focusing only on free trade deals he risks repeating the very mistakes that conjured him forth in the first place.

International free trade theory ultimately rests on this Ricardian bedrock: Free trade is a win-win, and not a zero-sum, proposition. … But that’s only part of the picture. Sometimes free trade isn’t a win-win at all. When a business shuts down due to its country’s loss of comparative advantage in that industry, people lose their jobs. Finding work in an entirely different sector is seldom as peachy as Ricardo’s model makes it seem.

The Keynes-based policies of the postwar era were designed with the understanding that workers were also consumers—a fundamental engine of demand. Making sure they had enough money in their pockets to buy goods kept the economy chugging along.

Though you’ll often hear people say that Nafta let Mexicans steal American jobs, this rhetoric distracts from a far more fundamental dynamic of trade—that workers in all countries benefit from rules that prevent corporations from exploiting them.

What economists seldom explain is that the only way for the US to gain from cheaper production in China is by giving up those same jobs at home, according to Ricardo’s model, and employing laid-off workers in more sophisticated, better-paying jobs.

Ricardo didn’t account for what happens when another country devalues its currencies against the dollar, forcing the US to run a chronic current account deficit. When this happens, the cheapness of imported goods enjoyed by American consumers doesn’t come from comparative advantage. These supposed “gains from trade” result from one country suppressing its people’s purchasing power in exchange for propping up employment. The US gets the opposite: excessive consumption and job loss. Until those imbalances readjust, America’s trade deficit will persist—and so will joblessness among its lower-skilled workers.

Just as free trade itself didn’t cause America’s lost jobs and stagnant wages, neither will restricting it fix those problems. Winning global cooperation on exchange rates would help—a lot. But ultimately, to make free trade fair again, instead of “bringing back jobs,” America’s new president should also invest in creating new ones.

Source: Donald Trump is right: Free trade is broken, but his “fix” would only make things worse. — Quartz

Trump’s Carrier deal could permanently damage American capitalism – The Washington Post

Some of the worst abuses of power are the acts that the people demand from their leaders.

It seems to me what we have just witnessed is an act of ad hoc deal capitalism and, worse yet, its celebration as a model. As with the air traffic controllers, only a negligible sliver of the economy is involved, but there is huge symbolic value. A principle is being established: It is good for the president to try to figure out what people want and lean on companies to give it to them. Predictability and procedure are less important than getting the right result at the right time.

I fear in a way that is more fundamental than a bad tax policy or tariff we have started down the road of changing the operating assumptions of our capitalism. I hope I am wrong, but I expect that as a consequence we are going to be not only poorer but less free.

Source: Trump’s Carrier deal could permanently damage American capitalism – The Washington Post

The job-to-job transition rate: An obscure statistic that offers a clue to the rise of Donald Trump — Quartz

It’s all about the job-to-job transition rate.

recent research led by economists at the Federal Reserve in Washington, DC found that labor mobility has been broad based, affecting all types of workers and industrial sectors. This study also argues that the decline began all the way back in the 1980s

there is some evidence that a decline in “social trust” has made people less willing to change jobs as readily as before.

Source: The job-to-job transition rate: An obscure statistic that offers a clue to the rise of Donald Trump — Quartz

Election 2016: We just saw what voters do when they feel screwed. Here’s the economic theory of why they do it — Quartz

The benefits from trade and immigration and globalization are so huge that everyone inside of developed countries should be doing better than they otherwise would have.

Policies such as trade, globalization and immigration have all been proven to be of great global economic benefit.

while China and the developing world have benefited enormously from trade, so too has the developed world. The benefits of comparative advantage are real. But the question then becomes: for every extra dollar that has accrued to the US and the UK, who has been the beneficiary?

Here’s a hint: it’s not the people who are voting for Trump and Brexit. These folks don’t care about the chart above, or what it represents as an accomplishment for humanity. It’s not their chart.

Source: The State of Working America

Yes, trade, globalisation, immigration are good things. They have grown the pie immeasurably.

But playing the ultimatum game and screwing the second player — those folks being screwed won’t care how much the pie is being grown if they feel they’re not getting a fair slice. They’ll throw the whole thing out.

Source: Election 2016: We just saw what voters do when they feel screwed. Here’s the economic theory of why they do it — Quartz

 

For comparison, if all households had experienced equal cumulative percent change in income from 1979 to 2007, then that percentage would have been 53.4%. The top 10% of American households by income took more than the average share of gains since 1979 while everyone else received less. The bottom 20% (bottom fifth / bottom quintile) received about half (29.2/53.4 ~ 55%) of an equal gain. The middle quintile (40th-60th percentile), the core of the middle class, received about a third (19.7/53.4 ~ 37%) of an equal gain.

Source: Change in average real annual household income, by income group, 1979–2010 | The Working State of America

Big Hospital Network Cracks Down On The Right To Sue

Some networks of hospitals, doctors and medical services are now so dominant in their region that they can hike their prices and force patients to waive the right to sue when things go wrong.

Dozens of companies have received a letter, via their insurance administrators, asking them to waive their rights to sue Sutter. If they don’t, a fact sheet included in the letter says, the companies’ employees who get care through Sutter’s network of hospitals, doctors and medical services will no longer have access to discounted in-network prices.

Source: Big Hospital Network Cracks Down On The Right To Sue

In a highly indebted world, austerity is a permanent state of affairs — Quartz

The logic behind austerity holds that “the market”—which the public had just bailed out—did not like the debt incurred when states everywhere rescued and recapitalized their banking systems.

Public debt, however, grew, because economies got smaller and grew slower the more they cut.

The reason is simple—and it is surprising anyone thought that anything else would happen. Imagine an economy as a sum, with a numerator and a denominator. Make total debt 100 and stick that on the top (the numerator). Make Gross Domestic Product (GDP) 100 and stick that on the bottom (the denominator) to give us a 100% debt-to-GDP ratio. If you cut total spending by 20% to restore “confidence,” the economy is “balanced” at 100/80. That means the debt-to-GDP ratio of the country just went up to 120%, all without the government issuing a single cent of new debt.

In short, cuts to spending in a recession make the underlying economy contract. After all, government workers have lost jobs or income, and government workers not shopping has the same effect as private sector workers not shopping. So the debt goes up as the economy shrinks further.

As difficult as it can be to make this reality part of the political conversation, public debt is an asset. Even at today’s low rates, it earns interest and retains value. No one is forced to invest in public debt, but every time bonds are issued investors show up and buy them by the truckload. By market criteria, public debt is a great investment.

But who pays for it? That would be the taxpayer.

Source: In a highly indebted world, austerity is a permanent state of affairs — Quartz