The only thing we have to fear…
The robots are coming! We've been told to fear that automation will put most people out of work, supporting just a few lucrative jobs for those with the skills to handle our new cybernetic friends, while the rest of humanity is left behind.
But robots are not out to get you, writes Robin Harding. The FT's Tokyo bureau chief has interviewed the boss of one of the biggest robot makers in the world, who reveals that while robot brains are getting better and better, their hands can't keep up. The cost of matching the human hand's 10,000 sensors means robots are in no place to sweep away human workers and will be confined to very specialised tasks on the factory floor or in distribution centres.
A broader version of the same message - don't fear the robots - was put more broadly last week to a Brookings event on "The Future of Work in the Age of the Machine". The discussion was relevant not only for thinking about the coming horde of job-killing robots (or not), but for what it says about the intellectual journey of the American centre-left. The organisers are the Hamilton Project, a think-tank effort closely associated with the Clintons. A Hamilton background paper has come in for strong criticism (in part from non-Clinton precincts of the left) for sticking to a diagnosis left behind by the facts. That diagnosis frames the problem as a polarisation of the job market between low- and high-skilled jobs - the notorious hollowing out of the middle - and concludes that the policy priority should be to improve education so more people can get the high-skilled jobs. The problem is that this polarisation stopped around 2000 - lower-skill jobs are increasing, but high-skill jobs are not; and the wages of those with a college education have stagnated.
Recordings are available on the event website, but the Equitable Growth blog has a good summary of the discussion. It suggests few participants got a word in edgeways with Lawrence Summers. (Another very good summary, on the Rortybomb blog, is entitled "The One Where Larry Summers Demolished the Robots and Skills Arguments".) Summers pointed out that the current stagnation in wages for everyone (including the college-educated), except the very richest, cannot have been driven by the sort of technological revolution we are told to fear. That would have shown up in a greater premium on skill, and above all, in higher productivity. Neither can be seen. The US wage premium on skill has plateaued, and everywhere people worry about productivity growing too slowly, not too fast.
So it's not about education, Summers said: "Unless you're doing things that are affecting the demand for jobs, you're helping people win a race to get a finite number of jobs." Almostnowhere are there tell-tale signs (such as strong wage inflation) of a hunger to hire the to-be-upskilled workers who, according to the conventional story, are only separated from the American Dream by the lack of another academic diploma.
Brad DeLong's conclusion: the robot threat is one for the 50-year agenda rather than the two- or 10-year ones. Summers' conclusion: the urgent need is not for more education but for policies to boost demand (in particular promoting public investment and full employment); eliminate the rents created in the yawning gap between high profits and low interest rates; and redistribute incomes. Add all the other good advice in last month's report from the Commission on Inclusive Prosperity - an alternative take on centre-left policy from that of the Hamilton Project, headed by one Mr Summers together with UK shadow chancellor Ed Balls.
- Reuters has published the letter outlining Greece's reform proposals to the institutions formerly known as the troika. For the Commission at least, the list passes the hurdle of being "sufficiently comprehensive to be a valid starting point for a successful conclusion of the review".
- The WSJ explains why Deutsche Bank (and others) will find the Fed's stress tests harder to pass than the ones back home in Europe.
- If history is a guide, the Fed need not worry about wage inflation any time soon: the current US labour participation rate is far below the level typically associated with high wage growth.
- It's breathless but fun: a Fortune interview with economist James Galbraith, who acted as Yanis Varoufakis's sidekick (they are friends) during the eurogroup negotiations.
- Eurozone prices fell by 0.6 per cent year-on-year in January.
To receive Martin Sandbu's Free Lunch by email every workday, sign up here.
Get alerts on Columnists when a new story is published