Robots and Donald Trump

Let’s say it’s 1970 and you’re a man who just graduated from high school. You don’t come from wealth but you can get a job at a local factory, the same way your dad did, and make enough to raise a family. You have a son, and in 1995, he does the exact same thing. Just like his dad, he takes a factory job (or similar blue collar gig) and makes decent living. He has kids, starts a family etc.

Now it’s 2016. Five years ago, the son in that scenario was let go from his shuttered factory. He’s been looking for work ever since. Or maybe he’s given up and become an alcoholic. Either way he feels betrayed. The unspoken promise society gave him was that if he played fair and worked hard he could live a comfortable life and take care of his family. That promise has been betrayed. He blames Mexicans for coming in and driving down wages and trade agreements that close factories on American shores and open them in countries with cheap labor.

This, I suspect, is a Donald Trump voter.

My question is whether things are about to get worse.

First, let’s examine this guy’s presumptions. Are Mexicans and bad trade agreements what screwed him? Well, maybe, I don’t really know. But I don’t think they will be the problems faced by that guy’s kids. I suspect the problem of the future is technology: robotization and advanced software. You could even argue this is the problem of today.

…in a 2014 poll of leading academic economists conducted by the Chicago Initiative on Global Markets, regarding the impact of technology on employment and earnings, 43 percent of those polled agreed with the statement that “information technology and automation are a central reason why median wages have been stagnant in the U.S. over the decade, despite rising productivity,” while only 28 percent disagreed. Similarly, a 2015 study by the International Monetary Fund concluded that technological progress is a major factor in the increase of inequality over the past decades.

The bottom line is that while automation is eliminating many jobs in the economy that were once done by people, there is no sign that the introduction of technologies in recent years is creating an equal number of well-paying jobs to compensate for those losses. A 2014 Oxford study found that the number of U.S. workers shifting into new industries has been strikingly small: in 2010, only 0.5 percent of the labor force was employed in industries that did not exist in 2000.

The gist of this argument is that it won’t be Mexicans taking your job in the future (if they ever did), it will be robots.

This is a problem that I don’t really see any of the candidates talking about. Partly, I suppose, because there’s no obvious solution. People often talk about retraining people but as the text above notes, new jobs aren’t keeping up with jobs lost. And I think there’s a psychological component that makes people resistant to retraining. People associate their selves, their identities, with their job (sometimes a job that has run in their family for generations). When someone comes in and says, “OK, throw all that away and train to become a widget manufacturer,” people are resistant. They don’t want to give up their identities.

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