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Trade, automation, and employment

December 17, 2016

This is sort of a rambling post about items I’ve come across recently that are loosely related.

ReasonTV released this clip this week.

This pretty much confirms what I’ve read about NAFTA. And that’s one reason I’ve never been happy about Trump’s bashing free trade agreements, NAFTA in particular.

Trade’s not a case of one-side-wins-while-the-other-side-loses. Trade works to mutual advantage: that’s why people engage in it, after all.

The only point I can take from Trump’s comments is that the U.S. is big enough to gain concessions by threatening to stop trading so freely. (He may be correct about that but I think it would be a bad idea.)


Being a free trade kind of guy, I was more than a little surprised to read about Stephen Moore’s turn to "the Dark Side."

If you know anything about Moore’s background, his new position is a fundamental shift for him. (For example, the Wikipedia article about him says, "Moore is known for advocating free-market policies…")

But read this whole thing to find out why Moore now backs Trump’s approach to trade and the economy.

Welcome to the Party of Trump

I stirred up some controversy last week when I told a conference of several dozen House Republicans that the GOP is now officially a Trump working-class party. For better or worse, I said at the gathering inside the Capitol dome, the baton has now officially been passed from the Reagan era to the new Trump era. The members didn’t quite faint over my apostasy, but the shock was palpable.

I emphasized that Republicans must prioritize delivering jobs and economic development to the regions of the country in the industrial Midwest — states such as Michigan, Pennsylvania, Ohio, Indiana, Wisconsin, Iowa, and Missouri. These are places that, for the most part, never felt the meager Obama recovery and where blue-collar Reagan Democrats took a leap of faith this election and came back to the Republican party for the first time since 1984. The GOP will be judged in 2018 and in 2020 on whether they deliver results for this part of the country and for the forgotten middle-class men and women (“the deplorables”) whom Democrats abandoned economically and culturally. This is all simply a political truism.

What roused the ire of some of my conservative friends was my statement that “just as Reagan converted the GOP into a conservative party, with his victory this year, Trump has converted the GOP into a populist, America First party.”‎

One friend lamented that I must have been drunk when I said this.

No. I meant exactly what I said, but I will clarify. […]


And here’s an interesting TED Talk by David Autor, professor of Economics and Associate Head of the MIT Department of Economics. It was published at the end of last month.

Prof. Autor has some explanations for the fact that the more we automate, the more people we have working. There are more jobs, not fewer.

Near the end of the clip, he makes a good point about the influence of culture on the employment picture.

Update 12/19/16:

I ran across an interesting post at pseudoerasmus that goes into detail on Prof. Autor’s topic. Despite its mocking tone and focus on conspicuous consumption, I think it’s a pretty fair explanation of how employment can increase despite increasing automation. (It doesn’t have a lot to say about people working in fields that weren’t even possible before automation enabled them, unfortunately.)

The emptiness of life will save us from mass unemployment

I don’t I have much to add to the debate about the dystopian robot future scenario envisioned by many people. But I do think the nightmare scenario is less mass unemployment than a kind of revamped neo-mediaevalism. I’m not predicting that, so much as saying that’s the worst-case scenario. {Edit 28/12/2016: This was written more than 2 years ago as a half-joke to mock trends in luxury consumption more than anything else.}

In the past 250 years, technological progress has not caused unemployment because human wants have been infinite. Every time productivity (output per unit of input) rises, the implied extra income in the economy still gets spent on something (at least when there isn’t a recession), and extra work gets created to produce that something. In other words, fewer inputs may be used to make one unit of output, but more output always gets desired / created. (OK, that sounds Say’s Law-ish, but please be patient.)

Environmentalists understand keenly that when energy prices fall, people frequently just drive more or fly more, or the savings get spent, ultimately, on something else that uses energy. Productivity growth produces the same effect. Which is why, as of now, we’ve never had permanent mass unemployment from technological displacement.

After the basic needs of food and shelter are satisfied, people go in search of other fulfillments — more caloric, varied, and exotic diets; more living space to fill with ever more stuff; 58 changes of clothes instead of 2 per year; more leisure in the form of vacations and entertainment; and ever more marginal extensions of life expectancy. That’s all very obvious.

But as people get wealthier, they demand not only more quantity of stuff, but also ever more trivial and even imaginary increments to the quality of goods and services. How else to explain the market for, say, honey in a jar that’s ‘raw’, unfiltered, unpasteurised, ‘fair-trade’, non-GMO, single-country-origin, single-bee-colony, and single-flower-species? […]


Finally, I learned yesterday that the Cato Institute has a session scheduled next month with the author of Men Without Work: America’s Invisible Crisis. From the descriptive blurb at Amazon:

Today, nearly one in six prime working age men has no paid work at all—and nearly one in eight is out of the labor force entirely, neither working nor even looking for work. This new normal of “men without work,” argues Eberstadt, is “America’s invisible crisis.”

I have to wonder if all these people are really unemployed or whether some of them are simply working off the books in the underground economy.

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