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This Axios headline is problematic: “Summers: Automation is the middle class’ worst enemy.”
The accompanying piece doesn’t actually quote economist Larry Summers making that declaration. Rather it summarizes an interview in which Summers indeed points out the challenge automation poses for workers. He’s right. Of course that’s been the case for the past 200 years and will likely be the case for the next 200. But in exchange for a degree of instability and disruption, technological progress has dramatically raised living standards for workers.
Automation is kind of like alcohol, which, as Homer Simpson puts it, is “the cause of, and solution to, all of life’s problems.” It’s the job of policymakers to make sure workers are ready to climb to the next foothold or ledge as the waters of automation continue to rise. It’s also their job to make sure policy is as supportive as possible of innovation. Indeed, we need more tech progress, not less. “The U.S. economy currently suffers not from too much automation, but rather from too little investment in the sort of technology that would raise the country’s lackluster productivity,” writes Derek Thompson in an excellent new piece at the Atlantic.
Technology will erase jobs but also create them. Unfortunately, as Kevin Kelly writes, we can’t see those jobs from here “because we can’t yet see the machines and technologies that will make them.”
The piece also includes this chart, which shows lower US labor force participation than other advanced economies:
But I doubt whether Summers blames automation vs. the lack of US policies that center-left economists see as supporting workers, such as paid leave, and high US incarceration rates. And here is economist David Autor on the net impact of automation on jobs this century:
A final observation is that while much contemporary economic pessimism attributes the labor market woes of the past decade to the adverse impacts of computerization, I remain skeptical of this inference. Clearly, computerization has shaped the structure of occupational change and the evolution of skill demands. But it is harder to see the channel through which computerization could have dramatically reduced labor demand after 1999. … My suspicion is that the deceleration of the U.S. labor market after 2000, and further after 2007, is more closely associated with two other macroeconomic events. A first is the bursting of the “dot-com” bubble, followed by the collapse of the housing market and the ensuing financial crisis, both of which curtailed investment and innovative activity. A second is the employment dislocations in the U.S. labor market brought about by rapid globalization, particularly the sharp rise of import penetration from China following its accession to the World Trade Organization in 2001.