As the next generation of robots arrive in the workplace, will they enable workers or replace them? According to MIT’s Daron Acemoglu, one of the most frequently cited economists in the world, this distinction is the difference between technology that raises workers’ wages versus tech that merely reduces overall employment and wage growth.

Daron Acemoglu is a professor of economics at MIT, a frequent contributor to Foreign Policy Magazine, and co-author of Why Nations Fail. He joins me today to discuss his research and what technological innovation means for the future of work.

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  1. Henry Racette Member
    Henry Racette
    @HenryRacette

    Gentlemen,

    While the automation engineer in me enjoyed your podcast on the subject of automation and its impact on productivity and employment, the conservative in me found one aspect of it a little odd. At about the 28:20 mark, when discussing the incentives businesses have for pursuing employment-displacing automation, your quite articulate guest gave examples of how, as he put it, the government “subsidizes automation.”

    I kept waiting for someone to point out that there is another obvious way of looking at this: that, rather than subsidizing automation, the government might be thought of as penalizing employment. After all, the factors Mr. Acemoglu  cited — depreciation of capital assets, absence of payroll taxes on machinery, paucity of regulations regarding machinery versus employees, etc. — are not unique to automation: essentially everything a business does other than employing people enjoys those benefits. The reality is that the costs, in terms of direct expenses, regulatory headache, and exposure to liability, of employing human beings continue to rise, thanks almost entirely to a ratcheting up of employment costs by government.

    At the risk of sounding like a libertarian (and I try hard not to do that): while you were talking about possibly increasing the cost of automation via a “robot tax,” might it also have made sense to discuss the obvious alternative, which is to decrease the cost of human labor by unburdening employers of some of the regulatory and/or tax burden associated with their employment?

    I mean, just to give a nod to that “center-right” thing we have going on here at Ricochet?

    Hank

    • #1
  2. I Walton Member
    I Walton
    @IWalton

    Henry Racette (View Comment):
    Gentlemen,

    While the automation engineer in me enjoyed your podcast on the subject of automation and its impact on productivity and employment, the conservative in me found one aspect of it a little odd. At about the 28:20 mark, when discussing the incentives businesses have for pursuing employment-displacing automation, your quite articulate guest gave examples of how, as he put it, the government “subsidizes automation.”

    I kept waiting for someone to point out that there is another obvious way of looking at this: that, rather than subsidizing automation, the government might be thought of as penalizing employment. After all, the factors Mr. Acemoglu cited — depreciation of capital assets, absence of payroll taxes on machinery, paucity of regulations regarding machinery versus employees, etc. — are not unique to automation: essentially everything a business does other than employing people enjoys those benefits. The reality is that the costs, in terms of direct expenses, regulatory headache, and exposure to liability, of employing human beings continue to rise, thanks almost entirely to a ratcheting up of employment costs by government.

    At the risk of sounding like a libertarian (and I try hard not to do that): while you were talking about possibly increasing the cost of automation via a “robot tax,” might it also have made sense to discuss the obvious alternative, which is to decrease the cost of human labor by unburdening employers of some of the regulatory and/or tax burden associated with their employment?

    I mean, just to give a nod to that “center-right” thing we have going on here at Ricochet?

    Hank

    Yes exactly.  The best way to approach the issue is to explicitly acknowledge that we don’t know the future, can’t know what technologies will emerge nor what kinds of jobs and skills will be needed and thus must assiduously avoid trying to fix the future by thinking we know how to do such a thing.  We don’t and can’t.  Policies to address these unknown but rapidly changing and impactful changes, are school and training choice that allows just about anything, including employers to provide on the job training and pay whatever they think a trainee is worth.  Secondly we should abolish the payroll tax and the corporate tax so that there is no depreciation to affect employment or capital decisions.  These taxes should be replaced with an across the board uniform VAT tax.  Such a tax solves SS finance problem, enables us to privatize SS for those who want to own their own savings while paying for those who don’t, stimulates savings which will close our current account deficit which is the deficit which matters most and of course resolves the issue of how and whether to tax internet sales.

    • #2
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