Ro­bots and rob­ber barons trim work­ers’ slice of pie

Austin American-Statesman - - BALANCED VIEWS - From the left Mon­day Tues­day Wed­nes­day Thurs­day Krug­man writes forthe New York Times. Fri­day Satur­day Sun­day


Amer­i­can econ­omy is still, by most mea­sures, deeply de­pressed. But cor­po­rate prof­its are at a record high. How is that pos­si­ble? It’s sim­ple: Prof­its have surged as a share of na­tional in­come, while wages and other la­bor com­pen­sa­tion are down. The pie isn’t grow­ing the way it should — but cap­i­tal is do­ing fine by grab­bing an ever-larger slice, at la­bor’s ex­pense.

Wait — are we really back to talk­ing about cap­i­tal ver­sus la­bor? Isn’t that an old-fash­ioned, al­most Marx­ist sort of dis­cus­sion, out of date in our mod­ern in­for­ma­tion econ­omy? Well, that’s what many peo­ple thought; for the past gen­er­a­tion dis­cus­sions of in­equal­ity have fo­cused over­whelm­ingly not on cap­i­tal ver­sus la­bor but on dis­tri­bu­tional is­sues be­tween work­ers, ei­ther on the gap be­tween more- and lesse­d­u­cated work­ers or on the soar­ing in­comes of a hand­ful of su­per­stars in fi­nance and other fields. But that may be yes­ter­day’s story.

More specif­i­cally, while it’s true that the fi­nance guys are still mak­ing out like ban­dits — in part be­cause, as we now know, some of them ac­tu­ally are ban­dits — the wage gap be­tween work­ers with a col­lege ed­u­ca­tion and those with­out, which grew a lot in the 1980s and early 1990s, hasn’t changed much since then. In­deed, re­cent col­lege grad­u­ates had stag­nant in­comes even be­fore the fi­nan­cial cri­sis struck. In­creas­ingly, prof­its have been ris­ing at the ex­pense of work­ers in gen­eral, in­clud­ing work­ers with the skills that were sup­posed to lead to success.

Why is this hap­pen­ing? As best as I can tell, there are two plau­si­ble ex­pla­na­tions. One is that tech­nol­ogy has taken a turn that places la­bor at a dis­ad­van­tage; the other is that we’re look­ing at the ef­fects of a sharp in­crease in mo­nop­oly power. Think of th­ese two sto­ries as em­pha­siz­ing ro­bots on one side, rob­ber barons on the other.

About the ro­bots: There’s no ques­tion that in some high-pro­file in­dus­tries, tech­nol­ogy is dis­plac­ing work­ers of all, or al­most all, kinds. For ex­am­ple, one of the rea­sons some high-tech­nol­ogy man­u­fac­tur­ing has lately been mov­ing back to the United States is that th­ese days the most valu­able piece of a com­puter, the moth­er­board, is ba­si­cally made by ro­bots, so cheap Asian la­bor is no longer a rea­son to pro­duce them abroad.

In a re­cent book, “Race Against the Ma­chine,” MIT’s Erik Bryn­jolf­s­son and An­drew McAfee ar­gue that sim­i­lar sto­ries are play­ing out in many fields,

Scot Le­high

Paul Krug­man

Dana Milbank

Mau­reen Dowd in­clud­ing ser­vices like trans­la­tion and le­gal re­search. What’s strik­ing about their ex­am­ples is that many of the jobs be­ing dis­placed are high-skill and high­wage; the down­side of tech­nol­ogy isn’t lim­ited to me­nial work­ers.

Still, can in­no­va­tion and progress really hurt large num­bers of work­ers, maybe even work­ers in gen­eral? I of­ten en­counter as­ser­tions that this can’t hap­pen. But the truth is that it can, and se­ri­ous econ­o­mists have been aware of this for al­most two cen­turies. The early 19th cen­tury econ­o­mist David Ri­cardo is best known for the the­ory of com­par­a­tive ad­van­tage, which makes the case for free trade; but the same 1817 book in which he pre­sented that the­ory also in­cluded a chap­ter on how the new, cap­i­tal-in­ten­sive tech­nolo­gies of the In­dus­trial Rev­o­lu­tion could ac­tu­ally make work­ers worse off, at least for a while — which mod­ern schol­ar­ship sug­gests may in­deed have hap­pened for sev­eral decades.

What about rob­ber barons? We don’t talk much about mo­nop­oly power th­ese days; an­titrust en­force­ment largely col­lapsed dur­ing the Rea­gan years and has never really re­cov­ered. Yet Barry Lynn and Phillip Long­man of the New Amer­ica Foun­da­tion ar­gue, per­sua­sively in my view, that in­creas­ing busi­ness con­cen­tra­tion could be an im­por­tant fac­tor in stag­nat­ing de­mand for la­bor, as cor­po­ra­tions use their grow­ing mo­nop­oly power to raise prices with­out pass­ing the gains on to their em­ploy­ees.

I don’t know how much of the de­val­u­a­tion of la­bor ei­ther tech­nol­ogy or mo­nop­oly ex­plains, in part be­cause there has been so lit­tle dis­cus­sion of what’s go­ing on. I think it’s fair to say that the shift of in­come from la­bor to cap­i­tal has not yet made it into our na­tional dis­course.

Yet that shift is hap­pen­ing. For ex­am­ple, there is a big, lav­ishly fi­nanced push to re­duce cor­po­rate tax rates; is this really what we want to be do­ing at a time when prof­its are surg­ing at work­ers’ ex­pense? Or what about the push to re­duce or elim­i­nate in­her­i­tance taxes; if we’re mov­ing back to a world in which fi­nan­cial cap­i­tal, not skill or ed­u­ca­tion, de­ter­mines in­come, do we really want to make it even eas­ier to in­herit wealth?

As I said, this is a dis­cus­sion that has barely be­gun — but it’s time to get started, be­fore the ro­bots and the rob­ber barons turn our so­ci­ety into some­thing un­rec­og­niz­able.

Gail Collins

John Young

Leonard Pitts

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