Paul Krugman (HT Mark Thoma) writes that skill bias may be yesterday’s story… twenty years ago… capital bias didn’t look like a big issue. But… profits have been rising at the expense of workers in general, including workers with the skills that were supposed to lead to success in today’s economy….
Moshe Vardi – a professor of computational engineering at Rice University – writes… that… in… the Great Recession… people started noticing that while machines have yet to exceed humans in intelligence, they are getting intelligent enough to have a major impact on the job market. Such concerns have gone mainstream…. And the question deserves not to be ignored as it is not clear what humans will do if machines are capable of doing almost any work humans can.
Owen Zidar reports that Larry Summers recently engaged his audience with a thought experiment along similar lines. Suppose that a new technology called “the Doer” will be created tomorrow. Doers can do anything flawlessly…. Cheaper, high quality goods would proliferate. The price of raw materials would increase…. People who can think of new things for Doers to do or of new ways for Doers to do things will make a lot of money. For everyone else, the value of working for an hour will be nearly zero…. Citing 3D printers and Google’s driverless cars, Summers argued that while we aren’t quite living in the world of Doers, we are perhaps 15 or 20% of the way there.
In a 2011 post, Brad DeLong wrote that the question of what humans will do in the future as machines replace more and more jobs has worried economists since the eighteenth-century French physiocrats tried to figure out how an economy could avoid mass unemployment if the agricultural share of the labor force ever fell below two-thirds. The physiocrats were, of course, wrong…. But what happens next as hardware robots take over manufacturing, mining, and transportation and as software 'bots take over the routine paper shuffling?
Econfuture (HT Angry Bear) writes that manufacturing in the U.S. has become dramatically more productive and requires fewer workers…. The really big deal in the U.S. will be when automation hits the service sector/white collar jobs.
Brad DeLong does not see… any reason that technological unemployment should be any more in our future than it has been in our past. What is of interest is the effect of all of this on the wage distribution….
Nick Rowe wonders if it’s possible to both have capital-biased technological change and very low real interest rates at the same time…. Maybe we are forgetting a third factor?… But if, as Paul says, the college premium has stopped rising, and so that third factor is not skilled labour, what is it?…
[T]here’s another possible resolution: monopoly power. Barry Lynn and Philip Longman have argued that that increasing business concentration could be an important factor in stagnating demand for labor… a rising-monopoly-power story would be one way to resolve the seeming paradox of rapidly rising profits and low real interest rates.