Michael Spence: Digitally enabled supply chains.... Economic activity... moved to any accessible country or region that had relatively inexpensive labor... complexity became manageable.... Many services related to intermediate and final demand require knowledge, expertise, information, and communication for their delivery. What they do not require is geographical nearness or the physical movement of goods.... Now comes a second, potentially even more powerful, wave of digital technology that is replacing labor in increasingly complex tasks. This process of labor substitution and disintermediation has been underway for some time in service sectors--think of ATMs, online banking, enterprise resource planning, customer relationship management, mobile payment systems, and much more.... With a huge potential global market to amortize the upfront fixed costs of design and testing, the incentives to invest are compelling.... Unlike the preceding wave of digital technology, which motivated firms to gain access to and deploy underutilized pools of valuable labor around the world, the driving force in this round is cost reduction via the replacement of labor.... Meanwhile, the impact of robotics... is not confined to production... the impact on logistics is no less transformative..."
Albert Wenger: Computers and Wages: "There is good reason to believe that computers are substitutes for labor in general. Their apparent complementarity with skilled labor was the result of substituting skilled labor for unskilled labor rather than being based on a fundamental technological complementarity.... Let's look instead at the type of skilled work that to date has been boosted by the use of computers.... As we have used computers to substitute for unskilled labor we have created massive additional profits. Skilled labor has been given some share of that but that share is limited to roughly the marginal product by competition between engineers. That leaves a large pool to be split between top management and capital. And in that bargaining situation it turns out that top management is surprisingly well positioned. Why? Because there is a large principal-agent problem between board members and the capital that they represent.... We should not expect the benefits for skilled labor to last forever. Instead, we will gradually see computers substituting for those as well and only top management (and capital) continuing to benefit. And so the current idea that we can somehow educate our way out of this divergence without the need for more profound changes in how we think about income is likely deeply flawed..."
Should Be Aware of: