Why Did Trump Win? Robots Are to Blame

At the end of this post, I’ve embedded a paper by Carl Benedikt Frey, Thor Berger, and Chinchih Chen, all of Oxford Martin, titled It argues that the propensity to vote for Trump is best explained by the exposure to the local economy of job losses to automation. From the abstract:

Building on the intuition that voters who have lost out to technology are more likely to opt for radical political change, we examine if robots shaped the outcome of the 2016 US presidential election. Pitching technology against a host of alternative explana- tions, including offshoring and trade exposure, we document that the support for Donald Trump was significantly higher in local labour markets more exposed to the adoption of robots. A counterfactual analysis based on our estimates shows that Michigan, Pennsyl- vania, and Wisconsin would have swung in favour of Hillary Clinton if the exposure to robots had not increased in the immediate years leading up to the election, leaving the Democrats with a majority in the Electoral College.

The paper includes an extensive discussion of the impact of automation on the incomes of working people and their political responses during the Industrial Revolution, and find it has strong parallels to the period that started in 1980. I’ve pointed out from time to time that in the first generation of the Industrial Revolution, workers’ standard of living fell. While the authors stress that the topic of the economic impact of the Industrial Revolution is hotly debated, it is extremely difficult to argue that workers wound up better off. As they explain, the automation of textile production ended well paid, skilled trades like hand-loom weaving. Older workers were allegedly unable to adapt to factory life. The result was displaced laborers piled into agricultural work, lowering pay levels there, and with many winding up unemployed

From the article:

As forcefully argued by Mokyr (1998):

Any change in technology leads almost inevitably to an improvement in the wel- fare of some and a deterioration in that of others. To be sure, it is possible to think of changes in production technology that are Pareto superior, but in prac- tice such occurrences are extremely rare. Unless all individuals accept the verdict of the market outcome, the decision whether to adopt an innovation is likely to be resisted by losers through non-market mechanism and political activism…

During the first six decades of the Indus- trial Revolution, ordinary Englishmen did not see any of the benefits from mechanization: as output expanded, real wages stagnated, leading to a sharp decline in the share of national income accruing to labour. Notably, the trajectories of the American economy over the four decades following the revolution in automation of the 1980s almost exactly mirror the first four decades of the Industrial Revolution in Britain…

Between 1780 and 1840—the classic period of the Industrial Revolution—the lives of ordinary workers got nastier, more brutish, and shorter. The standard of living debate surrounding the Industrial Revolution will probably never settle for good, but the optimists have an in-creasingly difficult case to make as empirical evidence continues to accumulate.4 Almost by any measure, material standards and living conditions for the common Englishman did not improve before 1840. Output expanded, yet the gains from growth did not trickle down to the vast majority of the population. The best estimates suggest that while output per worker increased by 46 per cent over the classic period (Crafts and Harley, 1992), real wages rose by a mere 14 per cent (Feinstein, 1998).5 Meanwhile, working hours increased by 20 per cent (Voth, 2000), suggesting that hourly wages even declined in real terms.6 The main ben- eficiaries were industrialists who saw the profit share of income double (Allen, 2009).

As workers rioted to try to prevent the opening of new factories, the British government turned on them:

During the Luddite risings of 1811–13, rioters achieved nothing more than their predecessors, except forcing the British government to deploy an even larger army: the 12,000 troops sent to resolve the situation exceeded the size of the army which Wellington took into the Peninsula War against Napoleon in 1808.

The authors then turn to America, pointing out, as has often been noted, how the benefits of productivity gains have largely been withheld from ordinary wage earners:

Over the period 1979 to 2013, productivity growth was eight times faster than hourly compensation: as productiv- ity grew by 64.9 per cent, hourly compensation for 80 per cent of the American workforce grew only by 8.2 per cent, while the top 1 per cent of earners saw cumulative gains in an- nual wages of 153.6 per cent (Bivens et al., 2014). The real wages of the vast majority of Americans thus stagnated or even declined. With the exception of a brief period in the late 1990s, the wages of middle-income workers were either flat or in decline, while the wages of low-wage workers fell by 5 per cent. The greatest reversal of fortunes has taken place since the turn of the twenty-first century: between 2000 and 2013, hourly wages fell for the bottom 30 per cent and were flat for the next 40 per cent (Bivens et al., 2014)….According to estimates by Summers (2015), the income distribution of 1979 would leave today’s top 1 per cent with $1 trillion less in annual income, while adding on average $11,000 a year for a family in the bottom 80 per cent.

Although the causes of this detachment are still being debated, a growing body of work has identified automation as one of the prime forces driving the shifts in income shares along the occupational wage distribution.

While Trump did not campaign on automation, he did stump for bringing back manufacturing and mining jobs, which are more stable and better paid that low skilled service industry positions. Similarly, exit polls found that 82% of the voters saw Trump as a candidate for change, versus only 14% putting Clinton in that category.

Of course, this disparity underscores the issue made obvious in so many other ways, such as Clinton’s “deplorables” remark, her refusal to stump in Rust Belt states, her focus on small group meeting with wealthy donors even when she did campaign. As Thomas Frank has stressed, the Democrats have become the party of the top 10%, the professionals the technical and managerial elite. And Hillary made no effort to pretend otherwise. She, like so many other pundits, offered at best hollow “Let them eat training” solutions to the problem of loss of skilled jobs and downward mobility.

The bulk of the paper goes though the analysis that identified county-level exposure of jobs to displacement by robots and in particular how that exposure changed between 2012 and 2016, as well as testing the exposure to offshoring, routinization, and trade competition. The final section of the paper looks at the counterfactual: What if exposure to robots had not risen in the years immediately before the 2016 election?

The authors warned early on:

This process of creative destruction, upon which long-run growth ultimately rests, has always created both winners and losers in the labour market. Because creative destruction comes with social costs—as some workers see their incomes disappear, are forced to migrate, and may experience episodes of unemployment—it may lead to social unrest, in turn threat-ening the power of incumbent political leaders.

And conclude:

To avoid further populist rebellion and a looming backlash against technology itself, governments must find ways of making the benefits from automation more widely shared.

Political Machinery_171008_CF5
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70 comments

  1. Expat

    It’s the economy, stupid! Jobs, jobs, jobs.
    And while unemployment, at least official figures, were declining significantly through Obama’s eight years, the reality is that many were of those new jobs were McJobs. Low-paying and without benefits. The irony is that conservative republicans have been pushing for low-paying, no benefit jobs for years! They killed the unions and struggled against minimum wage.
    Trump promised high-paying, great jobs for under-educated, under-trained Americans in Flyover Land. I suppose his pro-coal stance has brought back about thirteen jobs so far. And his use, at taxpayer expense, of his resorts and hotels has probably increased demand for busboys by ten or fifteen.

    High paying manufacturing jobs are not coming back to America. There are no effective unions to get those jobs and too many workers willing to work for $7.50 an hour rather than starve. And robots are still cheaper. Alternatively, there are workers in China, Indonesia, and Vietnam who will work for $7.50 a week.

    That said, you don’t get elected by telling people the truth. You get elected, like Trump did, by telling them whatever they want to hear. And they want to hear that they will get great jobs, high pay and become the rich overlords they are destined by God to be! Amen.

    Reply
    1. readerOfTeaLeaves

      That said, you don’t get elected by telling people the truth.

      I’d offer Bernie Sanders and Elizabeth Warren as evidence that people actually prefer ‘straight talk’ and a larger Overton Window when they finally, finally hear it push through the campaign-fundraising industry’s bloviating and pollster-driven drivel. Similarly, some people think that Ron Paul was a ‘truth teller’.

      Don’t blame voters for the greed and creepiness of the campaign industry, or for media laziness that seems to assume that asking every elected whether they plan to run for President constitutes ‘journalism’.

      Reply
      1. Other JL

        Ron Paul is principled. His policies largely line up with what he says he believes in. Contrast this with the majority of politicians who promise good jobs but engage in class warfare.

        I think it’s that level of intellectual honesty that resonates with Paul supporters. I don’t think anyone gets that same sense from Clinton. The most ardent supporters I’ve met will simply repeat talking points instead of engaging with her rhetoric in any way. That seems true for most national politicians actually.

        The major flaw with Paul is that his understanding of economics is extremely flawed. He may really believe that a gold standard will fix all economic problems, but that doesn’t mean it will.

        Reply
        1. Amfortas the Hippie

          first time i ever voted, it was for Ron Paul…and for the very reasons you stated: a perceived honesty and no indication of a forked tongue(which trait was evident in Billary from the start).
          I never agreed with him on everything, by any stretch…but an end to the wars, including the drug war, looked pretty good to me at the time, and i was willing to take a chance.
          The last time he ran, I emailed him about his aversion to medicare and social security, asking if we didn’t first need to redistribute the wealth of society so that we could begin his great experiment with a level playing field.
          Dude actually called me! and we argued on the phone for an hour,lol.
          In spite of his quirks and economic mythos, I figger we need more like him.

          Reply
  2. Joshua Ellinger

    Yves had it right. Right after the result came in she said “Voters reject Hillary”.

    Even if you thought Trump couldn’t deliver on his promises, it was at least a way to say FU to the establishment.

    Reply
      1. JTMcPhee

        And under Clinton it would have been SO much better. Not to ask for trouble by raising that partisan BS. Like Sanders says, “It’s up to you all,” a much more useful message than the crap from the mouth of Obama, “Make me do it, Nyah-Nyah-Nyah-Nyah-Nyah!

        Go DSA and other folks with an organizing principle that tests all policy against what’s good for everybody (except the Looter Rich Folks)) and the planet…

        Reply
        1. b1daly

          So your argument if an outcome of an election would have only been a little bit better, it’s not worth it, we’re better off to have the worse of two possibilities?

          That’s some messed up reasoning. So far Trump is making the worst hash of a Presidency I can imagine, and seems to be determined to cause as much damage to whatever good we might have managed to build into our civic infrastructure in over two centuries of bitter struggle in the US. IMO, the US has never been a great country: we were founded in sociopathic savagery, and have yet to emerge from the consequences of the evil aspects of US society. The damage Trump and the Repubs are doing to the judicial system alone can undo decades of hard fought progress.

          Since so many voters in the US seem incapable of grasping the bare facts of reality, it’s not hard to seriously trainwreck the whole system. You think the poor are going to come out ahead on this one?

          Reply
          1. YankeeFrank

            The poor and middle class weren’t going to come out well with either Trump or Clinton. The vote against Hillary (including many of us who stayed home) was for many a protest move — it was people saying “whichever one you rich who control everything and have removed almost all agency from the people want most, we’ll pick the other, even if it hurts us more”.

            It may appear as a “cut off my nose to spite my face” move, and in many ways it was. However, people can only accept “there is no alternative” for so long before the unthinkable becomes thinkable.

            And there is another, more salubrious result, described in a famous line from “I, Claudius”: to “let all the poisons that lurk in the mud hatch out.” Its a strategy. Sure its crazy, but sometimes crazy is all you got. Ask any decent game theorist. They’ll tell you.

            Reply
      2. fajensen

        Immensely. Donald Trump is America Distilled into such a concentrated form that even the EU beginning to twig on that the world “special” in our “special relationship” maybe means something more in the direction of “special needs” or “not exactly a relationship as the dictionary defines it”?

        If only “the establishment” had run a robot, the robot would have been beating Hillary too (and then the DNC would somehow have sabotaged it, Hillary would have tasked her consultants with some double-clever winning strategy, just to make sure … and we’d still get Donald Trump)!

        Maybe they can send a robot to break the bad news about Her Loss to Hillary? The screeching would be heard all the way to Proxima Centauri, maybe some aliens would care to drop by and check it out?.

        Reply
    1. readerOfTeaLeaves

      Completely agree.
      I suspect that robots are ‘salt in the wound’ on top of the lack of prosecutions for massive mortgage fraud. TARP was even more ‘salt in the wound’.
      It would be very interesting to overlay foreclosure data with the robot data.

      Reply
      1. flora

        I agree with your ‘salt in the wound’ assessment about lack of prosecutions and TARP.

        Yesterday’s Water Cooler had this tweet which starts with 3 charts. The first chart, the line graph, shows white deaths going down from 2008 to 2009, so, after the election of someone a lot of voter believed was going to clean up the banks, take them to the woodshed, and stop the other financial abuses. That didn’t happen .(understatement). Instead the banks were lavished, the fraudulently foreclosed on were given ‘work outs’ and lost their homes. All the other financial abuses went unaddressed. The safety nets (unemployment insurance, disability insurance, etc.) were decreased. In 2010 the deaths start rising and only rising. Between 2010 and now the deaths have only risen, not fallen, not even leveled off.

        ‘Salt in the wound’ is right. imo.

        Reply
        1. readerOfTeaLeaves

          Thanks – I’d missed that item.
          I can’t tell about the ‘more deaths than births’, because it doesn’t give ages — I’ve had to deal with quite a few deaths over the timelines in those charts, but they were of people in their 80s and 90s (who’d lived full lives). There’s been a cohort of people now in their 80s and 90s that IIRC are the largest group of ‘advanced elderly’ in human history. IIRC, this is also characteristic of Japanese demographics.

          No robot can provide the quality of caregiving that an actual human can do; however, humans are expensive, and the pay for caregiving is just dismal and depressing. (The people who own Senior Care facilities, OTOH, must be absolutely rolling in money.) We need some kind of economics that spreads wealth from ‘facility owners’ (capital) to the caregivers (labor) who do — sometimes literally — back-breaking work and are key to the quality of life of the people they assist.

          Reply
          1. Carla

            “We need some kind of economics that spreads wealth from ‘facility owners’ (capital) to the caregivers (labor) who do — sometimes literally — back-breaking work and are key to the quality of life of the people they assist.”

            Back in the day, we used to call those caregiver folks “Moms.” I guess we still do, even though now many of them have to take care of other peoples’ families as well as their own. Of course, that has long been true of “Moms” of color.

            Reply
            1. YankeeFrank

              Moms and people who care for others and for their homes should be paid a solid middle class wage, say $60-70k per year, tied to inflation. True feminists would fight for that just as hard as they do for equal pay and access to “jobs”.

              Reply
  3. gearandgrit

    Not exactly rocket science.

    – Be rich
    – Destroy unions, fight minimum wage increases
    – Invest in automation, increase productivity, reduce human workforce
    – Blame brown people
    – Promise to bring back frickin’ coal jobs of all things
    – Watch as ignorant voters “reject the establishment” by voting for you, the rich

    Reply
    1. Synoia

      Watch as ignorant voters “reject the establishment” by voting for you, the rich

      Vote D. – A Vote for the Rich.
      Vote R. – A vote for the Rich.
      Vote anything else – Unlikely to get candidate elected.

      Your suggestion on voting?

      Reply
      1. Martin Fritter

        Pay close attention to state and local races – school boards, Sec. of State (controls the polls in most states) and so on.

        Reply
        1. Code Name D

          Dosn’t work. Down ticket elections are bsicly little more thn establishment frm teams. Running for these posts gets more expensive each year. But even if you were to be elected, you can not progress through the ranks without paying feildy to the apropreate party dons.Thus, only establishment freindly canidates rises through the ranks.

          Reply
      2. b1daly

        As you point out, realistically, a vote for the D or R’s is the only option…so that’s the deal. There within a society that is structured for the benefit of the rich, there are still degrees of difference, and it is foolish to pretend otherwise. If you don’t want to vote, another option is to go hang out and post memes on . Or pound sand.

        Were I live, there have been some decent Democratic politicians in office over the years.

        Reply
        1. Code Name D

          Then you don’t live in a democracy – by definition. Are you okay with this? Because i sure am not.

          Reply
    1. gearandgrit

      Not yet. But technology improves and is adopted at an exponential rate. So, sure. Automation is in its infancy and general intelligence is still lab-based but that can change dramatically in just a few short years.

      Reply
      1. JTMcPher

        So Pareto superior is, as ever, “just around the bend,” then? The next best thing this time for sure, right?

        But what about antibiotics, extends lives or used to until the fluoroquinolones, and hey, fattens up beef and let’s chickens and pigs be factory farmed, and now we have another marvel of technology advancement, totally antibiotic-resistant new! improved! Superpathogens ™!!!

        Luddites of the world, unite! You have nothing more to lose, after all…

        Reply
  4. Tomonthebeach

    Unlike the agro-industrial shift at the turn of the century, the AI/robot impact is far more dispersed, and less visible.

    Displacements due to introducing technology into the workplace (AI and robots) has been going on for several decades, but most journalist have only recently noticed. Most of us still think of displaced coal miners when we think of automation displacing workers. Of course, that image was actually created by a lack of demand for coal; not automation.

    In late 1999, I retired from the Navy and started my second career at NIH. I recall that the hallways and offices were choked with file cabinets and stacks of as-yet unfiled grant applications. Back then, NIH required the submission of 7 duplicate copies of grant applications which often ran 40-50 pages per application. This was necessary to facilitate peer review and grants administration.

    Soon after my starting at NIH, the decision was made to go electronic – PDF’s were to replace paper. Also, coincident, my institute moved to a new office building just off the NIH campus. As I and my colleagues entered our new workplace it was like Dorothy’s first visit to Oz. We were awed by the wide-open hallways and spacious offices. Contractors were hastily scanning the contents of our old file cabinets into PDFs, so the era of file cabinet clutter had ended. That is not all that ended.

    NIH stopped buying file cabinets in large quantities. In the 90’s it was common to see mail delivery trucks lined up waiting hours to get to the NIH loading docks. Today those docks are rarely unloading more than a single truck. Eighty percent of NIH’s loading dock workers and mail-room staff lost their jobs. UPS, FEDEX, and USPS have all lost business as there was no longer the need to deliver huge boxes of paper grant applications. This little scenario is going on all over America on a daily basis. Because worker displacements are diverse, they stay below the public’s awareness until opioid overdoses and other deaths of despair highlight the crisis.

    Reply
    1. cocomaan

      Having submitted quite a few grants through grants.gov, I understand the convenience factor but as Fluffy says, what a great example of the hidden “indirect costs”, in NIH parlance!

      Reply
  5. flora

    I’ve wondered about the comparison/similarity of the Gilded Age Industrial Revolution (1870-1914) and today’s industrial automation effects on the working class and middle class, and the political consequences in both eras.

    Interesting that during Gilded Age the populist Dem politician William Jennings Bryan ran for president as a champion of those left behind by the Industrial Revolution. The Dem party essentially split at that time between the populists and the laissez faire ‘Bourbon’ Dems ideologically aligned with conservatism or classical liberalism. GOP president candidate McKinley won the 1896 election, died in office, and was succeed by his vice president Teddy Roosevelt who proceeded to steal the Dem populists’ thunder by busting the trusts, enacting regulations, and reforming some of the worst abuses and monopoly business practices.

    I think both Bryan and T. Roosevelt laid the groundwork for the New Deal programs. I think Sanders’ run for office has laid the groundwork for future reforms to benefit the majority’s economic well being.

    Thanks for this post.

    Reply
  6. a different chris

    “Automation!! Automation!!” — they all scream. “It’s taking your jobs and there’s nothing you can do!!”.

    BS. Complete, attention-distracting BS. Automation makes doing things easier and quicker. If you can mow your lawn easier and quicker on a riding mower than your old push mower, do you somehow spend the same time cutting grass? Obviously not, you go relax on your porch or something.

    So why do we add efficient machines to the shop and still stay stuck on 40hr/employee/week? And thus have a “need” to lay off the “excess” workers. Well we do that because the profits then flow upward. Otherwise the plebes would be working shorter and shorter weeks and still having the same amount of stuff, and our betters can’t abide that.

    Look at any US manufacturing sector where there have been heavy layoffs. The first think you’ll find, if you look, is a lot more overtime among those left. Think about it.

    Reply
    1. Lil'D

      Productivity gains are not distributed to displaced workers
      Net, perhaps, “the economy” is better off (more output from less input) but it’s all going to capital

      Reply
    2. Yves Smith Post author

      With all due respect, your claims are clearly disproven by the data in the paper, and plenty of other places.

      From what I have heard from the heartlands, the overtime is often s due to greedy managers going overboard on headcount cuts and then realize they need skilled and/or experienced workers and wind up having to give way more hours than they planned to the the ones like that that remain. But another element is trying to to break down physically the remaining older workers who are unionized and on higher pay rates. My brother who is 55 and by all standards needs to stay working despite having managed to do a remarkable job of saving (much higher than you’d guesstimate net worth despite pension turned to defined contribution over a decade ago and no meaningful house price appreciation) due to having a sickly wife and needing health insurance, is going to quit because he cannot take it any more. 12 hours shifts, rotating through day-night-swing shift. And I can’t see that the money he has is remotely enough given that he’s not in the category where it’s reasonable to gamble on not having health insurance.

      Reply
  7. JohnnyGL

    Wow, key paragraphs here:

    During the first six decades of the Indus- trial Revolution, ordinary Englishmen did not see any of the benefits from mechanization: as output expanded, real wages stagnated, leading to a sharp decline in the share of national income accruing to labour. Notably, the trajectories of the American economy over the four decades following the revolution in automation of the 1980s almost exactly mirror the first four decades of the Industrial Revolution in Britain…

    Between 1780 and 1840—the classic period of the Industrial Revolution—the lives of ordinary workers got nastier, more brutish, and shorter. The standard of living debate surrounding the Industrial Revolution will probably never settle for good, but the optimists have an in-creasingly difficult case to make as empirical evidence continues to accumulate.4 Almost by any measure, material standards and living conditions for the common Englishman did not improve before 1840. Output expanded, yet the gains from growth did not trickle down to the vast majority of the population. The best estimates suggest that while output per worker increased by 46 per cent over the classic period (Crafts and Harley, 1992), real wages rose by a mere 14 per cent (Feinstein, 1998).5 Meanwhile, working hours increased by 20 per cent (Voth, 2000), suggesting that hourly wages even declined in real terms.6 The main ben- eficiaries were industrialists who saw the profit share of income double (Allen, 2009).

    Reply
  8. rc

    These types of analysis are somewhat one dimensional and useful distractions. Sometimes the obvious explanations are correct.

    1. Healthcare, housing and education costs have skyrocketed.
    2. Job opportunities have declined or at least the abundance of high paying jobs with benefits has deteriorated.
    3. The infrastructure in the US is awful.
    4. Our leaders waste trillions on useless wars that maim and kill our people and other innocents.
    5. Offshoring has resulted in lower quality goods across many consumer products–‘crapification’
    6. Scams across the economy are rampant and the government fails to enforce laws on the most powerful.
    7. Civil rights are being obliterated.
    8. Voters truly have little impact on policy relative to wealthy and corporate donors.
    9. Election laws have enshrined a one party political monopoly parading as a duopoly.

    The U.S. you read about in books is a myth if it ever existed. This is an empire run by a select few who view you at best as staff and support and most likely as exploitable and disposable.

    Reply
    1. RUKidding

      Thanks. On target. I agree.

      Our choices are limited, at best, and often nonexistent. The “average citizen’s” ability to effect real change is limited at best.

      A citizen’s greatest impact is somewhat possible at the local level. As you move up the ladder, our impact diminishes.

      Reply
    2. Carla

      I hope you will investigate and decide to ask your Congress Critter to co-sponsor, and your Senators to introduce companion legislation to, HJR-48:

      Very simply, it proposes an amendment to the Constitution stating that Constitutional rights are for human persons only, and that money is not speech, so campaign expenditures can be regulated.

      Some NC’ers having gotten their knickers in a bunch over what they perceive is a threat to first amendment rights in HJR-48. There is no such threat, as the NY Times explained here:

      Reply
  9. Synoia

    Why Did Trump Win? Robots Are to Blame

    Sending millions of jobs overseas had no effect? Really!

    The real issue is Management’s hatred of Workers – and this local hatred destroys overall demand.

    The now ever present Management’s fear of some mysterious overseas competitor stokes this hatred.

    There is no US in management.

    Reply
    1. Watt4Bob

      You see what I see.

      Hatred of the workers, especially organized workers is the sacred dogma of the neoliberal religion.

      It’s self-defeating as we’ve come to see, but questioning their religious tenets has been, and is taboo.

      Reply
  10. precariat

    The needs of the new industrial economy gave rise to universal education benefitting society and citizens. Automation is the dark flip-side of this dynamic.

    Automation means less humans needed to perform, and only a select class of technical worker is needed. Thus we have all-out warfare on universal, public education. This is the harbinger of the downward, not upward, trajectory automation brings. To use Jane Jacob’s phrase, “the dark age ahead.”

    Reply
    1. Carla

      In “Democracy in Chains,” Nancy MacLean shows how James Buchanan capitalized on opposition to de-segregation of the public schools to launch the “public choice” movement that became the tsunami of privatization which has destroyed public institutions in this country over the last five or more decades. There’s nothing “ahead” about the dark age, I’m afraid. We’re in it.

      Reply
      1. Enquiring Mind

        Buchanan’s approach is a prime exhibit of the need for truth in policy, programs and legislation. Disclose funders, start by following the money, and make that a requirement.
        Show true life-cycle costs and benefits (direct and indirect), not on some artificial cutoff like Bush’s pharma 5-year horizon.
        That is somewhat like how Environmental Impact Statements and similar attempts at standardization have been used over the past decades.

        Reply
      2. Synoia

        My question of James Buchanan would be:

        “ok, who was she?”

        That level of hate only comes from being jilted.

        Reply
    2. Synoia

      There is an assumption build into robots, which would need quantifying:

      EIOER is Energy Invested over Energy Returned, is is a measure of the economics of fossil fuel extraction.

      CDLOR Is Cost during Lifetime over Return, is a measure of the Investment over a complete lifetime (of human or robot) over return.

      I really have an interest in when robots will become more expensive humans. When because robots have a shorter lifetime, as less adaptable, and appear to consume less refined, and thus less expensive, energy.

      Plus robots will never buy your product.

      Reply
  11. Jim A.

    And yet….Automation and productivity improvements were common in the 50s 60s and early 70s which were arguably a golden age for many wage earners in the US.

    Reply
    1. MyLessThanPrimeBeef

      Perhaps it’s not linear.

      If one day, one giant, smart machine can do everything…that is, everything, then, human labor is completely eliminated.

      In that case, if the GDP is shared fairly, then, good.

      If not, automation is not good, and only benefits those who own the machines.

      Given that, in the present situation, machines are owned by the rich, automation is bad.

      Reply
      1. Synoia

        Good luck with those machines becoming customers.

        The whole economic view of robots is the same as “free trade,” based on the assumption that one is not eliminating one’s customers.

        Reply
        1. Left in Wisconsin

          What is interesting is that the productivity data are created in such a way that automation and free trade are both by definition productivity enhancing because it is relatively high productivity jobs that are subject to export and automation, which makes the remaining jobs in those sectors even higher productivity (value-added per domestic labor-hour goes up). Because there will ALWAYS be jobs wiping old people’s butts (even if this could be automated, there is no economic logic to doing so), we end up in the paradoxical situation Baumol identified 50 years ago – that productivity increase absent off-setting demand increase (not just maintaining demand but increasing it to compensate for productivity increase) leads to increasing employment in low productivity jobs. But if you just look at the data, it seems to show automation and trade “driving” productivity growth and other sectors “lagging.”

          You might say the data are neoliberal – contrary to Krugman’s claim that the data are liberal.

          Reply
          1. Watt4Bob

            You might say the data are neoliberal – contrary to Krugman’s claim that the data are liberal.

            Or, you might say,

            “It doesn’t matter who votes, it matters very much who counts the votes.”

            …or something like that.

            Reply
    2. flora

      If the mechanical or robotic machinery was made in the US the automation wouldn’t be decimating jobs, imo. Someone replaced by automation in one US factory could find a new job making the new machinery in another or the same US factory.

      Think of the computing equipment, the hard drives, the logic boards and chips still being made in the US instead of China or elsewhere. New machinery would not have to displace the available work if the the machinery was still made in the US. For example, where horse and buggy were replaced as standard transportation by automotive transportation people weren’t too alarmed by the loss of buggy manufacture because there was new automoble manufacture in the US.

      (Trivia du jour: Studebaker started a manufacture of horse drawn wagons in the 1800’s and evolved to automobile manufacture in the 1900’s. The technology changed but the jobs stayed to make the new products.)

      But the manufacture of the new technologies have been off-shored. That’s the problem, imo.

      Reply
      1. flora

        adding:
        A Studebaker conestoga wagon from the mid-1800’s

        A Studebaker conestoga auto from the 1950’s

        Reply
      2. Synoia

        Consider the circumstances:

        After WW II the US was the ONLY intact manufacturing country on the planet.

        It could not devise a win-win-win strategy. Only win/lose. The reqime in place until the 1970s was, in a fashion, win/win/win. However that was demolished by Thatcher and Reagan and the greed which propelled them to power.

        Their impact, reinforced by the focus on money alone, pushed the world economy from one unstable equilibrium to another.

        If economics was anything useful other than telling to powerful what it wanted to hear, there would be much study on the unstable equilibrium sought by central bankers, and what he effects of chaos have on the “equlibrium.”

        The first step is to identify the variables.

        Reply
        1. blennylips

          Seems there were a number of “drastic” changes in the 70’s. US left the gold standard for good in 1971, and NC covered another 70’s anomaly in 2013:

          David Dayen: Productivity Rose 7.7% Post-Great Recession; Workers Have Seen None of It
          Posted on August 26, 2013 by David Dayen

          The other biggie, that may underlie the others, is that the US reached peak oil in the early 70’s.

          [jpods.com]
          Life requires energy. Oil is finite. Life powered by oil is terminal…, before 2023. We have a choice, adapt or not.

          Or is this one of those “True, but so what?” things?

          Reply
    3. junez

      There were unions then to bargain for higher wages and benefits as productivity rose. Some of these spread to non-union firms that wished to avoid unionization. No longer.

      Reply
      1. John Wright

        One question might be: Was there was an effective shortage of labor in the USA which allowed unions to organize workers for higher wages?

        Now we have a much more global labor market with great mobility of workers, either via air travel or communications cables.

        And English is more widely spoken around the world.

        It is also quite acceptable for US companies to move operations many places in the world as they arbitrage labor costs.

        In a sense, many US practices undercut the value of local US labor (immigration, electronic outsourcing, cheap imports) and the US military helps enforce property rights of US corporations around the world as foreign leaders will be nervous about confiscating a US corporations property in their country. The makes conducting business overseas using foreign labor less risky.

        I worked at an electronics firm in the 1990’s that opened up an Asian manufacturing operation. At first the company told US workers that their jobs were secure as only excess demand would be moved overseas.

        Those secure USA jobs proved not to be.

        Sharing of productivity gains will not happen until it is more costly, to management, to not share them.

        Will this happen any time soon?

        Reply
        1. Synoia

          And English is more widely spoken around the world.

          yes and no.

          And English is more widely mis-spoken around the world.

          Reply
    4. Pespi

      You’re right to point toward the distribution of profit. But there is substance to the statement than capital tends to grab bigger share of the profit during times of technological change. It takes time for labor to organize and find working strategy to get back.

      Reply
  12. Anonimo2

    Robots are not the problem: unfettered neoliberalism and financializarion are. US manufacturing jobs have not been taken away by robots, they have been offshored.

    This doom stories about robots taking our jobs are perfect pro-establishment narratives whose aim is to distract us from the real problem: you are no longer a capitalist industrial country but a casino capitalist one.

    Reply
  13. Altandmain

    I have a big, big beef with the robots narrative: weak productivity growth.

    http://cfdtrade.info/2017/08/flagging-productivity-growth-how-much-is-due-to-bad-management-to-blame.html

    Strong evidence for robots would involve:

    1. Very high productivity growth (it hasn’t been very good – )
    2. Lots of capital investment (). There isn’t much and these days, companies tend to use any money they have for stock buybacks for one purpose: maximizing executive compensation.
    3. A strong correlation between unemployment and productivity rise. (The opposite is actually true for the US – see ).

    It also hides another problem. Who owns the robots? In other words, who owns the means of production? Socialists historically believed workers should. Our jobs have been off-shored more so than they have been taken by robots.

    Our society has gone from a industrial manufacturing capitalism society to a financial-neoliberal crony capitalistic one.

    Then there is the matter that Germany, along with several of the European (former) social democracies still maintain export sures, with even stronger labour protections than in the US.

    Basically the real problem is that rich people are waging class warfare on us.

    Reply
    1. Yves Smith Post author

      You need to re-read the paper. It tested BOTH for offshoring and for trade competition, as in exposure of local economies to the impact of sending jobs abroad by US cos and loss of jobs to foreign competitors. Neither explained the change in voting patterns anywhere remotely as well as automation.

      So you can deny data or consider the implications.

      On the adoption of “robots” which really means automation (those horrible phone prompt systems, which have gotten rid of receptionists and call center workers, are also a form of automation), I suggest you read the literature. Two reasons for not having more adoption of robots.

      One is clearly mentioned in the paper, which you apparently didn’t bother to read. Low level service jobs are not well suited to automation.

      The second is that with low level wage rates as low as they are, there’s not enough additional profit to be gained from automating that work to justify the risk of investment.

      Reply
      1. Altandmain

        Yves, with all due respect, I did read the paper. The paper found a correlation between the GOP’s gain in vote share vs robot exposure.

        My question is, where are the productivity gains? I would expect that these automation systems would lead to a huge growth in productivity, which particularly since 2008 has been very anemic. It would seem to me that robots are correlated with Trump support, but not necessarily with a rise in productivity (hence your comment about receptionists being replaced by phone prompt systems,).

        As far as the rest of my post, on the means of production, I would argue the paper agreed with me on that one.

        Perhaps so; so far, the economic trajectories of
        the age of automation closely resembles those of the British Industrial Revolution. But any
        future benefits from automation hinge upon its politics. To avoid further populist rebellion
        and a looming backlash against technology itself, governments must find ways of making the benefits from automation more widely shared.

        The key issue here is, who gains and who loses? Productivity gives the potential for higher wages, but only if it is shared fairly equitably. If the gains were shared in a more egalitarian way, assuming there were productivity gains (which since 2008 has seen only weak growth), then this would be the only real solution.

        As far as service jobs and low wages, no disagreement here. It has been argued that one of the reasons why the Industrial Revolution took place in the UK was due to the UK having (at the time) higher wages than most other places in the world.

        For the sake of argument though, if you are right, that is going to require a very generous social safety net and some form of job guarantee. Bill “End of Welfare as we know it” Clinton may very well have hurt his wife’s candidacy in more ways than one.

        The paper drew a number of correlations between today and the Industrial Revolution. However, it also noted that it took about 60 years for the gains to hit the common citizen, and that 3 generations suffered in between them. The big question is, can the gains be shared this time around a lot sooner?

        I believe that is not so much a technological problem as much as it is a “the rich are stealing all the productivity gains for themselves” problem. In theory, there could be a way to redistribute the gains, whether that be progressive taxation, another New Deal, etc.

        Reply
        1. Yves Smith Post author

          You assume the objective is increased productivity and profit. It rarely is. So your underlying premise is flawed.

          I have pointed out repeatedly that companies engaged in offshoring and outsourcing did so even when the economic case was non-existant even before you factored in the increased risks. So why did they proceed?

          The objectives are:

          1. Transfer of income from factory level workers to managers

          2. Appeal to Wall Street to pop the stock price.

          Wall Street like stories about automation and they like even more headcount cuts.

          So the same behavior can be assumed to apply to automation decisions too.

          Reply
          1. Altandmain 9

            That a makes sense. Thanks for clarifying. I had assumed that this was about long term profits and productivity.

            If not then, it is often a con game to pop the share price up, not dissimilar then to stock buybacks. Even where the economic case does not make sense, I would imagine that if there was an executive about to cash in on stock options or to sell stock, this would be an expected move. In many cases, it could be a loss making action. An example might be the lower customer rate of satisfaction from automated customer service leading to lower future revenues.

            Strictly from a standpoint of providing a high standard of living, the answer of course is to have executives that focus on long term gains. That is wishing for a unicorn in many cases, although privately owned companies might dk better on this front. This will be difficult if not impossible for current publicly traded firms.

            The only other remedies are to:
            1. Actually focus on productivity and not stock price to maximize executive compensation.

            2. A strong social safety and some form of job guarantee.

            3. I would argue some form of benefit sharing. An example might be that workers should be compensated in equity. Since 2008, the common citizen has not been able to benefit from the rising stock market. It has become a plaything of the top 10 percent of the population. Of course, this would also require that outside of the top 10 percent, workers be given a decent wage allowing them to save money or else they will be forced to sell their stock to cover living expenses.

            For the Democratic Establishment, this makes it pretty much impossible to offer a good solution since they are so bought out and corrupt. The fact that they also look down so much on the working class, as Clinton’s comments on working class Americans revealed, along with the “Bernie Bros” rhetoric suggests that they will be unable to appreciate the economic despair of the former middle class.

            Reply
  14. Tom

    Here’s an idea. How about we work out a system so that society has equity position in all corporations. It could be a way to capture the increased profits from automation and route them back to workers. As profits from automation increase payments to workers also increase. Its a win win situation for govt civil society and business owners.

    Any thoughts?

    Reply
  15. TG

    It’s the demographics, stupid.

    Wages fell in England during the industrial revolution because of massive population growth – aided of course by strongly pro-natalist government policies (John Stuart Mills was arrested for distributing information about contraception). Because supply and demand!

    And ‘robots’ are clearly not the issue now. Else, why is productivity stagnant and declining? Surely the productivity of the single person supervising a robot factory should be sky-high, yes? But the hourly productivity of workers hand-assembling iPhones, less so – but at 50 cents an hour, who cares?

    Believe that ‘robots’ are destroying jobs when productivity is going up, not before.

    Reply
    1. J Sterling

      The productivity of labor isn’t going up, as we see by the stagnant wages. The productivity of labor+capital isn’t going up, as we see by the low interest rate. The productivity of capital is going up, as we see by the rent, house prices, and the stock market. Robots count as capital, not labor.

      Reply
  16. Sound of the Suburbs

    Obama was on a slow motion suicide mission.
    The house of Representatives was lost in 2010, the Senate in 2014 and the Presidency in 2016.
    Full house for the Republicans
    “Thomas Frank: Why Democrats Lose”

    Reply
  17. Michael C.

    We should not underestimate the effect of “Cross-Check” to purge voters from the polls. I live in Ohio, and it is estimated that 500,000 voters have been purged due to the system, and this went on in, if I remember correctly, over 20 other states.

    We cannot lose sight of the fact that all kinds of shenanigans are implemented to suppress votes, and much more often, those votes that belong to the poor and working people of little means.

    Why the Democrats do not make a stink about this issue is beyond my ken, other than to say it is a party that is far to ineffective to face its much more effective opposition party.

    And of course, job losses and crappy jobs helped too, and that is the fault of both parties who serve the elite and moneyed, and damn the working class and poor.

    Reply
  18. phichibe

    Here’s a YT video of Thomas Frank on “WHy Democrats Lose”… The first five minutes are full of relevant statistics to this topic

    I have more thoughts on this topic (including a reprint of an 1828 House of COmmons Special COmmittee on the Future of the Workers in the Industrializing UK – hint, the conclusion recommended was emigration to Canada, Australia, etc.) but I’m just too depressed to do more than share TF’s eloquent words.

    P

    Reply

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