I've done a couple of posts the past 2 days which use the word "Luddite' in the title. I employ this word somewhat tongue in cheek. I certainly don't think either Krugman or Jared Bernstein are Luddites. However, they have been treating a theory- that the digital revolution has displaced many American workers-with respect most mainstream economists tell us is the Luddite Fallacy.
For my part I love the digital revolution and do think that humanity is already richer for it in all kinds of ways. However, I do believe that over the last 12 years it has displaced many American workers. Yes, in tme many do finally get new jobs. However, the unheralded story is how much we've seen white collar workers displaced as burger flippers or Wallmart cashiers. This is a really unappreciated story and I'm very gratified that Krugman and Bernstein-two highly talented economists with gravatis within the profession are talking about it.
http://diaryofarepublicanhater.blogspot.com/2013/06/jared-bernstein-joins-luddites.html
As Krugman says, the skills theory in explaining the loss in jobs has taken a beaten over these 12 years as white collar workers have become vulnerable to downsizing, outsourcing, etc. as well. This was not the case in the 80s and 90s where it was much more plausible to make the case that education is the key and will solve the problem of displaced workers.
The 1991 recession was actually a very historic one. Superficially this Bush the First recession it was very short and shallow as seemed the Bush the Second recession of 2001. In both cases superficial appearances were quite wrong.
The 1991 recession was really the first white collar recession we'd ever seen, It was something brand new and unexplainable. However, the 90s saw the full explosion of the Internet boom and huge bull market and that was forgotten as a misnomer. In the 2001 recession the same characteristics showed itself but this time it was here to stay.
In the above link I spoke a little of two writers Bernstein linked to who have done more work than anyone on the idea of the digital revolution leading to a long term hit to the job market. Here are some excerpts from the book which show how important and provocative their work is:
"We wrote this book because we believe that digital technologies are one of the most important driving forces in the economy today. They’re transforming the world of work and are key drivers of productivity and growth. Yet their impact on employment is not well understood, and definitely not fully appreciated. When people talk about jobs in America today, they talk about cyclicality, outsourcing and off-shoring, taxes and regulation, and the wisdom and efficacy of different kinds of stimulus. We don’t doubt the importance of all these factors. The economy is a complex, multifaceted entity."
http://raceagainstthemachine.com/excerpt/
They look at the why of it:
"Why are computers racing ahead of workers now? And what, if anything, can be done about it? Chapter 2 discusses digital technology, giving examples of just how astonishing recent developments have been and showing how they have upset well-established ideas about what computers are and aren’t good at. What’s more, the progress we’ve experienced augurs even larger advances in coming years. We explain the sources of this progress, and also its limitations."
Implications:
"Chapter 3 explores the economic implications of these rapid technological advances and the growing mismatches that create both economic winners and losers. It concentrates on three theories that explain how such progress can leave some people behind, even as it benefits society as a whole. There are divergences between higher-skilled and lower-skilled workers, between superstars and everyone else, and between capital and labor. We present evidence that all three divergences are taking place."
For my part I love the digital revolution and do think that humanity is already richer for it in all kinds of ways. However, I do believe that over the last 12 years it has displaced many American workers. Yes, in tme many do finally get new jobs. However, the unheralded story is how much we've seen white collar workers displaced as burger flippers or Wallmart cashiers. This is a really unappreciated story and I'm very gratified that Krugman and Bernstein-two highly talented economists with gravatis within the profession are talking about it.
http://diaryofarepublicanhater.blogspot.com/2013/06/jared-bernstein-joins-luddites.html
As Krugman says, the skills theory in explaining the loss in jobs has taken a beaten over these 12 years as white collar workers have become vulnerable to downsizing, outsourcing, etc. as well. This was not the case in the 80s and 90s where it was much more plausible to make the case that education is the key and will solve the problem of displaced workers.
The 1991 recession was actually a very historic one. Superficially this Bush the First recession it was very short and shallow as seemed the Bush the Second recession of 2001. In both cases superficial appearances were quite wrong.
The 1991 recession was really the first white collar recession we'd ever seen, It was something brand new and unexplainable. However, the 90s saw the full explosion of the Internet boom and huge bull market and that was forgotten as a misnomer. In the 2001 recession the same characteristics showed itself but this time it was here to stay.
In the above link I spoke a little of two writers Bernstein linked to who have done more work than anyone on the idea of the digital revolution leading to a long term hit to the job market. Here are some excerpts from the book which show how important and provocative their work is:
"We wrote this book because we believe that digital technologies are one of the most important driving forces in the economy today. They’re transforming the world of work and are key drivers of productivity and growth. Yet their impact on employment is not well understood, and definitely not fully appreciated. When people talk about jobs in America today, they talk about cyclicality, outsourcing and off-shoring, taxes and regulation, and the wisdom and efficacy of different kinds of stimulus. We don’t doubt the importance of all these factors. The economy is a complex, multifaceted entity."
"But there has been relatively little talk about role of acceleration of technology. It may seem paradoxical that faster progress can hurt wages and jobs for millions of people, but we argue that’s what’s been happening. As we’ll show, computers are now doing many things that used to be the domain of people only. The pace and scale of this encroachment into human skills is relatively recent and has profound economic implications. Perhaps the most important of these is that while digital progress grows the overall economic pie, it can do so while leaving some people, or even a lot of them, worse off."
"And computers (hardware, software, and networks) are only going to get more powerful and capable in the future, and have an ever-bigger impact on jobs, skills, and the economy. The root of our problems is not that we’re in a Great Recession, or a Great Stagnation, but rather that we are in the early throes of a Great Restructuring. Our technologies are racing ahead but many of our skills and organizations are lagging behind. So it’s urgent that we understand these phenomena, discuss their implications, and come up with strategies that allow human workers to race ahead with machines instead of racing against them."
http://raceagainstthemachine.com/excerpt/
They look at the why of it:
"Why are computers racing ahead of workers now? And what, if anything, can be done about it? Chapter 2 discusses digital technology, giving examples of just how astonishing recent developments have been and showing how they have upset well-established ideas about what computers are and aren’t good at. What’s more, the progress we’ve experienced augurs even larger advances in coming years. We explain the sources of this progress, and also its limitations."
Implications:
"Chapter 3 explores the economic implications of these rapid technological advances and the growing mismatches that create both economic winners and losers. It concentrates on three theories that explain how such progress can leave some people behind, even as it benefits society as a whole. There are divergences between higher-skilled and lower-skilled workers, between superstars and everyone else, and between capital and labor. We present evidence that all three divergences are taking place."
Their Prescriptions and Recommendations
"Once technical trends and economic principles are clear, Chapter 4 considers what we can and should do to meet the challenges of high unemployment and other negative consequences of our current race against the machine. We can’t win that race, especially as computers continue to become more powerful and capable. But we can learn to better race with machines, using them as allies rather than adversaries. We discuss ways to put this principle into practice, concentrating on ways to accelerate organizational innovation and enhance human capital."
However, they conclude on an optimistic note"
"Conclusion: The Digital Frontier
"We conclude in Chapter 5 on an upbeat note. This might seem odd in a book about jobs and the economy written during a time of high unemployment, stagnant wages, and anemic GDP growth. But this is fundamentally a book about digital technology, and when we look at the full impact of computers and networks, now and in the future, we are very optimistic indeed. These tools are greatly improving our world and our lives, and will continue to do so. We are strong digital optimists, and we want to convince you to be one, too."
So we need to work with the machine ultimately rather than against it. Ie, their project really isn't Luddite at all, actually the opposite.
It's certainly very thought provoking. If it's true-and it seems very plausible to me-this could mean that while Stiglitz was ridiculed for arguing that worker displacement from agriculture had a lot to do with the Great Depression he may have been write too and therefore what we're are seeing now has a historical antecedent.
I think that at the very least this dimension should be added to the cyclical discussion and the discussion about taxes, regulation, offshoring, and outsourcing.
Certainly we can already see lots of ways the Internet has improved our lives-certainly our intellectual and cultural lives; also personal and entertainment. If you can believe it they now say that 25% of married couples met online.
It's what's enabled me to do this blog which is such a focus of my passion and hopes. I'd say the rise of liberalism starting in 2006 would not have been possible without the Internet-that might seem strong but what about the Arab Spring which was organized on Facebook?
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