Monday, May 14, 2018

Industrial revolutions are political and social wrecking balls.

I want to point to yet another impressive bit of research and writing by Thomas Edsall, who gives one of the most clear pictures I have seen of current political and economic changes. Edsall begins with a few quotes from Klaus Schwab at Davos in January 2016 on the bright side of the 'fourth industrial revolution' (cf. my posts on Schwab and Davos on Jan. 28, Jan. 29, and Feb. 9, 2016.) and then the downside. Compared with previous industrial revolutions,
...the fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.
And, in a huge understatement:
As automation substitutes for labor across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labor.
Edsall quotes from various authors:
On balance, near-term AI will have the greatest effect on blue collar work, clerical work and other mid-skilled occupations. Given globalization’s effect on the 2016 presidential election, it is worth noting that near-term AI and globalization replace many of the same jobs...Robots, autonomous vehicles, virtual reality, artificial intelligence, machine learning, drones and the Internet of Things are moving ahead rapidly and transforming the way businesses operate and how people earn their livelihoods. For millions who work in occupations like food service, retail sales and truck driving, machines are replacing their jobs.
AI’s near-term effect will not be mass unemployment but occupational polarization resulting in a slowly growing number of persons moving from mid-skilled jobs into lower wage work
The concern is not that robots will take human jobs and render humans unemployable. The traditional economic arguments against that are borne out by centuries of experience...the problem lies in the process of turnover, which could lead to sustained periods of time with a large fraction of people not working...not all workers will have the training or ability to find the new jobs created by AI. Moreover, this “short run” could last for decades and, in fact, the economy could be in a series of “short runs” for even longer.
A populist politician who campaigned on AI-induced job loss would start with ready-made definitions of the "people” and the “elite” based on national fault lines that were sharpened in the 2016 presidential election. This politician also would have a ready-made example of disrespect: the set of highly educated coastal “elites” who make a very good living developing robots to put “the people” out of work.
...both technology and trade seem to drive structural changes which are consequential for voting behavior...Job losses in manufacturing due to automation do create fertile territory for continued populist appeal...In fact, some of the places where Trump made the biggest gains relative to McCain or Romney are in the heartland of heavy manufacturing where robots did lead to losses of manufacturing jobs...David Autor, an economist at M.I.T., examined the political consequences in congressional districts hurt by increased trade with China and found a significant increase in the election of very conservative Republicans.
Rather than directly opposing free trade policies, individuals in import-exposed communities tend to target scapegoats such as immigrants and minorities. This drives support for right-wing candidates, as they compete electorally by targeting areas affected by trade, the scapegoating of immigrants takes place across the board and is not limited to manufacturing workers.
The hard core of Trump’s voters — more than half of all Republican voters don’t just approve of him, but strongly approve — have, in turn, demonstrated a willingness to deify the president no matter what he does or says — a deification dependent in no small part on Trump’s adoption of new communications technologies like Twitter.
The determination of the Trump wing of the Republican Party to profiteer on technologically driven economic and cultural upheaval — and the success of this strategy to date — suggests that the party will continue on its path. For this reason and many others, it is critically important that Democrats develop a more far-reaching understanding of the disruptive, technologically fueled economic and cultural forces that are now shaping American politics — if they intend to steer the country in a more constructive direction, that is.

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