Read on Twitter
1/Today's @bopinion post is about technology and inequality.
Many people just sort of assume that new technology will exacerbate inequality. But what if it does the opposite? https://www.bloomberg.com/opinion/articles/2020-12-09/we-may-be-exactly-wrong-about-technology-and-inequality?sref=R8NfLgwS
Many people just sort of assume that new technology will exacerbate inequality. But what if it does the opposite? https://www.bloomberg.com/opinion/articles/2020-12-09/we-may-be-exactly-wrong-about-technology-and-inequality?sref=R8NfLgwS
2/In the 80s, 90s, and 00s, the big fear was that computerization would lead to inequality, because some people would have the skills to use computers, and others wouldn't.
But if any of that did happen, it was over by the 1990s.
https://davidcard.berkeley.edu/papers/skill-tech-change.pdf
But if any of that did happen, it was over by the 1990s.
https://davidcard.berkeley.edu/papers/skill-tech-change.pdf
3/Nowadays the big fear is that AI/automation/robots will replace human workers. Even if robots don't actually take your job, maybe they'll reduce your wages?
https://pubs.aeaweb.org/doi/pdf/10.1257/jep.33.2.3
https://pubs.aeaweb.org/doi/pdf/10.1257/jep.33.2.3
4/Everybody is investing in automation, and AI tech still seems to be improving rapidly, so a lot of people are scared about technology-driven inequality.
5/A second fear is that countries that dominate in the AI/robot field will suck up most of the manufacturing in the world, leaving less technologically advanced countries without a development strategy. https://www.imf.org/en/Publications/WP/Issues/2020/09/11/Will-the-AI-Revolution-Cause-a-Great-Divergence-49734
6/So are we poised for an era of A.I. Haves and A.I. Have-Nots?
Maybe.
But there's also the possibility that new technology will help drive inequality DOWN rather than up.
We should be prepared for this possibility.
Maybe.
But there's also the possibility that new technology will help drive inequality DOWN rather than up.
We should be prepared for this possibility.
7/First, let's talk about those robots.
Here's a paper showing that industries that get new automation technologies tend to ADD jobs rather than subtracting them, suggesting that automation boosts labor demand. That should boost wages too!
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2959584
Here's a paper showing that industries that get new automation technologies tend to ADD jobs rather than subtracting them, suggesting that automation boosts labor demand. That should boost wages too!
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2959584
8/More generally, as @joshgans @professor_ajay and @avicgoldfarb write in their book "Prediction Machines", it's possible that A.I. will mostly replace certain *tasks* but not whole *jobs*, making service workers and white-collar workers more productive. https://www.amazon.com/Prediction-Machines-Economics-Artificial-Intelligence/dp/1633695670/ref=sr_1_1?s=books&ie=UTF8&qid=1534277946&sr=1-1&keywords=prediction+machines
9/And though higher productivity doesn't always translate 1-for-1 into higher wages, the link between the two isn't entirely broken. So more productive office workers would mean higher wages, all else equal. https://www.piie.com/publications/working-papers/productivity-and-pay-link-broken
10/As I always say:
Dystopia is when robots take half of your jobs.
Utopia is when robots take half of your job.
Dystopia is when robots take half of your jobs.
Utopia is when robots take half of your job.
11/As for the idea that automation will make labor-intensive manufacturing a non-viable development strategy...There just isn't that much evidence for this so far. https://www.bloomberg.com/opinion/articles/2020-03-05/vietnam-and-bangladesh-can-still-get-rich-from-manufacturing?sref=R8NfLgwS
12/I mean...look at Vietnam and Bangladesh.
13/And so far we've just been talking about technology in terms of automation/A.I.
There's an even bigger technological revolution happening right now: The energy tech revolution. Solar power and storage. https://ourworldindata.org/cheap-renewables-growth
There's an even bigger technological revolution happening right now: The energy tech revolution. Solar power and storage. https://ourworldindata.org/cheap-renewables-growth
14/Physical energy tech is going to transform our world just as much as A.I./automation in the coming decades. Probably more.
15/And remember, cheap energy is a COMPLEMENT to human labor. Just as in the Industrial Revolution, cheap energy allows any human to move stuff around more easily -- to build bigger things more cheaply, to drive cars and construction vehicles, etc.
16/Of course, to make sure the benefits of that increased productivity flow to workers, we will need strong institutions -- in particular, strong unions.
Industrial technology caused inequality to increase too (and is still doing so in China!), until unions became strong.
Industrial technology caused inequality to increase too (and is still doing so in China!), until unions became strong.
17/So while technology won't just make inequality magically fall on its own, it might create an opportunity for unions and other institutions to appropriate huge amounts of new economic value for normal people instead of for the super-rich.
18/We should be prepared for this possibility, and strengthen our institutions, and not lash out against technology.
THAT is how we get the Star Trek future, folks.
(end) https://www.bloomberg.com/opinion/articles/2020-12-09/we-may-be-exactly-wrong-about-technology-and-inequality?sref=R8NfLgwS
THAT is how we get the Star Trek future, folks.
(end) https://www.bloomberg.com/opinion/articles/2020-12-09/we-may-be-exactly-wrong-about-technology-and-inequality?sref=R8NfLgwS
