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Are jobs lost due to ‘bad trade policy’ or automation?
The notion that automation, rather than trade policies such as allowing China to join the World Trade Organization, is more responsible for a loss of manufacturing jobs has gained currency in recent years. One big issue in the academic research is how one determines the impact of automation vs. trade, especially because interaction is difficult to untangle. A U.S. company facing competition from China might decide to improve its productivity through increased automation, so the question becomes whether this situation is trade- or automation-related.
Houseman’s 2018 paper offers a sustained critique of the Ball State University findings, saying productivity cannot so easily be attributed to automation. Another approach is offered by Daron Acemoglu of the Massachusetts Institute of Technology and Pascual Restrepo of Boston University, who studied the impact of robots on U.S. labor markets between 1990 and 2007. A footnote in their paper suggests robots reduced employment by about 750,000 jobs between 1993 and 2007; estimates of the impact of China trade are about 2½ times as large, according to some estimates. Dean Baker of the Center for Economic and Policy Research noted that manufacturing jobs had declined as a share of total employment gradually since the 1960s, but jumped sharply between 2000 and 2007 when the trade deficit doubled as a percent of the U.S.
gross domestic product. For the past nine years – past the period of most recent research – manufacturing jobs have gradually increased, despite the supposed impact of automation, he noted. The Warren campaign pointed to a study, looking at the period 1999-2018 for the decline in the employment-population ratio, that cited two major contributing factors – import competition from China and adoption of industrial robots – and a host of contributing factors. The Pinocchio Test.Be wary of politicians who speak with certainty about economic research. The available research suggests she speaks with too much certainty.
Even researchers who do not accept the Ball State findings are not willing to go as far as Warren, in part because more research needs to be done in untangling the interplay between trade and automation.
Why Is Andrew Yang So Afraid of Automation?
It’s too bad that Yang’s idea is a foolish response to a nonproblem. Worse, Yang is trying to convince people to fear and oppose something that we need more of, and that is a key to economic progress and higher wages-namely, automation. To hear Yang tell it, robots are on the verge of ripping an irreparable hole in the American job market and fundamentally destabilizing our society. We should be mindful of how innovation creates winners and losers, and do our best to mitigate the harm to people and communities that are negatively affected not to put too fine a point on it, Yang’s fear of automation in general and self-driving cars in particular is completely insane. Of course, rather than harming us by supplanting old modes of transportation, all these innovations made us more productive, and therefore richer and better off.
At a practical level, Yang’s assumption that autonomous vehicles are going to wipe out all trucking jobs, and relatively soon, is unsupported by the evidence. The people once employed in these jobs haven’t been rendered socially and economically inert, threatening the social order. If it’s true that labor-saving innovations destroy jobs, unemployment should have steadily increased since the Industrial Revolution, indeed the ranks of the unemployable should have been growing since the invention of the first mechanical farm implement. The wealthier people are, the more they consume, and not just on services, but on real concrete goods like houses and cars. Studies warning of massive potential job losses from automation tend to neglect the upsides.
Rob Atkinson of the Information Technology & Innovation Foundation notes that U.S. labor productivity has been increasing at a dismal rate of 1.2 percent per year since 2008, half the rate of the preceding 13 years. Such is the state of the political debate in 2019 that even the winsome and refreshing candidate, Andrew Yang, is a net subtraction to our collective self-understanding.
Democratic debate: The fight about automation and job losses, explained
One of those was automation – the idea that robots and technology will replace workers and destroy jobs. It prompted a confusing discussion about whether automation is actually killing jobs or whether free trade policies are. CNN moderator Erin Burnett cited a study predicting that a quarter of US jobs will be lost from automation, then asked a few of the candidates what they would do to prevent such job losses. Sen. Bernie Sanders said guaranteeing a federally funded job for every person is one solution.
Here’s the truth: Neither automation nor trade policies are responsible for overall job losses in the past few decades, generally speaking. Globalization is more to blame for the decline of manufacturing jobs in the US than automation is. Another thing: No one has any clue how many future jobs may be lost to automation; the estimates vary wildly and the methodology for trying to guess is questionable. 1) The impact of automation on jobs is overblown The reason why so many people say robots will take our jobs one day is because that’s what economists and politicians have believed for the longest time. The trade deal was also directly responsible for the loss of more than 840,000 US factory jobs, most of which were moved to Mexico. Economists Scott Andes and Mark Muro at Brookings also point out that other countries with high productivity growth in recent decades haven’t seen a similar steep decline in manufacturing jobs as the US has seen. 2) No one has any idea how many jobs robots will replace Study after study is published every year warning the public about the looming threat of robots.
The McKinsey consulting firm estimates that automation could kill 73 million US jobs in the next 10 years.