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Man and Machines
Recently, Eduardo Porter had a report in the New York Times on the threat machines pose to the labor force.
A few excerpts....
“A research report published last month by the Organization for Economic Cooperation and Development argued that even the occupations most at risk of being replaced by machines contained lots of tasks that were hard to automate, like face-to-face interaction with customers.
“It concluded that only 9 percent of American workers faced a high risk of being replaced by an automaton. Austrians, Germans and Spaniards were the most vulnerable, but only 12 percent of them risked losing their jobs to information technology.
“Ever since the Luddites started smashing textile machines in the 19th century, workers have, as a whole, done rather well adapting to new technologies, retooling to find new jobs in other industries. Employment has increased throughout the modern age. As Kenneth S. Rogoff of Harvard put it a few years ago: It seems unlikely that millions of workers are headed to the glue factory like discarded horses....
“Last November, (former Treasury secretary) Lawrence H. Summers...stroke up to the podium at the Peterson Institute for International Economics in Washington and made an unlikely admission: Perhaps economists were not always the smartest people in the room.
“He reminisced about his undergraduate days at M.I.T. in the 1970s, when the debate over the idea of technological unemployment pitted ‘smart people,’ exemplified by the great economist Robert Solow, and ‘stupid people,’ ‘exemplified by a bunch of sociologists.’
“It was stupid to think technological progress would reduce employment. If technology increased productivity – allowing companies and their workers to make more stuff in less time – people would have more money to spend on more things that would have to be made, creating jobs for other people.
“But at some point Mr. Summers experienced an epiphany. ‘It sort of occurred to me,’ he said. ‘Suppose the stupid people were right. What would it look like?’ And what it looked like fits pretty well with what the world looks like today.
“For large categories of workers, wages are inadequate. Many are withdrawing from the labor force altogether. In the 1960s, one in 20 men between 25 and 54 were not working. Today it’s three in 20. The population is generally healthier than it was in the 1960s; work is almost uniformly less demanding. Still, more workers are on disability....
“In a world in which many Americans do not work during large chunks of their lives, we might have to conceive of Social Security and disability much more broadly than we do today.
“That, Mr. Summers said, ‘could start to look like a universal income.’”
Wall Street History will return in two weeks.