Those two years in Canada were fine. London, Ontario, turned out to be full of wonderful old trees – it is the Forest City after all – and the place looked and felt like some friendly and pleasant small town from a Frank Capra movie. That London, the lesser one, was full of good and honest and open but modest people, everywhere, as if you’d turn the corner and bump into Jimmy Stewart. But that gets the decades wrong. Somehow it’s always a good day in 1953 in that particular London, so one might think of Ozzie and Harriet perhaps, which would make that place the America every conservative imagines but which disappeared long ago, or never existed. It’s almost as if the Canadians got America right, while down here something went terribly wrong.
That’s not to say it wasn’t boring at times, and a bit isolated – Justin Bieber got the hell out of there as fast as he could. It was, after all, hard to get a sense of the outside world in that surrealistically nice place. The local newspaper was mostly human interest fluff and a few severely truncated wire-service stories, so if you wanted to know what was going on in the larger world you grabbed a copy of the national newspaper out of Toronto, the Globe and Mail – staid and formal and a bit dull, but comprehensive. That helped – too much pleasantness can by cloying. Sometimes hard news is what you need, and there’s a reason they call it “hard” news – it’s the details of what you wish weren’t happening, but is happening.
That’s why the Globe and Mail just sent John Stackhouse, their editor-in-chief, to cover the extraordinarily exclusive annual economic summit in Davos, Switzerland, the one where the very few richest and obviously most important people in the world gather to figure out how things are going, and where they soon will be going. These folks are the top one percent of the top one percent, and Stackhouse reports that this year they’re filled with a sense of dread:
Eric Schmidt, the tall and strapping executive chairman of Google, is in a verbal tussle with Martin Wolf, the shorter and rotund economics guru from the Financial Times, over – and only in Davos could this be called an “It” party – productivity. Like a school master at exam time, Mr. Wolf is distressed by the world’s inability to generate more growth and more jobs, and it’s all because we can’t find a way to be more productive. Every banker in the room seems to agree with him. Mr. Schmidt doesn’t. He says we’re using the wrong numerator – we’re all producing lots more than we know thanks to, well, Google, and a lot of other disruptive technologies. We’re producing more, consuming more, enjoying more.
As the Google crowd nibbles on prosciutto and sips Chablis, there isn’t much room for the fusty old views of John Maynard Keynes, that in such times of distress it’s the role of the state to guide the economy and create jobs. …
Once again, the argument between creative destruction and state-funded stability is the talk of policy-makers, who have woken up to a new year of economic growth around the world and yet a dreaded sense that this global expansion will not bring nearly enough jobs and wage increases to satisfy any public.
They seem panicked by the idea that the public, the riff-raff, unemployed and angry, will take to the streets or something. There was little talk about how making sure that those folks have jobs might mean hundreds of millions of new customers and lead to boom times, because they’re beginning to sense that there will be no new jobs:
Another machine revolution is upon us. There is a new wave forming behind the past decade’s surge of mobile technology, with disruptive technologies like driverless cars and automated personal medical assistants that will not only change lifestyles but rattle economies and change pretty much every assumption about work.
The talk of one Davos session this week was 3-D printers – for housing. A prototype, it was claimed, is already printing small houses fit for human habitation. Within five years, the entire construction industry could be replaced by a phalanx of printers. Goodbye, a million construction jobs. Hello, a thousand code-writers.
“It’s a race between humans and computers,” Mr. Schmidt tells another audience, in another hotel room, over another meal. “And it’s important the humans win.”
No one is sure that will happen. There may be no financial or economic crisis at the moment. Most economies are growing. Save for this week’s slump, the markets are at record highs. We’re in a reasonably robust recovery. But there are no jobs, and that worries the elite few at Davos. There’s no economic model that addresses that. The current situation is inherently unstable. Trouble is coming, and they know it.
Of course the trouble is already here, as detailed in this item at Money News:
A new report from the University of New Hampshire’s Carsey Institute estimates the number of jobless looking for work for more than six months has more than doubled since 2007, and currently totals more than 39 percent… A separate study from CareerBuilder shows that nearly a third of those without a job for 12 months or longer who are still looking for work have not had a single job interview during that time. But many of them are still trying. In fact, 44 percent of the long-term unemployed reported they still hunted for a job every day, and 43 percent said they looked every week.
The item goes to note that Guy Ryder, director general of the International Labour Organization (ILO), told CNBC that the “gorilla in the Davos living room” was lack of jobs – so it’s not just the United States, although times are tough here:
The labor force participation rate in the United States has slumped from 66 percent to 62.8 percent since 2008 – meaning 12.6 million people have simply left the workforce since then, according to the National Journal. In addition, the number of part-time workers who long for a full-time job has risen by nearly 4 million people since 2008, long-term unemployment is higher than any period since 1990 and most of those who have lost their paychecks since 2008 “were laid off for good, not temporarily jettisoned for better times to come,” the Journal noted.
They didn’t lose their jobs to someone else, or lose the job in question for a time, until things pick up again. The job itself is gone, never to return. That happens a lot now, and that may be the future, and the question is how best to address that future.
The economist Paul Krugman has some thoughts on that:
All indications are that President Obama will make inequality the central theme of his State of the Union address. Assuming he does, he will face two different kinds of sniping. One will come from the usual suspects on the right, shrieking “class warfare”. The other will come from a variety of people, some of them well-intentioned, arguing that while sure, inequality is an issue, the crucial thing now is to get the economy growing and create more jobs; these people will argue that populism is a diversion from the main issue.
Here’s why they’re wrong.
First of all, even on the straight economics inequality and job creation aren’t completely separable issues. There’s a decent though not ironclad case that rising inequality helped set the stage for economic crisis, and may be holding back recovery; there’s an even stronger case that weak employment is depressing wages and increasing inequality. So Obama can, and one hopes, will treat inequality-and-jobs as a single theme, and do so with a clear intellectual conscience.
Fine, but Krugman sees a tug-of-war here:
It has been painfully obvious, to anyone willing to see (a group that unfortunately doesn’t include a large part of the press corps) that deficit obsession hasn’t really been about deficits – it has been about using deficits as a club with which to smash to welfare state, and hence increase inequality. Even the supposedly nonpartisan players have this remarkable habit of including “reducing marginal tax rates” as a key goal of deficit reduction strategies, which is a dead giveaway to what it’s really about.
Conversely, talking about the need to help struggling families is also a way to shift the focus away from deficit obsession, and pave the way at least for a relaxation of austerity, if not actual stimulus.
Krugman is not big on the idea that the deficit is the biggest problem America faces. If we reduced that to zero and the effective unemployment rate – which would include those who just gave up, or settled for three or four part-time jobs to scrape by – rose to sixty or seventy percent, we’d hardly be in fine shape. The very few very important people in Davos know this, even if the Republicans don’t.
Others know this too. There’s that new Pew poll on public opinion on inequality that suggests that it’s the Democrats who are on solid political ground here. Large majorities think the gap between the rich and “everyone else” has grown and that government should act to reduce that gap:
When asked what would do more to reduce poverty, 54% of all Americans say raising taxes on the wealthy and corporations in order to expand programs for the poor. Fewer (35%) believe that lowering taxes on the wealthy to encourage investment and economic growth would be the more effective approach.
In short, nearly two thirds of Americans think the Republicans are full of crap, and Greg Sargent fills in the details:
The key here is that the question does not ask whether we should raise taxes on the rich to pay down the deficit, as many other polls do. Respondents are asked if we should raise taxes on the rich to expand the safety net as a way to reduce poverty, and a majority says yes – far more than saying the best way to help the poor is by cutting taxes on the job creators.
Independents agree with this by 51-36. Only Republicans favor lowering taxes on the job creators over taxing the rich to expand programs for the poor, by 59-29.
The poll also shows the public rejects the GOP Hammock Theory of Poverty – the idea that the safety net lulls people into dependency. Forty-nine percent think government aid to the poor “does more good than harm because people can’t get out of poverty until basic needs are met,” versus 44 percent who think it does “more harm than good by making people too dependent on government.”
Independents favor the pro-safety net argument by 49-46. Only Republicans agree with the Hammock Theory (by 65 percent!), while a scant 28 of Republicans see poverty as a resources problem – perhaps constraining GOP officials from offering a real poverty agenda that spends money to help the poor.
On individual policies, 73 percent favor raising the minimum wage and 63 percent back extending unemployment benefits for a year.
It’s the Republicans who are in the wilderness here, not Democrats, although Matthew Yglesias has a warning for them:
The danger for liberals to keep in mind is that voters are less persuaded that the government can do something useful to reduce inequality than they are that the government should do something useful.
People are accustomed to the idea of a mass public that’s “ideologically conservative and operationally liberal” – in other words one that hates “big government” but loves programs such as Medicare and Social Security. On inequality you could see the reverse happen, where people favor bold action to tackle inequality but are skeptical that specific programmatic ideas are workable or will be implemented correctly.
As Reagan said, more government is always the problem and never the solution. That sunk in. The well has been poisoned.
Emily Badger is far more interested in what the poll had to say about the causes of wealth and poverty:
The belief that people are poor more through their own lack of effort than their circumstances is widely held by large segments of the population, including 51 percent of Republicans, and 46 percent of people in the highest income group (which is not that high). If you fall into this category, then it clearly doesn’t make sense for society to try to solve a problem that it had little hand in creating.
This difference is important, although the survey question itself feels unsatisfying. I’d love to see a survey that gets much more specific about what those circumstances might be: If a child born into poverty remains poor as an adult, how much do you believe failing schools, neighborhood crime, and poor job access contributed to that outcome? I wonder if the answer would change for some people if the concept of “circumstances” weren’t quite so abstract, if it weren’t posed simply as the alternative to personal responsibility. Surely Obama is choosing his words very carefully right now.
Obama always does that, but those words, whatever they are, may not matter in the future that has now arrived. Sure, somehow, in spite of Republicans howling about the deficit, fix failing schools, and pour in resources to do something about neighborhood crime on the mean streets, and don’t cut off unemployment benefits to those in dire situations, but people move out of poverty, and income inequality diminishes, when people get good jobs. Even the people at Davos are beginning to realize there may be fewer and fewer of those from now on. In fact, Derek Thompson reports on a new study predicting that as many as half of all American jobs might be lost to computers and robots in the next few decades, and sees the future:
We might be on the edge of a breakthrough moment in robotics and artificial intelligence. Although the past 30 years have hollowed out the middle, high- and low-skill jobs have actually increased, as if protected from the invading armies of robots by their own moats. Higher-skill workers have been protected by a kind of social-intelligence moat. Computers are historically good at executing routines, but they’re bad at finding patterns, communicating with people, and making decisions, and that is what managers are paid to do. This is why some people think managers are, for the moment, one of the largest categories immune to the rushing wave of Artificial Intelligence.
Meanwhile, lower-skill workers have been protected by the Moravec moat. Hans Moravec was a futurist who pointed out that machine technology mimicked a savant infant: Machines could do long math equations instantly and beat anybody in chess, but they can’t answer a simple question or walk up a flight of stairs. As a result, menial work done by people without much education (like home health care workers, or fast-food attendants) has been spared, too.
But perhaps we’ve hit an inflection point.
As Erik Brynjolfsson and Andrew McAfee pointed out in their book Race Against the Machine (and in their new book The Second Machine Age), robots are finally crossing these moats by moving and thinking like people. Amazon has bought robots to work its warehouses. Narrative Science can write earnings summaries that are indistinguishable from wire reports. We can say to our phones I’m lost, help and our phones can tell us how to get home.
That’s our brave new world, the future that has now arrived, although Kenneth Anderson, in the Washington Post, considers the idea that all these advances in artificial intelligence will simply create new jobs:
The “this time is different” view seems to me overstated, as so often the case with AI… One should never rule out paradigm shifting advances, but so far as I can tell, the conceptual pathways as laid down for AI today are not going to lead – even over the long-run – to what sci-fi has already given us in imagination. Siri is not “Her” – as even Siri herself noted in a recent Tweet. For the future we can foresee, in the short-to-medium term, we’ll be more likely to have machines that (as ever) extend, but do not replace, human capabilities; in other cases, human capabilities will extend the machines. The foreseeable future, I suspect, remains the process (long underway) of tag-teaming humans and machines – which is to say (mostly), same as it ever was.
The significant new job categories (I speculate) run toward skilled manual labor of a new kind. The “maker movement”; new US manufacturing trends toward highly automated, but still human-run and staffed factories; new high technology, but still human-controlled, energy exploitation such as fracking; complex and crucial robotic machines under the supervision of nurses whose whole new skill sets put them in a new job category we might call nursing technologist – these are the areas of work that point the way forward.
The robots aren’t going to take over, leaving most everyone without a job. There are infinite amounts of money to be made here, from all sort of quite new jobs. It’s not like there’ll be a situation where only rich people will be those who own all the amazing robots, as capital, while all the workers of the world become obsolete nothings. It’ll never happen.
Isn’t it pretty to think so? Kevin Drum doesn’t think so:
The thing that gets me is that so many people continue to think of this as wild speculation. I don’t mean the infinite incomes stuff, which is obviously hyperbole since we’ll always need more than just capital to make the economy run. I just mean the general idea that robots and AI are pretty obviously going to have a huge economic impact in the medium term future. This is something that seems so obvious to me that I’m a little puzzled that there’s anyone left who still doesn’t see it. Nonetheless, an awful lot of people still think of this as science fiction.
So he puts the doubters in what he sees as their four main ways of thinking about this:
1: Moore’s Law is going to break down sometime very soon, and we’ll never get the raw computing power we need for true AI.
2: There is something mysterious about the human brain that we will never be able to emulate with silicon and software. Maybe something, um, quantum…
3: Meh. We’ve been hearing about AI forever. It’s never happened before, so it’s not going to happen this time either.
4: La, la, la, la, la…
And here’s his breakdown:
#1 is at least plausible. I think we’re too far along for it to be taken very seriously anymore, but you never know. #2 is basically New Age nonsense dressed up as physics. #3 is understandable, but lazy. We heard about going to the moon for a long time too, but it didn’t happen until the technology curve caught up. We’re at the same point with AI. #4 is the group of people who kinda sorta accept that AI is coming, but for various reasons simply don’t want to grapple with what this means.
But it is happening, and Drum sees the political implications of all the automation that can’t be stopped now. Maybe we’ll soon have to forget about unemployment insurance, because actual employment will be a quaint thing of the past, and forget about food stamps and stipends to help buy health insurance and all the rest. Maybe we’ll simply have to guarantee everyone a reasonable income and send them a check each month, courtesy of all the robots doing all the work. How else will they be able to buy the goods and services the economy puts out there? How else can we keep the economy from stopping cold?
We’re not there quite yet, so Drum offers this:
Conservatives don’t like the idea that this almost inevitably will require a much more redistributive society. Liberals don’t like the idea that this might make a lot of standard lefty social programs obsolete.
As a liberal believer, I’ll put myself in the latter camp. I’m not willing to give up on the standard liberal social program because (a) I might be wrong about AI, (b) if I’m not, we’re still going to need variations on these programs, and (c) we still have to deal with the transition period anyway.
It’s that transition period that’s a real bitch. It’s the talk in Davos, and they have no idea how to navigate this quite dangerous transition period. As you can also see, this is also a hot topic among political writers not obsessed with the Tea Party and the deficit and the Republican obsession with women’s raging libidos and keeping their guns, or Chris Christie or Hillary Clinton or Benghazi or the next effort to end Obamacare, whatever that might be. Something has fundamentally changed. All those other things are now actually minor matters now.
Damn it, the future has arrived already. It kind of snuck up on us all. The only answer is to move back to the lesser London, the one in southwestern Ontario. It’s always a pleasant day in 1953 there, unless there’s nowhere to hide now.