Posted on 10/07/2013 10:31:07 AM PDT by neverdem
Policy changes can ease the transition to a tech-driven economy.
Being too early is a lot like being wrong. And for 40 years, the Left has been dead wrong in its Dickensian depiction of America as a nation suffering a “hollowed-out” middle class while the super-rich greedily grab all the income gains and heartless CEOs ship jobs to China.
But where have been the decades of protests and riots? And why did America keep electing centrist- to center-right presidents? Even Barack Obama ran in 2008 as more Clintonian technocrat than Great Liberal Equalizer.
The answer is that the data don’t back up those claims of middle-class meltdown. While the portion of American households that are middle-income has declined since the late 1960s, that drop was more than offset by share gains in the upper income levels.
“America’s middle class did start largely disappearing in the 1970s — but it was because they were moving up to a higher-income category,” writes economist Mark Perry at his Carpe Diem blog. Likewise, research from economists such as Cornell’s Richard Burkhauser and the University of Chicago’s Bruce Meyer finds total median household income, adjusted for inflation, up roughly 40 to 50 percent since the late 1970s.
But is the tired, fact-free, left-wing storyline finally catching up to economic reality? It might be, thanks to the increasing ability of smart machines — both robots and the vast, interconnected, digital “second economy,” as technologist Brian Arthur calls it — to substitute for human labor.
Instead of offshoring jobs to Asia, we’re sending to them to Machine Land. And the result will be, according to Average Is Over, by George Mason University economist Tyler Cowen, a sharply bifurcated America in coming decades that increasingly resembles a mash-up between Downton Abbey and Elysium. The middle of the income distribution will thin dramatically. In fact, it’s probably already happening.
While 60 percent of the jobs lost during the Great Recession were mid-wage occupations, 73 percent of the jobs added in the recovery have been low-wage jobs. Many of those disappearing middle-level jobs are what economists call “routine, manual tasks” that can be easily automated. (Cowen also wonders how many are fiscally unsustainable public-sector jobs.)
So if you are one of the maybe 15 percent who are tech-savvy and self-motivated or you “have an unusual ability to spot, recruit, and direct those who work well with computers even if you don’t,” you’ll end up with a wealthy and fantastically comfortable life.
Welcome to the Big-Data-driven hyper-meritocracy, as Cowen calls it, of those who are STEM-smart (smart in science, technology, engineering, and math) or who understand how technology can be used for marketing and management. Cowen analogizes with “freestyle” chess competitors who — even though they are not necessarily the best human players — adeptly use a variety of computer programs to best both unassisted grandmaster and machine.
As for the rest of us who aren’t entrepreneurial self-starters and whose skills don’t mesh so well with technology, “you may want to address that mismatch, ” Cowen writes. If you don’t, you’ll end up — assuming you are conscientious and hardworking — as one of the employable 85 percent whose job it will be to serve the needs of the 15 percent as personal trainers, valets, nannies, and “other forms of direct personal services.”
Hey, the pay won’t be great, but the Internet will provide more opportunities for cheap entertainment, education, and health care. And more people will move to low-service, low-tax, cheap-housing states such as Texas where a buck goes further. Low earners will have to “reshape their tastes . . . toward cheaper desires.”
Is this future of lowered expectations, as plausible as it is, one that must be or may be? Cowen for the most part adopts a detached “It is what it is” posture.
But American policymakers don’t have to be as passive. Education can be improved and reoriented to teach machine-complementary skills. Fewer mandates, along with wage subsidies, can make it more affordable to hire carbon-based life forms or start businesses.
A more pro-investment tax code can help produce the sort of innovation that creates new industries and jobs rather than just making existing ones more efficient. Cheaper urban housing via zoning deregulation would allow more people to benefit from living in the nation’s innovation hubs.
Of course, all our best efforts to maintain shared and increasing prosperity could yet be swept away by Moore’s law. If so, average will be over for good.
— James Pethokoukis, a columnist, blogs for the American Enterprise Institute.
Sum Ting Wong
Wei Bi Phuc Toi
Don’t be middle class? That’s proceeding apace, as far as the eye can see.
I had to stop there.
Sounds like a dystopia coming soon
*why did America keep electing centrist- to center-right presidents?*
When did that happen last?
The 1880’s?
Tough it out then vote them out
or
Leave the country, renounce citizenship
or
“But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”
This seems to be typical "academic" thinking. You must work in an office, with computers, to be middle class. What a bunch of snobs.
Our middle class would be growing if we pursued energy independence. Gas, oil, coal, nuclear, wind & solar production require people who can get their hands dirty, think on their feet and these jobs pay well.
Also, if access to capital weren't so limited by fed regulation we would see more startups many of which would succeed.
The only reason this country is decline is a majority of people voted for Rats.
"Paging Common Core"... "Paging Common Core"... "please pickup the red courtesy phone..."
” ... you’ll end up with a wealthy and fantastically comfortable life.”
On fabulous Fantasy Island! What a gay article.
Energy would help, but the middle class will not rebound until jobs return to this country which is not likely to happen anytime soon.
A Greek giving economic lessons is like hillary giving advice on being a Catholic Nun!
I’m not very high on Pethokoukis. Bill Bennett finally figured out that his listeners weren’t very high on Pethokoukis either eventually. I hear him a lot less on other shows than I did at the first of the year.
Some of what he offers is correct but his delivery and twist are not that great.
i’ve been preaching something similar to my friends and anyone that will listen for a while now: from anchinet history on, increases in productivity allowed society to redirect surplus labor to a new task. now increases in productivity are freeing us up to have more and more leisure time. eventually, as unskilled labor is replaced by machines, increases in that kind of productivity frees people up to do basically nothing or at least nothing that will get you very far in life. If people dont think about this when planning their careers and raising their children to be happy, productive and self supportive they will be sorry.
“Cheaper urban housing via zoning deregulation would allow more people to benefit from living in the nation’s innovation hubs.”
The author can take his urban housing ( cheap or otherwise) and his innovation hubs and stuff them up his joe biden!
bflr
G.W. Bush. I think he was pretty much a real-deal McKinleyite.
Even his Part D foray into Medicare was IMHO an attempt to undermine, or rather to continue to undermine, resistance to public, single-payer health-care schemes which will be foisted on the workforce as a substitute for employer-paid healthcare plans, on which the GOP elite, in obedience to the Lords Ordainers of business, have declared war lo, these 10, 15, even 20 years ago.
It is the E-GOP's concern, of course, to let the Democrats do the dirty work of dismantling healthcare and rebuilding it as a state-run triage operation ("Sorry, Mrs. McGillicuddy, you're over 65 -- no antibiotics for you!") instead of what it is now. Let not the Lords Ordainers even be mentioned -- much less blamed.
Problem is, how do you plan ahead 20, 30 years in an environment of disruptive change?
HTML coding your forte? Too bad, so sad, it's XML now, or BadBob's Super XXML, or something else, the point of it being quite precisely that you can't do that. New technologies will become gateways, and fleecing the retreads at the turnstiles a major source of wealth.
Getting rid of people, however, I'm afraid will become the major preoccupation of HR and eventually of the world's militaries and LE establishments.
Hope not, but it's starting to look like that. How many people DO you need to keep your Maybach Zeppelin all shiny, anyway?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.