Tag Archives: social unrest

Automation, Anxiety And Anger

The devil, as the saying goes, is always in the details.

It’s easy to point to social change as a reason for the increased anxiety and tribalism of American voters, just as it is easy to insist that we must “resist”/”do something.” It’s a lot harder to specify the nature and consequences of those social changes, or the form that resistance should take.

A lawyer with whom I used to work was fond of saying that there is only one legal question: what should we do? That adage also works pretty well for political action.

One of the drivers of social change is technology–not just the rapid evolution of communication devices and the like, but the truly incredible advances in automation. Robots are assembling cars and refrigerators; three-dimensional printers are beginning to look a lot like Star Trek replicators.

While labor advocates are still fighting the last war–international trade–automation poses a far greater threat to manufacturing jobs. Thomas Edsall recently compared our current dislocations to the Industrial Revolution, and that sounds about right.

We may never stop arguing about which historic currents swept President Trump into the White House.

Klaus Schwab, chairman of the World Economic Forum, is unlikely to have had Trump in mind when he described the fourth industrial revolutionin Davos in January 2016:

We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.

Compared with previous industrial revolutions, Schwab continued,

the fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.

Edsall connects the dots between seemingly unrelated phenomena and this fourth industrial revolution. For example, he points out the ways in which technology has facilitated immigration, both legal and illegal. Immigrants fly into the U.S. and overstay their visas, rather than trudging across borders. Innovations in transportation, communication, together with the globalization of politics and culture, have made the international movement of people “cheaper, quicker, and easier.”“

The IT revolution that has occurred in my adult lifetime has improved living standards and consumer convenience; but at substantial social cost. The substitution of machines for human labor is accelerating, and that reality has significant political and social consequences.

According to the International Federation of Robotics, “By regions, the average robot density per 10,000 employees in Europe is 99 units, in the Americas 84 and in Asia 63 units.”

In a March 2018 paper, “We Were The Robots: Automation in Manufacturing and Voting Behavior in Western Europe,” Massimo Anelli, Italo Colantone and Piero Stanig, of Bocconi University in Milan, found that “robot shock increases support for nationalist and radical right parties.”

The authors note that “both technology and trade seem to drive structural changes which are consequential for voting behavior.”

Some scholars even attribute Trump’s victory in the Electoral College to automation.

In their October 2017 paper, “Political Machinery: Did Robots Swing the 2016 U.S. Presidential Election?” the authors demonstrate that

Support for Donald Trump was significantly higher in local labor markets more exposed to the adoption of robots. Other things equal, a counterfactual analysis shows that Michigan, Wisconsin, and Pennsylvania would have swung in favor of the Hillary Clinton if robot adoption had been two percent lower over the investigated period, leaving the Democrats with a majority in the Electoral College.

An economist at Brookings has estimated that full adoption of driverless vehicles would put two-and-a-half million drivers out of work. Others estimate that the anticipated addition of 105,000 robots to American factories will result in 210,000 fewer assembler and fabricator jobs in 2024 than otherwise would have been the case.

Edsall quotes a number of economists who explain how IT has increased inequality and reduced labor force participation, and will continue to do so. The dislocations of this fourth industrial revolution are a breeding ground for what social scientists call populism–and what most of us call White Nationalism.

The question “What should we do” is getting pretty urgent.

Comments

Corporations Will Use Their Windfalls To Create Jobs. NOT.

Part of the mantra obediently recited by advocates of the mis-named “tax reform” bill is their touching (or feigned) belief that corporations will use the funds being repatriated and/or saved from the tax collector to create jobs.

Brings to mind the old adage about the triumph of hope over experience.

Ed Brayton relays the recent, eye-opening response by corporate CEOs to a speech by Gary Cohn, Trump’s chief economic advisor.

Trump’s chief economic adviser, Gary Cohn, took part in an event hosted by the Wall Street Journal that featured an audience full of CEOs, and when a Journal editor asked for a show of hands by those leaders who would invest in new capacity if their taxes were cut, very few hands went up. Cohn seemed shocked.

Cohn really shouldn’t have been shocked. We’ve been here before, and there is no reason to believe that the fundamentals–or the economic incentives– have changed. As Brayton notes, corporate profits are already at record highs, and credit is very cheap and readily available.

If those businesses believed that investing in new factories or equipment that might create more jobs would result in higher profits for them, they would already be doing it. But they’re not. Indeed, while this poll was an informal one, formal surveys of CEOs find the same result.

This summer, Bank of America Merrill Lynch asked 300 companies what they would do if Congress passed a “tax holiday” that allowed them to bring back massive amounts of money being held overseas at a lower tax rate. 65% said they would pay down their debt. Second most popular option? Stock buyback. Neither of those things creates new jobs. Indeed, when George W. Bush did the same thing in 2004, about $300 billion in cash kept in overseas subsidiaries was brought back at a ridiculous 5.25% tax rate. 80% of it was used to buy back stock. Why? Because it makes the shares of CEOs, which are a huge part of their compensation package, much more valuable. So the rich people benefit but no one else does.

I don’t know whether the lawmakers who continue to push this theory have convinced themselves of its credibility through constant repetition, or whether they are knowingly putting the best possible spin on an economic policy that repeated experience tells us is bogus. It probably doesn’t matter whether they are venal or stupid (not that the two categories are mutually exclusive); the outcome is the same: the rich get richer, and their political donations reward the lawmakers who’ve carried their water. Economic inequality and popular resentments continue to grow, along with political cynicism and social distrust.

It’s a prescription for upheaval, for further splintering of our already strained social fabric–and plenty of wealthy people understand that social unrest shrinks, rather than grows, the economy. As the contours of the tax “reform” bill  have become known, more than 400 American millionaires and billionaires have signed a letter to Congress demanding that Republican lawmakers not cut their taxes.

These wealthy Americans argue that reducing taxes on the richest families at a time when the the nation’s debt is high and inequality is at the worst level since the 1920s would be a colossal mistake.

The letter calls on Congress to not to pass any tax bill that adds to the debt and that “further exacerbates inequality.” Instead of cutting taxes of the wealthy, the letter tells Congress to raises taxes on rich people like them.

If money talks, theirs is the money Congress should listen to.
Comments

While Our Neros Fiddle…

In his Phoenix rally, Donald Trump doubled down on his appeal to racism–both through a self-serving (and inaccurate) defense of his remarks after Charlottesville and in a coy reference to a potential pardon for notorious Arizona racist Joe Arpaio. It was red meat for his supporters.

The question is: who are those supporters?

I have previously expressed my belief that Trump’s election owed much more to racial resentment than to economic distress. But I do understand the connections between cultural and economic anxiety.

It is true that Trump voters on average were better-off financially than Clinton voters (and it is also true, and worth repeating, that there were three million more of the latter than the former), but as sociologists will confirm, economic anxiety is not the same thing as economic deprivation. And multiple studies confirm that anxiety and insecurity trigger bigotries and other behaviors that are suppressed in less tumultuous times.

A recent Economist article describes an academic inquiry that illustrates the connection:

LAST year over 102,000 people died in nearly 50 armed conflicts across the world, according to the Peace Research Institute Oslo, a think-tank. Much of this violence is caused by tensions between ethnic groups—two-thirds of civil wars have been fought along ethnic lines since 1946. Yet historians differ over whether cultural differences or economic pressures best explain how tensions explode into violence.

A new study by Robert Warren Anderson, Noel Johnson and Mark Koyama suggests that, historically, economic shocks were more strongly associated with outbreaks of violence directed against Jews than scholars had previously thought.

The research cited an intriguing example: some 57% of people living in medieval England relied on farming, and a decline in average temperatures of only a third of a degree increased the probability of a pogrom or expulsion by 50% over the next five years. In other words, incidence of violence against Jews weren’t caused by religiously-motivated anti-Semitism. That animus was undeniably– and constantly– present, but its eruptions were triggered by social and economic ills.

Echoes of these patterns are discernible today. Many economists have linked the weather—particularly droughts and heatwaves in agricultural economies—to outbreaks of intercommunal violence in developing countries. Another paper published last year, by Carl-Friedrich Schleussner and his colleagues, found that between 1980 and 2010 23% of civil wars coincided with climate-related disasters in countries with deep ethnic divides. Global warming may worsen this problem further. The lesson of history is that better political institutions can help soothe tensions.

If better political institutions can soothe tensions, it stands to reason that worse political environments can encourage them.

The emergence of the so-called “alt-right” (and no, Mr. Trump, there really isn’t such a thing as an “alt-left”) is widely attributed to Trump’s barely-veiled encouragement of racism and other forms of bigotry, the expression of which was preceded by the years of GOP “dog whistles” that have become one of the party’s routine political tools in the wake of Nixon’s Southern Strategy.

The success of that strategy required both pre-existing bigotry–mostly latent, but undeniably potent–and an increase in appeals to social and/or economic anxiety.

Social anxiety in an age of constant and accelerating change is a given. There isn’t much lawmakers can do about that. But they can ameliorate economic insecurity. Legislators can strengthen America’s porous and inadequate social safety net; they can expand access to healthcare; they can make the tax code simpler and fairer; they can raise the minimum wage; they can fashion rules to ensure that the water in our cities remains lead-free and drinkable and the air breathable (and they can require Scott Pruitt’s EPA to abide by those rules).

In short, lawmakers can remove a significant number of the uncertainties that feed economic anxiety. They can also act responsibly and constitutionally, sending a reassuring signal that America’s institutions are functioning properly. None of that, however, is happening.

Nero is said to have fiddled while Rome burned. Congress could give him lessons.

Comments