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Trump barking at the wrong tree: Automation revolution is taking the jobs, not evil foreigners

Tuesday, January 17th 2017 - 09:45 UTC
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Secretary of Labor Andrew Puzder is a fast food magnate who got rich by shrinking his costs, and he has never met a computer he didn't like. Secretary of Labor Andrew Puzder is a fast food magnate who got rich by shrinking his costs, and he has never met a computer he didn't like.
They never take lunch or toilet breaks, they'll work 24 hours a day, and they don't have to be paid. So out with the workers and in with the robots. They never take lunch or toilet breaks, they'll work 24 hours a day, and they don't have to be paid. So out with the workers and in with the robots.
It was not evil foreigners who “stole” most of those seven million American jobs, and will probably eliminate up to 50 million more in the next 20 years. It was not evil foreigners who “stole” most of those seven million American jobs, and will probably eliminate up to 50 million more in the next 20 years.

By Gwynne Dyer - The main message of 2016 was that we are entering a period of economic and political upheaval comparable to the Industrial Revolution of 1780-1850, and nothing expressed that message more clearly than Donald Trump's appointment of Andrew Puzder as Secretary of Labour. Even though it's clear that neither man understands the message.

 Puzder bears a large part of the responsibility for fulfilling Trump's election promise to “bring back” America's lost industrial jobs: seven million in the past 35 years. That's what created the Rust Belt and the popular anger that put Trump in power. But Puzder is a fast food magnate who got rich by shrinking his costs, and he has never met a computer he didn't like.

“They're always polite, they always upsell, they never take a vacation, they never show up late, there's never a slip-and-fall, or an age-, sex-, or race-discrimination case,” he rhapsodised.

They also never take lunch or toilet breaks, they'll work 24 hours a day, and they don't have to be paid. So out with the workers and in with the robots.

It was not evil foreigners who “stole” most of those seven million American jobs, and will probably eliminate up to 50 million more in the next 20 years. It's the “intelligent machines” that did most of the damage, starting with simple assembly-line robots and ATMs. (“Every Automated Teller Machine contains the ghosts of three bank tellers.”)

But the automation keeps moving up the skill sets. The first self-driving cars are now on the road in the United States. That's another four million jobs down the drain, starting with taxi drivers and long-distance truckers. In recent years eight American manufacturing jobs have been lost to automation for every one lost to “globalisation”, and it will only get worse.

A 2013 study concluded that 47 per cent of existing jobs in the United States are vulnerable to automation in the next 20 years, and the numbers are as bad or worse for the other developed countries.

This is what is really driving the “populist revolution” that caused two of the world's oldest democracies to make bizarre, self-harming political choices in the past year. First Brexit, then Trump.

Leaving the European Union will hurt Britain's economy badly, and putting a man like Donald Trump in the US presidency is a serious mistake. Yet half the voters in each country were so angry that they didn't care about the likely negative consequences of their vote.

There is more to come. Beppe Grillo's populist Five-Star Movement may win the next election in Italy. Marine Le Pen's National Front (no longer openly anti-Semitic, but still basically neo-fascist) could win the French presidential election next spring. The Netherlands and Germany may see hard-right, anti-immigrant parties in governing coalitions after their forthcoming elections.

Some people fear that we are seeing a rerun of the 1930s. Economic growth has slowed since the crash of 2008, and unemployment is much higher than it looks. The official US unemployment figure is only 5 per cent, but almost one-third of American men between the ages of 25 and 54 are “economically inactive”. So angry populist leaders are popping up again all across the developed world.

The Dirty 30s ended in World War II, and there are obvious parallels today. The European Union is fraying at the edges, and Donald Trump has talked about curtailing US support for Nato. He has also threatened to slap huge tariffs on Chinese exports to the US, and it's probably a bad idea to push China too hard when it is already in grave economic trouble.

But this is not the 1930s. There are no ranting dictators promising revenge for lost wars, and government benefits mean that unemployment is no longer a catastrophe for most people in Western countries.

The old white working class (and some of the middle class) are angry because jobs are disappearing and because immigration is changing the ethnic balance in their countries, but they are not angry enough to want a war.

Trump's election means that we are in for a wild ride in the next four years, but he will ultimately disappoint his supporters because he is barking up the wrong tree.

He cannot bring back the jobs that were lost, because most of them were not lost to his favourite culprits: free trade and uncontrolled immigration.

Even if Trump understood this, he could not admit it in public, because there is nothing he can do about it. He might ban immigrants coming in to “steal American jobs”, and he can tear up free-trade deals to his heart's content, but his own cabinet contains people who have built their careers on eliminating jobs through automation.

This is change on the scale of the (first) Industrial Revolution, and you can't fight it. But then, you really don't need to. American industry has shed seven million jobs since 1979, but the value of US factory production has more than doubled (in constant dollars).

It is only jobs that are being destroyed, not wealth.

It is not a disaster for a rich society to reach a point where the same goods are being produced and the same services are being provided, but most people no longer have to work 40 or 50 hours a week (in jobs that most of them hate). Or rather, it's not a disaster unless having no work means having no money or self-respect.

The main political task for the next generation (post-Trump) in the developed countries will be to ensure that those without work have an income they can live on, and don't lose their self-respect.

Other ways will doubtless be suggested, but one way of achieving this that is already getting attention is a Universal Basic Income (UBI).

The UBI would provide everybody with enough to live on. Since everybody gets it, there would be no stigma involved in living on it. And 53 per cent of today's jobs will still be there in 2033, so those who really wanted to work could top up their UBI with earned income. There would still be millionaires.

The first national referendum on UBI was held in Switzerland last June. It was a radical new idea, so of course it was overwhelmingly rejected. But this idea will not go away, and there will be more like it. The rich countries can stay rich and stable if they understand the nature of the task -- but the developing countries may face a grim future.

No UBI for them -- they are not rich enough, not even China. But automation is eating into their newly-gained industrial jobs too. A recent Citibank report estimated that 77 per cent of Chinese jobs are at risk from automation, and in India there is talk of “premature deindustrialization” (ie. industrial jobs in India may be peaking right now, and will then go into decline).

That would not just mean continuing poverty for many, but huge political turmoil -- populist revolutions and super-Trumps. The future will be quite interesting.

Categories: Politics, United States.

Top Comments

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  • ElaineB

    I think this article is right in essence. Add to that the U.S. consumers driving force of ever cheaper prices and that has driven a lot of production abroad. I have heard the complaints about foreign goods but once they have to pay the price of U.S. made electrical goods and cars they will be not be at all happy. The U.S. consumer has driven down prices in many areas. It is why their airlines are so blooming awful and hotels (apart from the luxury level) are so stripped bare of any comfort.

    The rust belt has been particularly hit hard and I sympathise with the people there feeling left behind but it is not the 'evil foreigners' fault. The problem is that it is much easier to blame some foreigners rather than their own push for ever cheaper goods.

    Jan 17th, 2017 - 04:57 pm +1
  • Paragon

    Well ummm,

    This guy is also barking up the wrong tree He mentions ATM's as an example of Automation taking jobs

    According to an article in the Economist,
    The automated teller machines (ATMs) might have been expected to spell doom for bank tellers by taking over some of their routine tasks, and indeed in America their average number fell from 20 per branch in 1988 to 13 in 2004, But that reduced the cost of running a bank branch, allowing banks to open more branches in response to customer demand. The number of urban bank branches rose by 43% over the same period, so the total number of employees increased. Rather than destroying jobs, ATMs changed bank employees’ work mix, away from routine tasks and towards things like sales and customer service that machines could not do.

    There are numerous more examples in Industry, Computers and Automation thus reallocate rather than displace jobs, requiring workers to learn new skills.
    Only manufacturing jobs expanded more slowly than the workforce did over the period of study, but that had more to do with business cycles and offshoring to China than with technology,

    Jan 17th, 2017 - 08:38 pm 0
  • DemonTree

    @ElaineB
    I guess this idea is finally coming into the mainstream. There is a lot of potential in the future to automate increasingly higher skilled jobs, and this will just add to the pressure from globalisation.

    But it's a special problem for America and other developed countries. Supposing Trump succeeds in forcing companies to bring back production to the US, then we can expect to see a lot more automation than we do now. It may well be cheaper to pay a worker in China than to automate some part of production, but this is not true in America; the higher wages will be a huge incentive to automate as much as possible.

    @Paragon
    That may be true in the US, but in the UK the number of branches fell from 20,583 in 1988 to 8,837 in 2012. How much job growth do you think there has been here?

    It's perfectly true that changes in technology in the past often reallocated rather than eliminated jobs. But this may not continue. Even if it does, that doesn't mean the new jobs are at an equivalent skill level, that they are in the same location, or that they pay as well as the old ones.

    As we have seen, people in rural America are not at all willing, and may not be able, to move to a city and learn a completely new skill set, starting at the bottom in a new profession. Nor can they be expected to be happy that reliable, well paid manufacturing jobs have been replaced by low paid, casual customer service roles.

    Jan 17th, 2017 - 09:29 pm 0
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