The Brookings Institution has published several brief and highly accessible essays on issues that we follow here. Ordinarily, we might hold them for our Friday Roundup, but given that Friday is part of the holiday weekend, we thought we’d post them here.
As usual with the Roundup, we’ll post a paragraph or two from the report and encourage you to read the whole item if the snippet interests you. And, as with the Roundup, these posts are intended to stimulate discussion, not endorsements of policy recommendations. Enjoy.
Boston Consulting Group reports that it costs barely $8 an hour to use a robot for spot welding in the auto industry, compared to $25 for a worker—and the gap is only going to widen. More generally, the “job intensity” of America’s manufacturing industries—and especially its best-paying advanced ones—is only going to decline. In 1980 it took 25 jobs to generate $1 million in manufacturing output in the U.S. Today it takes five jobs…
So what would be a more viable response to the plight of displaced manufacturing workers—and the needs of U.S. manufacturing? One response must be a realistic, forward-looking vision of what manufacturing is becoming (high-tech, automated, super-innovative) so as to enhance American competitiveness and allow for some additional jobs. Above all, this means investing in manufacturing innovation to keep U.S. factories in the lead; ensuring that workers get industry-relevant training that equips them for today’s digital factories; and supporting the nation’s regional advanced industries clusters, whether in Grand Rapids or Pittsburgh.
International trade has become a proxy for a broader set of economic challenges, in particular growing income inequality, wage stagnation, and reduced economic mobility. Following through on campaign threats to restrict international trade would shrink the economic pie, making these underlying challenges more difficult to solve. For instance, failure to pass the TPP will mean the U.S. will miss out on annual gains between $57 billion and $131 billion a year (U.S. International Trade Commission, 2016; Petri and Plummer, 2016). Put another way, a $131 billion annual return is equivalent to making a $2.6
2 trillion investment in the U.S. (according to Harvard’s Robert Lawrence, who uses a rate of return of 5 percent over 15 years). This is not something the U.S. should be rejecting.
To foster domestic support for international trade, businesses need to explain to their workers when and how their jobs depend on international trade. Congress must take concerted action to support those negatively affected by trade, but also support people hurt by economic dislocation more generally.
Classes and course materials once accessible only to the rich or well-connected are now within reach via a smartphone. Yet in schools, technology has largely failed to systematically transform the teaching and learning environment.
A recent study in U.S. schools shows that this is largely because technology still functions more or less like an expensive substitute for textbooks and chalkboards. New advances in technology and artificial intelligence hold potential to provide mass personalization and foster engaging learning environments, but this will require reorganizing classrooms and capitalizing on the time young people spend outside school.
Arguably the most prominent effect of technology on inequality is through the increased premium it places on skills. Modern technology substitutes for many of the jobs and tasks traditionally performed by unskilled workers, while acting as a complement to skilled workers. In advanced countries, trade reinforces this effect by encouraging specialization in high-skill sectors in which those economies have a comparative advantage…
By substituting for unskilled workers, technology has not only increased the premium on skills, but increased the role of capital in production. Historically the share of income that accrues to workers relative to capital owners was stable, but since the 1980s, it has declined across most countries and industries as technology has made capital goods ever cheaper…