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White House: Robots will kill jobs and make inequality worse

Ethan Wolff-Mann
Senior Writer

Every American president comes into office with a mandate to create jobs. It’s so often the biggest part of an election that James Carville’s “The economy, stupid” quote has now been utterly lost to pundit cliche.

In the 2016 election, the four-year refrain was back again, but with the international narrative: Mexico and China are stealing jobs. While there’s no doubt that inexpensive labor abroad exports American jobs, a fundamental issue received next to no discussion. Automation and the robots.

As Yahoo Finance chart of the year showed, the amount the US manufactures domestically has risen to record levels. Meanwhile, the number of people that industry employs has fallen dramatically—it’s not in anybody’s imagination. Automation is a challenge far bigger than China, and according to a new report from the Executive Office of the President, artificial intelligence and automation have the potential to spur inequality and hurt the livelihoods of millions.

Increased efficiency due to technology may not be anything new, and in the past the economic changes have been positive. As the White House notes in the report, titled “Artificial Intelligence, Automation, and the Economy,” the 19th century saw changes in tech that made lower-skilled workers more productive and began to build a middle class, reducing inequality. The late 20th century, in contrast, has taken a different path, with higher-skilled workers using computers to boost productivity—at the same time dispatching countless routine-intensive jobs. And as current automation technology advances, with the help of AI, a reckoning is coming.

In the near term, 9% to 47% of jobs may be threatened over the next decade. According to the White House, “research consistently finds that the jobs that are threatened by automation are highly concentrated among lower-paid, lower-skilled, and less-educated workers.”

In the past, optimistic economists have pointed to the economy’s ability to adapt to new opportunities and constraints—pivoting to new jobs and even inventing entirely new types of work in response to macro-scale changes. But cyclical as the economy may often seem to be, past results are no guarantee of future performance, as any fine print disclaimer will tell you.

Much of the White House’s report echoes the findings of economists like Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, who have showed that the trajectory of the economy has been great for high earners, but horrible for the bottom half, which “has been completely shut off economic growth since the 1970s.”

The findings of these three economists are similar to those of the White House report, but are far darker, showing that current social safety nets funded by taxes do not compensate for the economic stagnation. With that in mind, glimpsing the future through the White House’s perspective looks grim.

“If labor productivity increases do not translate into wage increases, then the large economic gains brought by AI could accrue to a select few,” the report reads. “Instead of broadly shared prosperity for workers and consumers, this might push towards reduced competition and increased wealth inequality.”

Nothing says technology has to do these things. Robots could take all the jobs no one wants to do, leaving more time for leisure and the fulfilment of John Maynard Keynes’ 15-hour work week. But left to its own devices, the economy obviously does not work this way without policy changes.

Doing nothing could lead to chaos. Piketty, for his part, posits that inequality is especially destabilizing, a view shared by experts as diverse as Lloyd Blankfein, CEO of Goldman Sachs (GS) the go-to bank for evil capitalist caricatures, and Karl Marx, who once said capitalism sows the seeds of its own destruction.

So what is to be done about all this? The policy responses outlined by the White House include government investment in Artificial Intelligence and training for related jobs, and making sure people in the education system graduate “career-ready” and have access to training that’s relevant to the modern economy. Additionally, the report suggests that an important policy response is simply aiding workers in transition to “ensure broadly shared growth,” by keeping social safety nets—like unemployment insurance, Social Security, Obamacare, and Medicaid—strong as workers figure out how they fit into a changing economy.

It seems unlikely the incoming administration will heed the report written by the outgoing one. Thus far, President-elect Donald Trump has not outlined solutions for dealing with these emerging economic realities, instead preferring to focus on the parallel issue of jobs being lost overseas, which has a villain other than technological progress. In fact, Trump has been silent on issues of technological unemployment and the inequality it breeds. Instead, he has indicated willingness to cut spending on social safety net programs like Obamacare and Medicaid, and some in the Republican Congress aim to slash Social Security benefits. Unfortunately, this may be a very expensive mistake for millions of Americans.

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, tech, and personal finance. Follow him on Twitter @ewolffmann.

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