PAUL KRUGMAN SAYS INEQUALITY IS CAUSED BY DECLINE OF WORKER POWER

Economist Ezra Klein interviewed fellow economist Paul Krugman for a podcast. It is a very interesting listen. Vox transcribed much of it.

The best part for me was the discussion on the robot apocalypse.  In Krugman's view, rising inequality is caused in large part by labor losing power rather than automation. Anybody who has worked in the schools in New York City in the last quarter century has witnessed that worker power deterioration personally.

From the Vox transcript:

Is the robot apocalypse coming for us all?
Ezra Klein
You’ve been criticizing Andrew Yang’s robot apocalypse theories recently. I think it’s intuitive to people that if we had more automation emerging that that would be bad for the economy and bad for jobs. But economists say the problem in the economy is that productivity growth has slowed down in recent decades, especially compared to what it was in the post-World War II era. And so if we were actually seeing what the dire robot people say we’re seeing, it would actually be good for the economy.

So is the problem that we have too many robots coming for our jobs or that we have too few?

Paul Krugman
We keep on hearing about how radical and impressive new technology is, but output per worker hour is growing very slowly. And automation is just a kind of mechanization that allows you to do more stuff with fewer workers. So I think what is actually happening is the kinds of technological change we’re seeing now are ones that are flashy and very visible to people like you and me, but the basic way we live our lives and do business haven’t changed all that much.

Now, there’s another question: Is [automation] good or bad for ordinary workers? And the answer is: it depends. Historically, there have been periods when, at least, significant groups of workers have definitely been hurt by automation. There have been other periods when the benefits of automation have been very broadly shared. But I think currently it’s a moot point because automation is not really happening at all. The idea that robots are taking away the jobs of lots of American workers just doesn’t seem to be true.

Ezra Klein
There’s a great piece in the book where you say the way you do your work is to “listen to the Gentiles” — listen to the experiences people are having, even outside of what the economics profession can see. So what do you take from the fact that it feels so true to people that technology is reshaping the economy and the technology is hurting them? Maybe there is something that the economic data is simply missing.

Paul Krugman
That could certainly be true. But I am not hearing a lot of workers talking about how robots are taking their jobs. That actually seems to be more of an elite thing.

Remember the skills gap about five years ago? Everybody important knew that American workers just didn’t have the skills to be employed in the modern economy. And then all of a sudden we have unemployment below 4 percent. But the skills gap stuff was not coming from workers saying they didn’t have the skills to operate this stuff. It was coming from Jamie Dimon and people like that. My sense is that the robot apocalypse is not actually a grassroots perception. It’s actually a particular part of elite perception.

Ezra Klein
That’s an interesting sociological point. You had a great piece on the skills gap argument and how it played a particular political sociological role at the time, which was to say that the problem is the workers themselves, and not rich people or bad policy just siphoning off money from the economy. Is that the argument here: Robots are in certain ways an out for elites who want to suggest that the pain in the economy isn’t their fault?

Paul Krugman
From where I sit, the problem of rising inequality in America is a problem of power. It’s because we crushed our labor movement and allowed firms to gain monopoly power. It’s because we set the rules of the game in a way that have really disempowered ordinary workers. That’s not an appealing vision for a lot of people who are themselves successful. They like the story that it’s about technology — that it’s all about these fancy new machines. It’s something less confrontational than saying this is all about power.