Useful resources for poverty

Martin Ravallion’s new book, ‘Economics of Poverty’ released last year seems to have a website linked to it. I have not checked it out. But, sounds useful.

Related to the theme of poverty is the book on poverty in South Asia by Ejaz Ghani (ed.) titled, ‘The poor half billion in South Asia: what is holding back lagging regions’ published in 2010.

Separately, VoxEU had three volumes on the Long Economic and Political shadow of history. I have not read them yet. But, thought I should record their availability here. I might have recorded them already here. Does not matter.

On a related note, would strongly recommend, ‘Power and Plenty’ by Kevin O’ Rourke and Ronald Findlay. I have read parts of it. Delightfully written. It is a wonderful compendium of international economic history seen through international trade and the military conflicts that either accompanied them or preceded them. You can download the preface and chapter 1 here. Worth it.

In the preface, they write that most books are written for the authors and that there is much learning for authors during the writing of the book than there is transfer of knowledge from them to readers. Both are very true. I can vouch for both!

There is a website called ‘Booksforunderstanding.org’. Well, some of you might know it already. I did not know it until yesterday. The list of books under Financial Markets/Financial Panics/Market Regulation, etc., is quite long and leave one with a daunting feeling. Most titles sound interesting.

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Confronted with confounding complexity

Ever since I read Martin Ford’ ‘The rise of the robots’, I have been following his Twitter handle, from time to time. I am not on Twitter. Over the last two days, I had a rich harvest of articles to read. Just finished reading them. I am yet to comprehend the full import of all that I had read. Perhaps, it is not just possible.

The article about driverless trucks and the consequences of automation on the rise of extreme sentiments is of a garden-variety nature compared to the other articles that I read.

Prof. Tyler Cowen has a piece in which he expresses considerable disquiet about what the robotics/AI revolution holds. He presents evidence on what the Industrial Revolution wrought in terms of real wages. He is right that it has caused real pain to many, many people. Time has airbrushed them out of our collective conscience. More importantly, some of us never really experienced the fallout. So, it is easy to sound academically rational about it or as a techno-optimist.

Yet, he contrives to conclude on a note of ‘full steam ahead’. I am not able to understand that one. His choice. Useful to know the name of an economic historian, Gregory Clark, at UC Davis.

Then came the MIT Technology Review article. That too invoked an economic historian: Joel Mokyr at Northwestern University. His understanding of the problem seems very reasonable:

has spent his career studying how people and societies have experienced the radical transitions spurred by advances in technology, such as the Industrial Revolution that began in the late 18th century. The current disruptions are faster and “more intensive,” Mokyr says. “It is nothing like what we have seen in the past, and the issue is whether the system can adapt as it did in the past.”

But, his answer?

Mokyr describes himself as “less pessimistic” than others about whether AI will create plenty of jobs and opportunities to make up for the ones that are lost. And even if it does not, the alternative—technological stagnation—is far worse.

But, again, a good description of what a loss of a job means in the modern society:

There is no question that in the modern capitalist system your occupation is your identity,” he says. And the pain and humiliation felt by those whose jobs have been replaced by automation is “clearly a major issue,” he adds. “I don’t see an easy way of solving it. It’s an inevitable consequence of technological progress.”

Past is no guide to the future but is our recollection of even the past accurate?

Sample this:

Personal computers, the Internet, and other technologies of the last several decades did replace some bank tellers, cashiers, and others whose jobs involved routine tasks.

The full impact of the computing and internet revolution is being felt now. They enabled outsourcing and offshoring. Those who lost their jobs or income or both now want to shrink the world back to the familiarity of the past, in their own ways. Can we say that thse technologies simply replaced routine jobs and did nothing more in terms of damages?

Again, the same facile conclusion:

if we fail to use the technology in a way that benefits as many people as possible (see “Who Will Own the Robots?”), we risk fueling public resentment of automation and its creators. The danger is not so much a direct political backlash—though the history of the Luddites suggests it could happen—but, rather, a failure to embrace and invest in the technology’s abundant possibilities.

This is a short one but more of an introduction/summary of the BankUnderground blog post. BankUnderground is maintained by the Bank of England staffers. The header makes sense. To me, that is.

The Bank Underground article is a very important read because it shows – a bit like Tyler Cowen’s article above – how ‘this time it might be different’ – in terms of the time the latest wave of technology affords humans and societies to adapt – it could be far less. Telescoping of the pace of change – ask Alvin Toffler. Well, we cannot. He died last year but, who knows, technology might enable us to do so sometime in the future.

This is a series of articles in ‘Scientific American’. The lead article is a MUST READ. It touches upon all aspects such as personal liberty, our abilities to think, our freedom to make choices, etc., all those that will become playthings of technology. The page is not well formatted because headers of the subsequent sections merge into previous paragraphs.

Interestingly, the word, ‘complexity’ occurs eight times in these articles. Some of the sentences that bear them are interesting.

  1. But one look at the relevant scientific literature shows that attempts to control opinions, in the sense of their “optimization”, are doomed to fail because of the complexity of the problem. The dynamics of the formation of opinions are full of surprises.
  2. In a rapidly changing world a super-intelligence can never make perfect decisions (see Fig. 1): systemic complexity is increasing faster than data volumes, which are growing faster than the ability to process them, and data transfer rates are limited.
  3. Centralized, top-down control is a solution of the past, which is only suitable for systems of low complexity. Therefore, federal systems and majority decisions are the solutions of the present. With economic and cultural evolution, social complexity will continue to rise. Therefore, the solution for the future is collective intelligence.

This is an important point:

Collective intelligence requires a high degree of diversity. This is, however, being reduced by today’s personalized information systems, which reinforce trends…. Reducing sociodiversity often also reduces the functionality and performance of an economy and society. This is the reason why totalitarian regimes often end up in conflict with their neighbors. Typical long-term consequences are political instability and war, as have occurred time and again throughout history. Pluralism and participation are therefore not to be seen primarily as concessions to citizens, but as functional prerequisites for thriving, complex, modern societies.

If technology is tailored to reinforce and exploit what we like, then…. we lose the ability even to tolerat the ‘other’, let alone have an understanding of and accept them.

Thanks to Big Data, we can now take better, evidence-based decisions. However, the principle of top-down control increasingly fails, since the complexity of society grows in an explosive way as we go on networking our world. Distributed control approaches will become ever more important. Only by means of collective intelligence will it be possible to find appropriate solutions to the complexity challenges of our world.

There is a long NYT article on how Universal Basic Income is being experimented with, in a  village in Kenya. The idea of cash transfers is very appealing in such situations. But, it might prove to be wholly inadequate to the problems that AI/Robotics would be throwing up. For now, it is gaining traction because of the conscience salve that it is, for the technology industry. When Bill Gates said that one should tax robots, clearly, the technology companies that are unleashing them should pay for the externalities they are going to create. Taxation is the best instrument for it.

Just as banks have to create living wills and take up insurance to guard against economic consequences of their failures lest taxpayers are on the hook for collectivisation of losses while gains were kept private, technology companies have to do the same.

However, one good thing with UBI or Cash transfer is that the aid industry, as we know it, would be dead and that is a good thing.

Another NYT article says that with the recovery in oil prices, oil production is back on track in the United States but not the jobs. Nearly one third to one half of the jobs lost won’t come back. Why? Automation.

This may sound like a somewhat relatively lighter article about robots delivering sharing space with pedestrians but it would put delivery workers, drivers out of their jobs.

So, in the end, are we wiser? Yes. Are we confused? Yes. Are we worried? Yes. Do we have answers? No, except ‘tax the hell out of the companies that develop these’. For now, that is my only answser. One blogger is not going to stop the relentless march of humans to extinction in whichever manner it is achieved – hand to hand combat, animals, spears, arrows, swords, guns, bullets, missiles, bombs and technology.

It is time to remind the readers of the man who tried to redeem the world with logic. That is what these companies are trying to do with their technology. If you had not read that article, you should. If nothing else, it should make us humble, at least for a while.

Good weekend reads

Sri Lanka Port Loans contributed to the debt trap. But, why did India deny the offer of Trinconmalee port?

Chinese students threaten free speech abroad – Defenders of the global order that Trump is seeking to ‘destroy’?!

The town of Vijayawada immortalises its civil servants and one of them is my co-author and good friend Gulzar Natarajan. Good practice.

Bombay Jayashri makes her debut as a columnist. She might have written one-off articles before, I guess. A very good and nice start.

A lovely article and a very good reminder – on Leo Tolstoy’s ‘The death of Ivan Ilyich’.

If all theories that do not explain reality are thrown out of economics, what would be left?

Neel Kashkari makes the case for deregulation and higher capital requirements on big banks. Good stuff.

A great article on the exploitation in American Universities. Hypocrisy is one successful and enduring example of globalisation. May be, behind a firewall.

Economists would do well to put this up on their walls. A good exercise in spiritual evolution.

Paul Collier’s essay in the ‘Times Literary Supplement’ on saving capitalism may not have a original title but has many quotable and thoughtful lines. Made me buy three of the books reviewed or discussed. Was directed by Emanuel Derman’s quote from one of the paragraphs in the essay in a tweet.

The THIRD guy – Part 2

Now we are in November 2016. The question is where and what does this all lead to? That is the difficult part. Is Donald Trump truly an outsider who defied all the elites as described above and somehow sneaked through? Possible but is that plausible? I have no idea.

Or, is that the elites – as Brandon Smith claims – ‘allowed’ him to be elected such that a meltdown that they would engineer could be pinned on him? The premise is that post-meltdown, a new world order could be constructed or fashioned. One of the paragraphs from Part 1 is reproduced:

Giant multinational corporations, and their economic satellites, in alliance with governments and the big banks, are in the process of extending their influence on a global scale: they dream of a world central bank, global planning, and an international welfare state, with American troops policing the world to guarantee their profit margins.

I have a few problems with all of these, even with the analysis of Murray Rothbard:

(1) His point is that as long there is a State, it would remain forever captive to the interests of the powerful and the rich. The ‘Left’, ‘Right’ divides are artificial and for amusement value. Even engineered and allowed to rotate to keep up the pretense of alternative discourses such that no radically different discourse or personality comes in (imagine Trump). Fair enough. I can accept that. But, is there a feasible alternative? Can we go back to some idyllic world? Who will lead the world into an ‘idyllic’ alternative?  The moment someone is chosen to ‘lead’ the movement to the idyllic world, the seeds of an organised State are sowed. So, if there is no leader, how would the movement evolve organically? It does not seem possible to me.

In other words, I feel we are ‘doomed’to accept the ‘progress’ we have made – from self-organised communities to organised nation-States with all the benefits and consequences that flow from that.

On balance, it does not appear to have been such a bad thing, after all, for a vast majority of the global population. Of course, I do not know about the future. But, on the basis of the record so far, with all the wars and warts, millions have prospered and have seen their conditions get better. But, of course, we may be on the cusp of seeing all of that being undone. But, we do not know if that is a certainty. We can never know.

(2) If it is true that an outside organism (Donald Trump) had managed to sneak in by piercing the well-orchestrated charade of the Left-Right divide and therefore, if the so-called ‘globalists’ would want to destroy the world and pin it on him, then couple of questions arise:

(a) Won’t the elites be affected by it themselves? So many interconnected webs and networks have been formed that none can claim to know fully which string pulls what and brings down which edifice. May be, the elites know.

(b) Won’t they be better off trying to co-opt him, given (a) above?

(3) There is the final nagging question: These narratives (e.g., by Brandon Smith of Alt-Market) assumes that humans are in control always and that they move the coins on the board expertly, flawlessly, anticipating many and almost all the moves that will be made by others, etc. I am very sceptical of that.

By now, so many behavioural science experts have convincingly demonstrated that human brains are not equipped to handle complexity, to reason out and to arrive at logical conclusions. We simply do not have the capability. I sense that we might have unwittingly and inadvertently created far too much complexity than we can ever handle or even learn to handle. Take Brzezinski for example.

In the introduction to Murray Rothbard’s book, the following is mentioned and I have heard it from others too:

More than a decade after Rothbard wrote this book, identifying Brzezinski as a Trilateral executive director and “recently selected director of the CFR,” this establishment poster boy claimed credit for intentionally baiting the Soviets into invading Afghanistan—a fateful intervention that has changed U.S. policy in the Muslim world irreversibly.

So, how has it played out for America? Are the Americans feeling better off? Is the world better off? Are the Soviets/Russians worse off? We cannot even begin to answer these questions although Brzezinski might claim success for what he (supposedly) designed and achieved.

Things will take their own course and some will claim credit or deny culpability, post-facto. We will never know if they are being honest or not.

Sometimes, we assign too much credit to fellow human beings and to ourselves for having seen them through.

One thing can be accepted, however, from the works of Murray Rothbard, Carroll Quigley and Brandon Smith. Elites try to influence policies on either side of the aisle. They have no qualms about it. They have infiltrated both sides. Second, they may not always succeed but they do try to engineer outcomes regardless of larger consequence. Third, outsiders/underdogs have very little chance of breaking through with very few lucky exceptions. It is a lopsided world. 

Anyway, for the moment, we have to wait for the Trump Presidency to commence actually and see how it would play out, if it does. What would be the consequences in financial markets, in world economics and politics? I have no idea. Especially, if he turns out to be really the THIRD guy and not part of ONE that pretends to be TWO.

The THIRD guy – Part 1

When I read this paragraph attributed (to Carroll Quigley) who apparently was Bill Clinton’s mentor in the Q&A exchange with commentators by one Brandon Smith of the Alt-Market.com or website (Link), I was reminded to look for Murray Rothbard’s wonderful little pamphlet, ‘Wall Street, Banks and American Foreign Policy’ first published in 1984 and republished by the Ludwig von Mises Institute in 2011.

Before we get there, here is the passage from Carroll Quigley:

The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can ‘throw the rascals out’ at any election without leading to any profound or extensive shifts in policy.

The introduction by Anthony Gregory is interesting in itself:

The idea that corporate interests, banking elites and politicians conspire to set U.S. policy is at once obvious and beyond the pale. … But to make too fine a point of this is
typically dismissed as unserious conspiracy theorizing, unworthy of mainstream consideration.

In the left’s unflinching loyalty to social democracy and economic intervention and the right’s invincible love for the military and support for corporate America we see why we are allowed to decry corruption and special interests, but not dig too much deeper than that, lest we be relegated to the periphery of respectable discussion.

It should be clear that the name of the political party in power is far less important than the particular regime’s financial and banking connections.

The economic and imperial interests behind America’s response to 9/11 go far beyond the neocons and their diversion in Iraq.

(A) Now, specific illustrations of names and their connections from the introduction by Anthony Gregory:

The revered Teddy Roosevelt “had been a Morgan man from the beginning,” with family, business and political ties to the banking giant. Roosevelt’s “first act after the election of 1900 was to throw a lavish dinner in honor of J.P. Morgan,” and many of his policies, from the 1903 Panama coup to the trust busting of Standard Oil, were huge blessings for Morgan interests.

Cheney, it might be noted, was also a member of the Trilateral Commission—that elite club founded by David Rockefeller that came to dominate the halls of power beginning in the Carter administration. … In addition to Cheney, Trilateral members who have risen or remained high in American government since 1984 include Fed Chairman Alan Greenspan, George H. W. Bush, his national security adviser Brent Scowcroft, Bill and Hillary Clinton, and Clinton cabinet members Lloyd Bentsen (Treasury), Warren Christopher (State Department) and William Cohen (Defense).

Goldman Sachs accounted for over $994,000 of Obama’s war chest. Lehman Brothers was the origin of $395,600, a record amount for the company second only to what Hillary Clinton received. Out of 20 of his biggest sources of campaign money, eleven were investment banks or closely associated law firms. Justin Raimondo noted in 2008 that Obama’s fat cat donors included top executives from Wachovia, Washington Mutual, Citigroup, Deutsche Bank, Merrill Lynch, Bank of America, J. P. Morgan, Chase, Morgan Stanley and Countrywide.

(B) This is from the ‘Introduction to the 1995 Edition’ written by Justin Raimondo:

The inflationary trends resulting from the creation of assets tend to increase the ratio
of external financing to internal financing in large corporations and, as a consequence, the ultimate decision-making power of banking institutions increases over the activities of industrial corporations.

In my view, the above point is an extremely powerful and insightful one, if one cared to spend time reflecting on it.

It was Mises who pointed out that government intervention in the economy invariably leads to yet more intervention in order to “fix” the havoc wreaked—and there is a certain logic in the fact that it was the original culprits who decided to “fix” the distortions and disruptions caused by their policies with further assaults on the market mechanism.

The thought expressed by Raghuram Rajan in his book, ‘How to save capitalism from capitalists?’, it appears, had been expressed by Murray Rothbard before, says Justin Raimondo:

This explains the strange historical fact, recounted at length and in detail by Rothbard, that the biggest capitalists have been the deadliest enemies of true capitalism.

The theme below appears to have been picked up by Brandon Smith of Alt-Markets.com:

Giant multinational corporations, and their economic satellites, in alliance with governments and the big banks, are in the process of extending their influence on a global scale: they dream of a world central bank, global planning, and an international welfare state, with American troops policing the world to guarantee their profit margins.

Is this where the Universal Basic Income fits in?

After the long battle to create a central bank in the U.S., the high priests of high finance finally seized and consolidated control of domestic economic policy. It only remained for them to extend their  dominance internationally, and for this purpose they created the Council on Foreign Relations, and, later, the Trilateral Commission.

Justin Raimondo is careful to delineate his analysis from the standard ‘conspiracy theory’ framework:

To say that the House of Morgan was engaged in a “conspiracy” to drag the U.S. into World War I, when indeed it openly used every stratagem, every lever both economic and political, to push us into “the war to end all wars,” seems woefully inadequate. This was not some secret cabal meeting in a soundproof corporate boardroom, but a  “conspiracy” of ideas openly and vociferously expressed.

(C) Now, in the main body of the report by Murray Rothbard, he goes through several proofs of appointment that would defy the neat ‘Right’ and ‘Left’ cleavage. Indeed, many grassroot workers would appear foolish. Sample what Rothbard writes about John F. Kennedy:

When John F. Kennedy assumed the office of President, the first person he turned to for foreign policy advice was Robert A. Lovett, partner of Brown Brothers, Harriman, even though Lovett had backed Richard Nixon.

Secretary of the Treasury in the Kennedy Cabinet was C. Douglas Dillon, of Dillon, Read and the Rockefeller Foundation. Dillon saw no problem in serving for eight years as Ambassador to France and as a State Department official during the Eisenhower
Era, and then segueing to the Democratic Kennedy Cabinet. Like Lovett, he too was chosen even though he had been a big contributor to the Nixon effort of 1960.

Two important foreign policy actions of the Kennedy administration were the Cuban Missile Crisis and the escalation of the war in Vietnam. Kennedy was advised during the Cuban missile crisis by an ad hoc group called the Ex Comm, which included, along with his official major foreign policy advisers, Robert A. Lovett and John J. McCloy. In the Vietnam War, Kennedy brought in as Ambassador to South Vietnam the Boston Brahmin and Morgan oriented Henry Cabot Lodge, who had been Eisenhower’s Ambassador to the United Nations and who had run for Vice-President on the Nixon ticket in 1960.

Murray Rothbard documents the role and influence of the Trilateral Commission under Jimmy Carter quite thoroughly. Just a sample:

Jimmy Carter was invited to become a member of the Trilateral Commission shortly after it was formed, and he agreed enthusiastically. Why did the Trilaterals appoint an obscure Georgia governor with admittedly no knowledge of foreign affairs? Ostensibly because they wanted to hear the views of a Southern governor. Far more likely, they were grooming him for the Presidency and wanted to instruct him in trilateralism. Carter took instruction well, and he wrote later of the many happy hours he spent sitting at the feet of Trilateral executive director and international relations expert Zbigniew Brzezinski.

What these facts remind us is that many members of the Public who are railing (big time) against Donald Trump are missing the point that he might be representing a genuine discontinuity from this ‘Two is one’ arrangement that has survived and flourished for a long time. What does it mean for the world? I attempt some answers (or confess to inability) in part 2.

Misunderstanding the verdict

This is not an independent piece but a response to a piece that Martin Sandbu has written after the U.S. election results have been announced. His ‘free lunch’ piece (‘Silver linings for friends of liberal society’) may be behind a subscription firewall.

These are his two concluding paragraphs:

The populist wave of 2016 is not, therefore, the rise of a new, reactionary class, more the last gasp of a vanishing one. Few expected its death throes to be so violent, but that is still what they are. Attitudes among the young mean that time is on the side of liberal, open societies.

If those attitudes stay firm enough, this week may be remembered not as the when the floodgates opened to an ever-growing tsunami of illiberal populism, but rather as when its high water mark was passed. That, however, depends on the defenders of open society standing firm, to ensure its values are not washed away before the populist tide recedes.

This is a thorough mis-reading of the vote – from Brexit to Trump’s candidacy to Trump’s victory. First, one has to acknowledge the fact that Trump has won votes among the city-bred, educated, non-white, black and Latino voters. Similarly, Ms. Clinton had won votes among rural white men and women without a college degree. So, the voting fault lines are more blurred than what Mr. Martin Sandbu would like to have us believe. Of course, in few of these categories the vote share has been overwhelming in favour of one candidate. But, those are the exceptions.

There are many ways to interpret the voting pattern. One is Mr. Sandbu’s way. However, there are other interpretations too. One, it could be said that the young are relatively inexperienced and that, in the fullness of the time, they may come to appreciate the chasm between the discourse and delivery on globalisation and free movement of factors of production (both labour and capital). Two, populations are aging. So, more people will join the ranks of the old – the world over – and not the other way around. Our preferences and attitudes towards risk and cultural assimilations shift as we age. Third, with technology – robotics and artificial intelligence – many so-called educated young people will eventually feel the way that white under-educated men and women might be feeling today. It is not the ‘last gasp of the vanishing one’. It may be the beginning in which these distinctions between race, nationality and age profiles might be blurred. He may have to thank robots and their (Silicon valley?) creators in a future piece for uniting us all in our disaffection and frustration!

In any case, it is a betrayal of elitist thinking that those who have not spent time with formal schooling are not educated. They may be less complicated in their thinking.

It is good thinking on his part to spread the cheer among his colleagues who might be drained and exhausted. But, if he really wishes to see this as the ‘last gasp of a vanishing one’, many things need to change. Tax rates on top incomes (corporate and individual) might have to go up in some countries. Tax compliance has to be improved. Tax arbitrage has to be eliminated. Financialisation of advanced economies has to be rolled back. Executive compensation must be delinked from short-term stock price movements.  Monetary policy in many parts of the advanced world must be exorcised of the spell that asset prices have cast over it, for decades.

If Mr. Sandbu is yet to read  the paper ‘Stock returns over the FOMC cycle’, he might wish to do so to begin to understand the election verdict. Creative destruction of capitalism must be allowed to play its role instead of monetary policy propping up asset prices in the guise of delivering on output and employment growth. Recessions and slowdowns are necessary ingredients of a healthy economy. Once he has finished that paper, he can read the speech delivered by William White while accepting the Adam Smith prize from the National Association of Business and Economics.

Instead of the above, if defiance is his only response, then he should not be surprised if he and his fellow travellers continue to add to their exemplary record of failures in understanding and anticipating Brexit, American elections, etc.

Well, reading Gideon Rachman and Ed Luce in FT analysing the verdict, it is clear that the elites are far too steeply trapped in their own morass to smell anything other than the stink that their morass generates. This comment under Luce’ article sums it up well:

Edward Luce, Gideon Rachman and Martin Wolf will not reconsider their firm belief that they know better. Intellectual arrogance is an addiction that does not allow those with it to admit they have it. It leads to less relevance among serious thinkers which, of course these three are also incapable of admitting. As with the NYT, the FT has lost clout. Telling the world it is dumb, even stupid, if it does not agree with you has become tiresome. One wonders what Nikkei thinks of its recent purchase.

In contrast, this blog post by a Clinton supporter is far more mature and reasonable. It is a tragedy for FT that its senior journalists cannot write something like this.

p.s.: (1) Just a month ago, I wrote the piece, ‘The beginning of history’ in MINT. In my view, it explains the election result rather well.

(2) The Republican Party kept its control of both the chambers of the Congress only because of Mr. Trump:

After months of fretting that Mr. Trump would weigh down incumbent Senate Republicans, his strength instead buoyed GOP lawmakers in battleground states. With no wave of support materializing for Democratic nominee Hillary Clinton to bolster down-ballot candidates, Republicans swept through swing states, including many that President Barack Obama had won four years earlier. [Link]

(3) This WSJ video is quite useful in understanding who voted for whom

On Milanovic on robotics

Branko Milanovic has a blog post on robotics. He calls these three fallacies:
  • Labour displacement by robots – more short-term
  • Ability to predict our needs – they may expand making labour and robots co-exist
  • Limits to raw materials.
But, are they unreasonable, based on the trends in the last three decades?:
(1) Jobs may not be lost; what about jobs creation foregone? Wage growth? Is the trend of last thirty years not a warning of the consequences of capital displacing labour. If there is more of it, then is it wrong to fear consequences of robots on employment and/or wages?
Don’t these have social consequences as well?
(2) Is he confusing between needs and wants? Have our needs changed much? May be, our wants have? May be, marketing has created many wants which did not exist before and made us believe that they are needs. Has Milanovic read the ‘Joyless society’? The boredom of prosperity and affluence could become even more oppressive.
(3) Limits to raw materials – if we expand raw materials to include clean air, water, lakes and rivers, flora and fauna – our growth model has shown that it pushes against these limits sooner than we expect or reckon with. We are already feeling the impact. What if robotics pushes growth limits even further? What kind of growth would it create? Will we allow creative destruction to play a role? Or, will there be a greater demand for protecting those businesses displaced and threatened by the arrival of robotics? Then, what happens to productivity, economic growth and innovation in the overall economy?
(4) Lastly, will robotics help alleviate or complicate human psychological and behavioural limitations? Groupthink, herd mentality, elitism, cognitive dissonance have been amply on display in the response to the crisis of 2008 and in the US Presidential elections. Robotics or any technology can do nothing to help these. If anything, they can complicate them further.
(5) Humans do not understand risks that well. We neither anticipate them nor are we capable of assessing their magnitude and impact where we correctly anticipate them. Faced with unknowns, it is good to be on guard rather than be complacent. If the fears turn out to be misplaced, then adjusting to a positive surprise is a lot easier than the other way around.