Ignoring Automation is Just Sticking Your Head in the Sand

On 10/17/2019 the New York Times published an opinion piece Paul Krugman with the title “Democrats, Avoid the Robot Rabbit Hole” (https://www.nytimes.com/2019/10/17/opinion/democrats-automation.html). Unfortunately, in this piece, Krugman ignores something that almost everyone who makes similar arguments also ignores, education. I’m going to focus specifically on the following quote:

But if you think even that sounds bad, ask yourself the following question: When, in modern history, has something like that statement not been true?

After all, in the late 1940s America had about seven million farmers and around 12 million production workers in manufacturing. Machinery could and did take over much of the work those Americans were doing — and people at the time wondered where the new jobs would come from.

What he says here is completely true. It is a simple fact that is easy to verify. However, he ignores the other major change that has happened since 1940, the average level of educational attainment in the US grew dramatically. Consider Figures 3 and 4 in “120 Years of American Education: A Statistical Portrait”. This data cuts off at 1991, but the first figure on the Wikipedia entry for Educational Attainment in the US has a similar plot that goes through 2015 and one can see that the lines have continued to rise.

In order to keep ahead of automation and remain relevant in the workforce, people have had to become more educated. To participate in a more automated workforce, you need more skills. Krugman and so many others ignore this.

Even with a High School completion rate of ~90% and a college completion rate of ~30%, a large number of Americans are finding it hard to find work that pays a living wage. The Brookings Institute did a study of low-wage work in the US. They find that “More than 53 million people, or 44% of all workers ages 18 to 64 in the United States, earn low hourly wages.” Krugman specifically mentions 1940, the beginning of the plots I mentioned above, when the High School graduation rate was under 40% and the college graduation rate was ~5%. To enable the growth in automation, the High School completion rate had to more than double and the college graduation rate had to grow by 5–6x, yet 44% of workers in the US are still low income.

We are already pretty much capped out on people completing the free schooling that is provided in the US. College completion rates could theoretically grow another factor of three, but definitely not with the current costs. Even without the costs, it isn’t clear to me that we could get 90% of the population to a college degree without significantly reducing the rigor of college. Reducing the rigor would be counter-productive because it is the skills and knowledge that come from the rigor that people really need, not the piece of paper at the end.

The average length of time Americans spend in school doubled during the 20th century (figure 1). Would another doubling really be sustainable? How long can we expect people to stay in school before they can productively contribute to society? I don’t think anyone thinks it would make sense to have people living with their parents until they are 30 going through school so they can learn enough to compete with automation in the workforce.

Note that the way to deal with this is not to fight against automation. Automation needs to be embraced. We just have to realize that not everyone is going to be able to participate in the workforce in a meaningful way as automation grows. We also need to make it feasible for people to continue learning in mid-life. You often hear the term “life-long learning”, but it’s not an easy thing to do. Going back to the Brookings report, they say that for the low-wage workers “Their median hourly wages are $10.22, and median annual earnings are about $18,000.” People working for those wages can’t take off a year or two and complete some degree or certification. I doubt that most of them could even take the time in the evenings to do online courses given the pressures of trying to make ends meet on those wages.

This is why something like a Basic Income is so essential going forward. We need a way for people to live with dignity when they lose the race against automation. We also need a way for people to take a pause from work and focus on learning new skills so that they can go for a few more laps in that race. To really understand why this is needed, consider the last two plots from the Wikipedia article that show wealth and income broken out by educational attainment. Automation has made it so that the level of skill needed to succeed in the modern economy is basically the level of skill one has at the end of college. The required level of skill is only going to grow.

This is why I think it is great that Yang is bringing the concept of a Basic Income into the light of the central stage so that Americans can start really thinking about this. Krugman refers to this line of thinking as the “Robot Rabbit Hole”, but it seems to me that ignoring it the way Krugman suggests is really just sticking your head in a hole so you can’t see what is happening.