Technology, Jobs and Building a Brighter Future for all Americans

In a recent op-ed, Paul Krugman, the New York Times columnist, discussed disruptions in the labor markets the face of ever-advancing technology.

Here is the problem as Mr. Krugman sees it:

The American workforce is in trouble. Advanced technologies will soon do the jobs that are now done by both skilled and unskilled workers. Their skills no longer needed by the markets, these people will find themselves without a job.

As Mr. Krugman notes, advances in technology have caused disruptions in labor markets since, at least, the dawn of industrialization. As a society, we have developed a solution to this problem: Education. In the past, Technological advances caused a drop in demand for unskilled labor. But,  there would be an offsetting rise in the demand for skilled labor needed to operate the new technology. So we told people to get an education to acquire the skills needed for the new economy. With these new skills the labor force was in a position to get new and higher paying jobs. Problem solved.

But, Mr. Krugman argues, we can no longer rely on education to fix the disruptions in the labor market caused by today’s advancing post-industrial technology. This is because new technology will not only replace unskilled labor, but educated and highly skilled workers as well. If the educated and skilled workers are being replaced by machines and advanced software programs, more education and skill training will not solve the problem, according to Mr. Krugman.

So what are we to do? Since he reasons that more education won’t work this time, Mr. Krugman posits one solution: strengthen the safety social safety net.

“If the picture I’ve drawn is at all right, the only way we could have anything resembling a middle-class society — a society in which ordinary citizens have a reasonable assurance of maintaining a decent life as long as they work hard and play by the rules — would be by having a strong social safety net, one that guarantees not just health care but a minimum income, too. And with an ever-rising share of income going to capital rather than labor, that safety net would have to be paid for to an important extent via taxes on profits and/or investment income.”

At the end of his provocative piece, Mr. Krugman somewhat slyly asks conservatives what other options there are to solve this problem besides a strong safety net.

From this piece, one might argue that Mr. Krugman sees the world of the future as a dark, dystopian place where a tiny segment of the population will hold all of the jobs and all of the money. The rest of us, unable to find work because machines have made human labor a relic of the past, will live off of government handouts paid for by taxes on the super-wealthy.

Fortunately for everyone, there is another, brighter future that America can achieve.

Education is vital:

First I want to touch on the education piece of Mr. Krugman’s argument. While it is currently en-vogue to suggest that the pursuit of a higher education is a waste of time, more and more data is showing that this simply isn’t true. College graduates still make more over their lifetime than people with just a high-school education. (Read this great article by the Washington Post’s Dylan Mathews for some great insight into this debate.)

In a recent report, the McKinsey Global Institute, which Mr. Krugman cites in his piece, stated that education and skills training must be “priorities” for both business and government if the manufacturing sector of the economy is going to grow.

There is another way:

I generally agree with Paul Krugman’s conclusions. But I do not agree with the idea that the only way that we will maintain a middle class in this country is through a gargantuan social safety network paid for by taxes on a few elite. I think the right policies can lead the way to a better future than the one predicted by Mr. Krugman.

If we are going to have an effective government that can provide a strong safety net that Mr. Krugman wants, we will need a growing economy. And a growing economy requires broad prosperity and opportunity for all.

An effective government can set policies that will move us towards that goal; Policies that put us on a course of growth and innovation; Policies that encourage American companies to come up with the next great idea and prepare our workers for the jobs of the future; Policies that can spur private and public investment in the infrastructure we will need in the future. Investing in education, innovation, infrastructure and reform to move us to the “next” economy is the way to rebuild the middle class and create broad economic opportunity. While we can’t predict what new industries and jobs will result, we can predict that the right policies and the right investments will result in broad economic opportunity.

Maybe I am being overly optimistic, but I still believe that this country can provide a bright future for all of its citizens. All we need is a little cooperation between business and government, and the right group of people in Washington to set an effective course.






Economic Innovation Institute and Action Fund , 2012.
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