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While I am highly skeptical of the standard story that the rich have captured all the gains from economic growth (medium.com/@russroberts/d…), I do think it's true that there are significant parts of American society who struggle to successfully enter the labor market and be...
productive. Many people blame this on how trade and technology have transformed manufacturing. The story goes like this: it used to be that if you "played by the rules" and finished high school, you had a good middle-class life awaiting you through a factory job, but now...
between jobs moving to China and the robots, that person no longer can find a good job. So trade (and technology, although this often gets ignored) has benefited the educated class leading to cheaper goods but has hurt Americans with less education and so on. This...
story is what @TuckerCarlson is selling and @Chris_arnade in his new provocative book, Dignity (coming soon to EconTalk.) I am very sympathetic to this analysis, particularly because zoning and other regs have made relocation to cities (where jobs might be better) more...
expensive than it otherwise would be. This analysis also leads to a call for a more muscular industrial policy that would do more than just fight for cheaper goods for consumers (which is what trade and tech lead to) but also fight for jobs staying in America. This is part...
of the appeal of @ewarren's policy proposals as well. In my view, there is a massive disconnect between the problem (which I am sympathetic to) and the solution (which I am not.) The advocates for a bigger role for government intervention in markets are basically saying, look...
would it really be so bad to have slower growth or a slightly diminished standard of living and in return, we'd get a society with more dignity for its members, a society where people don't feel disrespected and so on. So let's slow the move to autonomous vehicles, for example...
They will put millions of cab drivers and uber drivers and truck drivers out of work. Maybe that's a bad outcome, a bad tradeoff. We make tradeoffs like this all the time with our children. We encourage them go into a field or to take a job that pays less money because of the...
non-monetary consequences--lifestyle effects, a sense of meaning, better colleagues to be around, and so on. But government doesn't act like a parent. So while it might be OK to take a 2.5% growth rate instead of 3% in return for slowing job loss, I wouldn't be so sure that's...
how it will actually turn out. Once government has the power and the support from the public to intervene in economic outcomes, it will not limit itself to loving interventions that wisely assess tradeoffs. We may end up more like Argentina than say France, and I am not...
sure that France isn't headed toward Argentina. My point is that once politicians are liberated to advocate for outcomes rather than a decentralized process, they will help the powerful and the connected. The result may not just be a lower standard of living but all of the...
worst aspects of a zero-sum game competition. Lots of unintended consequences. So rather than slow down the dynamism of the economy through tariffs or subsidies to favored industries or brakes on technological innovation as ways to maintain the dignity...
of workers struggling to find work that pays well or pays at all, I would much rather see us experimenting radically and creatively with the education system that fails to prepare people in certain parts of the economy for life in the modern economy. I would much rather see a...
change in zoning and land regulations that make it hard for workers to relocate to where the jobs are. I would much rather see us encouraging people to take responsibility for their own lives while understanding that that is not always successful and working on ways to help...
workers get a second chance or subsidizing a new set of skills. In short, the unease people have about undirected economic outcomes deludes them into thinking they can steer the economy in a better way. That is the road to cronyism at best and tyranny at worst. People who...
compassionately advocate for less economic freedom should be careful what they wish for. They don't know where that road ultimately leads and there's reason to think that road ends up badly. One last point--some of these problems are cultural. To pretend that they can all be...
fixed by some economics policy is another dangerous delusion. Whether on the left or the right, not all problems are driven by observable prices. There are some deeper malaises going on in America that are not easily fixed in any way by either a higher or lower minimum wage or...
by tariffs or by restrictions on the adoption of technology. The opioid crisis, the suicide crisis, the rise of gun violence against strangers. Some economics of course lies behind all of these problems. But I would close by suggesting that our focus on what we can measure...
such as wages, or jobs, might not always be where the problem lies.
I want to thank @Reinsch84 for a conversation that inspired these thoughts.
