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Paul Krugman on tech's great divergence

Economist and New York Times columnist Paul Krugman.

We were intrigued by a recent piece by New York Times columnist and Nobel Prize-winning economist Paul Krugman called "Robots and Robber Barons." The column, along with some other posts Krugman put up on his blog, took a look at a question we're familiar with: Are robots eating our jobs? I went on a cross-country journey in the last year looking at technology and what it's doing to the American workforce. With people like Krugman now looking at this controversial issue more seriously as well, we wanted to get his take. 

"Up until about ten years ago," says Krugman, "you could look at what was happening in the United States and say look, all those fears about automation, all those fears that the jobs would go away haven't come true. But if you look at the last ten years there is a pretty dramatic dropoff. Of the total income being generated in this country, a substantially smaller fraction is now going to workers of any kind -- including highly skilled workers -- and more is going to whoever it is that owns the capital. Which is the kind of thing you would expect to happen if you would have a certain kind of technological change where robots are taking away people's jobs and forcing people to accept lower wages to stay employed." 

Is all of this because of a quickening pace of technological change? Krugman says no. 

"We've had pretty rapid technological change for a long time," he says. "It's not so much that it's faster, it's that it has gone off in a different direction. And it's no longer saying 'I, the technological universe, need people with college degrees.' It's now saying 'I, the technological universe, don't want people. I want machines.' And so people end up being somewhat devalued."

Krugman points to things like legal research, which in some instances can already be replaced by certain forms of software. But what about globalization? Couldn't we attribute some of this divergence of tech and worker wages to jobs just going elsewhere? 

"Think back almost 200 years, to the industrial revolution," says Krugman. "Who were the luddites? Who were the people who were really upset about technology back then? They were actually the weavers who were finding that their skill was suddenly no longer valuable because of the power loom. And to some extent, we may be seeing something of that happening again, where technology is devaluing what were previously well-rewarded skill classes." 

How does Krugman think we can deal with this challenge? Better social safety nets, which he says help to soften the blow when the winds of technology change drastically enough to leave workers with certain high skill sets in trouble. Of course Krugman doesn't think we're doing very well at building those social safety nets here in the United States. Krugman's latest book, "End This Depression Now," comes out in paperback this month. 

About the author

David Brancaccio is the host of Marketplace Morning Report. Follow David on Twitter @DavidBrancaccio
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Dr. Krugman, When you say that income is dropping off for workers and funneling towards whoever owns the capital, aren't you assuming that automation and robotics destroy more jobs than they create? On the contrary, although technology may act as a job killer in some respects, shouldn't they also act as engines of substantial economic growth? After all, robots don't build themselves, nor do they design, program, or troubleshoot themselves either.

For instance, although commercial drones may someday replace the job of pilots, imagine all the economic activity that can now happen as a direct result of flight automation. One can imagine an entire industry cluster of drone manufacturers, drone supply and parts manufacturers, and the teams of engineers, machinists, lawyers, and financial professionals that can be hired to support the industry. An entire city's economy can be built on the foundation of just one dramatic innovation, supporting millions of potential new jobs.

Furthermore, if a significant innovation takes place, and if it fails to create at least as many jobs as they destroy, then wouldn't the real culprit of job losses due to automation and robotics be the outsourcing of the economies of production elsewhere? One might even blame higher retirement ages, where money and training is wasted on workers who lack the capacity to learn new skills for a the new economy.

In my mind, to assume that technology is a job killer--particularly with regard to robotics and automation--is to fall prey to a false paradigm, where innovation must always displace workers. In reality, new technology should be viewed as a liberating force of good for the worlds workers, empowering us to create new avenues of economic growth in areas we would have never imagined could have supported an economy. (See Deep Space Industries)

I think the Vangobot deserves a mention here. This robot, which renders photographs in paint, using paint brushes--that is, it creates paintings!--is sending a shiver through the artistic community. Economic and artistic concerns aside, it's just plain spooky to see a robot do something that I spent years learning to do.

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