Robert Skidelsky: The Rise of the Robots

LONDON – What impact will automation – the so-called “rise of the robots” – have on wages and employment over the coming decades? Nowadays, this question crops up whenever unemployment rises.

In the early nineteenth century, David Ricardo considered the possibility that machines would replace labor; Karl Marx followed him. Around the same time, the Luddites smashed the textile machinery that they saw as taking their jobs.

Then the fear of machines died away. New jobs – at higher wages, in easier conditions, and for more people – were soon created and readily found. But that does not mean that the initial fear was wrong. On the contrary, it must be right in the very long run: sooner or later, we will run out of jobs.

For some countries, this long-run prospect might be uncomfortably close. So, what are people to do if machines can do all (or most of) their work?

Recently, automation in manufacturing has expanded even to areas where labor has been relatively cheap. In 2011, Chinese companies spent ¥8 billion ($1.3 billion) on industrial robots. Foxconn, which build iPads for Apple, hopes to have their first fully automated plant in operation sometime in the next 5-10 years.

Now the substitution of capital for labor is moving beyond manufacturing. The most mundane example is one you will see in every supermarket: checkout staff replaced by a single employee monitoring a bank of self-service machines. (Though perhaps this is not automation proper – the supermarket has just shifted some of the work of shopping onto the customer.)

For those who dread the threat that automation poses to low-skilled labor, a ready answer is to train people for better jobs. But technological progress is now eating up the better jobs, too. A wide range of jobs that we now think of as skilled, secure, and irreducibly human may be the next casualties of technological change.

As a recent article in the Financial Times points out, in two areas notoriously immune to productivity increases, education and health care, technology is already reducing the demand for skilled labor. Translation, data analysis, legal research – a whole range of high-skilled jobs may wither away. So, what will the new generation of workers be trained for?
Optimists airily assert that “many new types of job will be created.” They ask us to think of the lead drivers of multi-car road trains (once our electric cars join up “convoy-style”), big data analysts, or robot mechanics. That does not sound like too many new jobs to me.

Imagine a handful of technicians replacing a fleet of taxi drivers and truckers, a small cadre of human mechanics maintaining a full robot workforce, or a single data analyst and his software replacing a bank of quantitative researchers. What produces value in such an economy will no longer be wage labor.

We can see hints of that future now. Twitter, the social-media giant, is an employment minnow. It is valued at $9 billion, but employs just 400 people worldwide – about as many as a medium-size carpet factory in Kidderminster.

It is not true that automation has caused the rise of unemployment since 2008. What is noticeable, though, is that structural unemployment – the unemployment that remains even after economies have recovered – has been on an upward trend over the last 25 years. We are finding it increasingly difficult to keep unemployment down.

Indeed, the days when we in Britain thought it was normal to have an unemployment rate of 2% have long since passed. It was considered a great achievement of the last government that it brought unemployment down to 5% at the height of an unsustainable boom. And it only succeeded in doing so by subsidizing a lot of unnecessary jobs and useless training schemes.

No doubt some of the claims made for robots replacing human labor will prove as far-fetched now as they have in the past. But it is hard to resist the conclusion that “technological unemployment,” as John Maynard Keynes called it, will continue to rise, as more and more people become redundant.

The optimist may reply that the pessimist’s imagination is too weak to envisage the full range of wonderful new job possibilities that automation is opening up. But perhaps the optimist’s imagination is too weak to imagine a different trajectory – toward a world in which people enjoy the fruits of automation as leisure rather than as additional income.

During the Industrial Revolution, working hours increased by 20% as factories replaced feasting. With our post-machine standard of living, we can afford to shed some of the Puritan guilt that has, for centuries, kept our noses to the grindstone.

Today we find a great deal of work-sharing in poor countries. It is the accepted means of making a limited amount of available work go around. Economists call it “disguised unemployment.”

If escape from poverty is the goal, disguised unemployment is a bad thing. But if machines have already engineered the escape from poverty, then work-sharing is a sensible way of “spreading the work” that still has to be done by human labor.

If one machine can cut necessary human labor by half, why make half of the workforce redundant, rather than employing the same number for half the time? Why not take advantage of automation to reduce the average working week from 40 hours to 30, and then to 20, and then to ten, with each diminishing block of labor time counting as a full time job? This would be possible if the gains from automation were not mostly seized by the rich and powerful, but were distributed fairly instead.

Rather than try to repel the advance of the machine, which is all that the Luddites could imagine, we should prepare for a future of more leisure, which automation makes possible. But, to do that, we first need a revolution in social thinking.

Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

Robert Skidelsky: Happiness Is Equality

LONDON – The king of Bhutan wants to make us all happier. Governments, he says, should aim to maximize their people’s Gross National Happiness rather than their Gross National Product. Does this new emphasis on happiness represent a shift or just a passing fad?

It is easy to see why governments should de-emphasize economic growth when it is proving so elusive. The eurozone is not expected to grow at all this year. The British economy is contracting. Greece’s economy has been shrinking for years. Even China is expected to slow down. Why not give up growth and enjoy what we have?

No doubt this mood will pass when growth revives, as it is bound to. Nevertheless, a deeper shift in attitude toward growth has occurred, which is likely to make it a less important lodestar in the future – especially in rich countries.

The first factor to undermine the pursuit of growth was concern about its sustainability. Can we continue growing at the old rate without endangering our future?

When people started talking about the “natural” limits to growth in the 1970’s, they meant the impending exhaustion of food and non-renewable natural resources. Recently the debate has shifted to carbon emissions. As the Stern Review of 2006 emphasized, we must sacrifice some growth today to ensure that we do not all fry tomorrow.

Curiously, the one taboo area in this discussion is population. The fewer people there are, the less risk we face of heating up the planet. But, instead of accepting the natural decline in their populations, rich-country governments absorb more and more people to hold down wages and thereby grow faster.

A more recent concern focuses on the disappointing results of growth. It is increasingly understood that growth does not necessarily increase our sense of well-being. So why continue to grow?

The groundwork for this question was laid some time ago. In 1974, the economist Robert Easterlin published a famous paper, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence.” After correlating per capita income and self-reported happiness levels across a number of countries, he reached a startling conclusion: probably not.
Above a rather low level of income (enough to satisfy basic needs), Easterlin found no correlation between happiness and GNP per head. In other words, GNP is a poor measure of life satisfaction.

That finding reinforced efforts to devise alternative indexes. In 1972, two economists, William Nordhaus and James Tobin, introduced a measure that they called “Net Economic Welfare,” obtained by deducting from GNP “bad” outputs, like pollution, and adding non-market activities, like leisure. They showed that a society with more leisure and less work could have as much welfare as one with more work – and therefore more GNP – and less leisure.

More recent metrics have tried to incorporate a wider range of “quality of life” indicators. The trouble is that you can measure quantity of stuff, but not quality of life. How one combines quantity and quality in some index of “life satisfaction” is a matter of morals rather than economics, so it is not surprising that most economists stick to their quantitative measures of “welfare.”

But another finding has also started to influence the current debate on growth: poor people within a country are less happy than rich people. In other words, above a low level of sufficiency, peoples’ happiness levels are determined much less by their absolute income than by their income relative to some reference group. We constantly compare our lot with that of others, feeling either superior or inferior, whatever our income level; well-being depends more on how the fruits of growth are distributed than on their absolute amount.

Put another way, what matters for life satisfaction is the growth not of mean income but of median income – the income of the typical person. Consider a population of ten people (say, a factory) in which the managing director earns $150,000 a year and the other nine, all workers, earn $10,000 each. The mean average of their incomes is $25,000, but 90% earn $10,000. With this kind of income distribution, it would be surprising if growth increased the typical person’s sense of well-being.

That is not an idle example. In rich societies over the last three decades, mean incomes have been rising steadily, but typical incomes have been stagnating or even falling. In other words, a minority – a very small minority in countries like the United States and Britain – has captured most of the gains of growth. In such cases, it is not more growth that we want, but more equality.

More equality would not only produce the contentment that flows from more security and better health, but also the satisfaction that flows from having more leisure, more time with family and friends, more respect from one's fellows, and more lifestyle choices. Great inequality makes us hungrier for goods than we would otherwise be, by constantly reminding us that we have less than the next person. We live in a pushy society with turbo-charged fathers and “tiger” mothers, constantly goading themselves and their children to “get ahead.”
The nineteenth-century philosopher John Stuart Mill had a more civilized view:
 “I confess I am not charmed with the ideal of life held out by those who think…that the trampling, crushing, elbowing, and treading on each other's heels, which form the existing type of social life, are the most desirable lot of human kind….The best state for human nature is that in which, while no one is poor, no one desires to be richer, nor has any reason to fear being thrust back, by the efforts of others to push themselves forward.”

CommentsThat lesson has been lost on most economists today, but not on the king of Bhutan – or on the many people who have come to recognize the limits of quantifiable wealth.

Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

Robert Skidelsky: Does Debt Matter? / 歐洲債務會變成革命嗎？

LONDON – Europe is now haunted by the specter of debt. All European leaders quail before it. To exorcise the demon, they are putting their economies through the wringer.

It doesn’t seem to be helping. Their economies are still tumbling, and the debt continues to grow. The credit ratings agency Standard & Poor’s has just downgraded the sovereign-debt ratings of nine eurozone countries, including France. The United Kingdom is likely to follow.

To anyone not blinded by folly, the explanation for this mass downgrade is obvious. If you deliberately aim to shrink your GDP, your debt-to-GDP ratio is bound to grow. The only way to cut your debt (other than by default) is to get your economy to grow.

Fear of debt is rooted in human nature; so the extinction of it as a policy aim seems right to the average citizen. Everyone knows what financial debt means: money owed, often borrowed. To be in debt can produce anxiety if one is uncertain whether, when the time comes, one will be able to repay what one owes.

This anxiety is readily transferred to national debt – the debt owed by a government to its creditors. How, people ask, will governments repay all of the hundreds of billions of dollars that they owe? As British Prime Minister David Cameron put it: “Government debt is the same as credit-card debt; it’s got to be paid back.”

The next step readily follows: in order to repay, or at least reduce, the national debt, the government must eliminate its budget deficit, because the excess of spending over revenue continually adds to the national debt. Indeed, if the government fails to act, the national debt will become, in today’s jargon, “unsustainable.”

Again, an analogy with household debt readily suggests itself. My death does not extinguish my debt, reasons the sensible citizen. My creditors will have the first claim on my estate – everything that I wanted to leave to my children. Similarly, a debt left unpaid too long by a government is a burden on future generations: I may enjoy the benefits of government extravagance, but my children will have to foot the bill.

That is why deficit reduction is at the center of most governments’ fiscal policy today. A government with a “credible” plan for “fiscal consolidation” supposedly is less likely to default on its debt, or leave it for the future to pay. This will, it is thought, enable the government to borrow money more cheaply than it would otherwise be able to do, in turn lowering interest rates for private borrowers, which should boost economic activity. So fiscal consolidation is the royal road to economic recovery.

This, the official doctrine of most developed countries today, contains at least five major fallacies, which pass largely unnoticed, because the narrative is so plausible.

First, governments, unlike private individuals, do not have to “repay” their debts. A government of a country with its own central bank and its own currency can simply continue to borrow by printing the money which is lent to it. This is not true of countries in the eurozone. But their governments do not have to repay their debts, either. If their (foreign) creditors put too much pressure on them, they simply default. Default is bad. But life after default goes on much as before.

Second, deliberately cutting the deficit is not the best way for a government to balance its books. Deficit reduction in a depressed economy is the road not to recovery, but to contraction, because it means cutting the national income on which the government’s revenues depend. This will make it harder, not easier, for it to cut the deficit. The British government already must borrow £112 billion ($172 billion) more than it had planned when it announced its deficit-reduction plan in June 2010.

Third, the national debt is not a net burden on future generations. Even if it gives rise to future tax liabilities (and some of it will), these will be transfers from taxpayers to bond holders. This may have disagreeable distributional consequences. But trying to reduce it now will be a net burden on future generations: income will be lowered immediately, profits will fall, pension funds will be diminished, investment projects will be canceled or postponed, and houses, hospitals, and schools will not be built. Future generations will be worse off, having been deprived of assets that they might otherwise have had.

Fourth, there is no connection between the size of national debt and the price that a government must pay to finance it. The interest rates that Japan, the United States, the UK, and Germany pay on their national debt are equally low, despite vast differences in their debt levels and fiscal policies.

Finally, low borrowing costs for governments do not automatically reduce the cost of capital for the private sector. After all, corporate borrowers do not borrow at the “risk-free” yield of, say, US Treasury bonds, and evidence shows that monetary expansion can push down the interest rate on government debt, but have hardly any effect on new bank lending to firms or households. In fact, the causality is the reverse: the reason why government interest rates in the UK and elsewhere are so low is that interest rates for private-sector loans are so high.

As with “the specter of Communism” that haunted Europe in Karl Marx’s famous manifesto, so today “[a]ll the powers of old Europe have entered into a holy alliance to exorcise” the specter of national debt. But statesmen who aim to liquidate the debt should recall another famous specter – the specter of revolution.

Robert Skidelsky, a member of the British House of Lords, is Professor Emeritus of Political Economy at Warwick University.

Robert Skidelsky: 歐洲債務會變成革命嗎？

歐洲上空飄蕩著債務的幽靈。這個幽靈令所有歐洲領導人心驚膽寒。為了把它趕走，他們正在把各自的經濟推向磨難。

但這一招似乎並不顯靈。他們的經濟仍然蹣跚，而債務並沒有停止增長。評級機構標准普爾剛剛下調了歐元區九國主權債務評級，法國赫然在列。英國很可能將步其後塵。

如果你還沒有被愚昧蒙蔽了雙眼，那麼這次大面積降級的原因就很容易看清。如果你有意要讓GDP下降，那麼你的債務/GDP占比必定會隨之上升。削減債務，除了違約之外，唯一的辦法就是讓經濟增長起來。

擔心債務乃是人類本能；因此，消滅債務的政策目標在普通公民眼中斷然是不會錯的。眾所周知，財務債務的意思是欠錢，通常是借來的錢。如果你對到時候無法償還所欠的錢感到不確定，那麼你的債務就會讓你產生焦慮。

這種焦慮已經轉移到了國民債務層面，也就是政府欠其債權人的債務。人們會問，政府將如何償還它們所欠下的數千億美元債務？正如英國首相卡梅倫所言：“政府債務和信用卡債務是一樣，遲早要還的。”

接下來出現的是，為了償還（或至少減少）國民債務，政府必須消除其預算赤字，因為支出超過收入會繼續增加國民債務。事實上，如果政府行動不力，那麼國民債務將變得——用今天的行話講——“不可持續”。

在這裡，仍然可以用家庭債務來類比。我的逝世並不會讓我的債務消失，稍有頭腦的公民都知道這一點。我的債權人將擁有對我的財產——即我准備遺留給子孫後代的所有東西——的第一索償權。類似地，政府長期未能償還的債務也將成為子孫後代的負擔：我可以從政府的鋪張浪費中獲得好處，這得由我的子孫後代買單。

這就是為什麼削減債務成為大多數政府財政政策的核心。一個具有“可信”的“財政整合”計劃的政府想必不太會對其債務違約，或把它留給未來去償還。人們認為，這能讓政府以更低的成本借到錢，反過來拉低私人借款人的利率，從而能夠提振經濟活動。於是，財政整合就成了經濟復蘇的不二法門。

這便是如今大多數發達國家的指導方針，但其中至少有五大漏洞，而由於財政整合說聽起來無懈可擊，因此這五大漏洞很少有人注意到。

首先，政府不同於個人，其債務並不是必須“償還”的。擁有本國中央銀行的政府可以通過印刷本國貨幣借給自己。這一點對歐元區國家是不成立的。但這些國家的政府也不是必須“償還”其債務的。如果（外國）債權人給它們施加太多的壓力，它們可以選擇違約。違約絕不是好事。但違約之後的日子並不會比不違約差。

其次，刻意削減赤字並不是政府平衡預算的最佳方式。在經濟蕭條時削減赤字絕非復蘇之路，反之，恰恰是收縮之路，因為這意味著連同政府收入所依賴的國民收入一起削減了。

這會讓赤字削減變得更困難而不是更容易。英國政府於2010年6月宣布赤字削減計劃，但現在，它所必須借入的資金規模比計劃中多了1120億英鎊。

第三，國民債務並不是子孫後代的淨負擔。盡管這會提高未來稅收負擔，但這一負擔會從納稅人手中轉移到債權人那裡。這可能會造成令人不快的分配後果。現在試圖削減國民債務將給子孫後代造成淨負擔：收入會馬上出現下降，利潤會縮水，退休基金規模會不足，投資項目會被取消或中止，住房、醫院、學校也將無法建設。未來政府的境況會因此更加糟糕，因為它們失去了本可以留在手中的資產。

第四，國民債務規模和政府融資成本之間並沒有多少聯系。日本、美國、英國和德國的國民債務償還成本一樣低，盡管它們的債務水平和財政政策相差極大。

最後，政府借債的低成本並不會自動拉低私人部門的資本成本。畢竟，公司借款人不可能以像美國國債那樣的“無風險”收益率借錢，有證據表明，貨幣擴張可以拉低政府債務的利率，但很難影響銀行向公司和家庭發放的新貸款的利率。事實上，這裡的因果關系正好相反：英國和其他地區的政府利率之所以如此之低，是因為私人部門貸款利率太高了。

馬克思著名的《共產黨宣言中》中說道，“共產主義的幽靈”游蕩在歐洲上空，而如今，“就歐洲的所有勢力已經結成了一個神聖同盟，驅逐國民債務的幽靈”。但意在清除債務的政客們應該記住另一個著名的幽靈——革命的幽靈。

作者為英國上議院議員，華威大學政治經濟學榮休教授