Much as I like Ash Sarker, I’m not happy with this recent thread of hers:
Lots of people have asked what I mean when I say I’m a communist. What I mean is that in the next 15 years, 1 in 5 jobs in the UK will be automated (1 in 3 in the North, and 40% in Hayes & Harlington). What does that mean for workers? it means that *either* 1 in 5 people are excluded from the means of survival, are consigned to the scrapheap and increasingly authoritarian and violent means are employed by the state to manage surplus populations. Or... we find a means to distribute the abundance generated by fixed capital for the good of all. We say that it’s bollocks that something as arbitrary as ownership can dictate whether homes, land, technology are for people, or for profit. in the past, we called that communism.
I’ll leave quibbles about her definition of communism to boring pedants. Instead, I have another problem: we should not – as far as possible – base our policy ideas upon economic forecasts. This is because forecasts, especially about the pace and direction of technical change, can be wildly wrong. To take just examples from Nobel laureates:
“The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive” – Paul Samuelson, 1989.
“Macroeconomics… has succeeded: its central problem of depression prevention has been solved, for all practical purposes” – Robert Lucas (pdf), 2003.
“The growth of the Internet will slow drastically…By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's” – Paul Krugman, 1998.
The notion that robots will take our jobs might fall into this category. Certainly, there’s little sign of it happening now; business investment has flatlined in recent years whilst employment has grown and the OECD says (pdf) the UK has fewer robots than most developed countries. And it might not happen at all. As Acemoglu and Restrepo point out, any incipient tendency for employment to fall would tend to reduce wages and so incentivize employers to create jobs.
I don’t say this to dismiss Ms Sarker’s point. She’s bang right to highlight a risk. This matters because good policy-making (older readers might recall such a thing) requires policy-makers to heed the distribution of risks, not just central scenarios.
Let’s take a brief detour to another example. The OBR warned this week that “the public finances are likely to come under significant pressure over the longer term, due to an ageing population and further upward pressure on health spending.” As a central forecast this is questionable. But it’s surely a risk. So what to do about it?
The answer isn’t to jack up taxes immediately: we shouldn’t trash the economy on the basis of a dubious long-term forecast. Instead, one way to address the risk is to adopt policies to raise productivity: the more productive we are, the more we can afford of everything, including healthcare. Here there are countless possibilities even ignoring the obvious (ditch Brexit): better education and training; more infrastructure investment; better planning policy; stronger competition policy; better financing for entrepreneurs. And so on.
And here’s the thing. Most policies such as these can be justified on different bases: they are good things in themselves (education); they create jobs; they give customers a better deal. And so on. You can kick away fiscal forecasts and still justify them.
Which brings me back to Ash. “Communist” policies should be defensible on bases other than a forecast. Take for example a citizens income. Ash might support this as a way of “distributing the abundance generated by robots”. But we could also justify it as: a way of supporting part-time workers or those in training; as a way of sustaining aggregate demand; or of empowering women and workers to walk away from exploitation; as a way of removing the stigma of being a “benefit claimant”; or as a way of cutting the administrative cost of the welfare state. And so on. This does not mean the scheme is a magic bullet. It's not. It’s just that it can be defended from many perspectives: left, right, feminist and so on. Sure, it might also be a solution to the job losses and inequality caused by robotization. But to argue on those grounds alone is to horribly under-sell it.
I’d argue that workers’ democracy also fits this bill: it’s not just egalitarian in itself, but a way of improving well-being and productivity.
Of course, in saying this I’m not attacking Ash at all. I’m making a general point about policy-making. Good policies should be defensible on many grounds, simply because any single ground might give way (especially if it’s a forecast). To argue for a policy therefore requires you to adopt more than just one perspective.
The Lucas quotation is correct, but probably not for his reasons. We know how to prevent a depression by printing unlimited money to bail out big financial firms. 2008 was the Great Recession, not a depression, because the Fed learned to print liberally. If there was another crash and ATMs were in danger of not working, why wouldn't we use the (digital) printing press again?
Posted by: Robert Mitchell | July 20, 2018 at 06:53 AM