Trump's team must face the reality of technology and jobs in America
© Getty Images

Many blunders and misstatements have come out of the Trump administration during the last few months. But few were as telling of the administration’s misunderstanding of the startling change that technology has brought to the American economy than when Treasury Secretary Steve Mnuchin last month said, “In terms of artificial intelligence taking over the jobs, I think we’re so far away from that that it’s not even on my radar screen, think it’s 50 or 100 more years.”

One has to ask when was the last time Secretary Mnuchin participated in one of the most basic everyday American experiences of going to a supermarket or a large chain drug store. For if he had, he would have noticed that there are few checkout clerks any more, as scanners have come to replace them.

ADVERTISEMENT

Artificial intelligence and its traveling partner, technology, are changing and unsettling the American economy at a pace not seen since the industrial revolution. Just look at the automobile industry. In 2016, the United States manufactured more than 12 million vehicles, double the quantity of the early 1950s, when there were no imports.

 

Yet those 2016 production numbers were achieved with the same number of workers as in 1953, approximately 934,000. A key difference is artificial intelligence (AI) and robots. The International Federation of Robotics says the auto industry is “the most important customer,” buying almost 40 percent of total global output of robots. In the first half of our current decade sales of robots to the auto industry have increased 20 per cent per year.

The devastating implications of this massive technological change for the American blue collar worker for this is now, not in the next 50 or 100 years. According to a 2015 Boston Consulting Group study, a human welder in a factory in the U.S. costs earns about $25 per hour including benefits, while the equivalent operating cost for a robot is just $8 per hour, including installation and maintenance. By 2030, “the operating cost per hour for a robot doing similar welding tasks could plunge to as little as $2 when improvements in performance are factored in.”

It is obvious for political reasons that Secretary Mnuchin and the administration do not want to recognize that they must face this problem is now. It would directly contradict with their wall building, America first, anti-free trade, bring jobs back election rhetoric.

But the issue is much deeper, it brings to the forefront what is the role of government and what is the role of private enterprise in the American system. Private enterprise’s clear responsibility is to produce and develop the most advanced products in the most efficient way.

Putting modern morals aside, their responsibility to workers is strictly to view workers as capital to be employed if and when necessary to provide the best return. So for instance there is no legitimate economic reason why a firm should invest in retraining the workers it is laying off on account of automation for any other jobs outside of that particular corporation. That should be the government’s job.

America’s government’s role here however has been ambiguous at best with the argument going between Rooseveltian activism and Reagan’s, the government that governs less is the government that governs best. The Reagan concept of limited government derived from America’s enlightenment movement founding, which in principle gave power to the individual and not the government.

Ironically, a concept that could be interpreted by an entrepreneur such as our president that one’s rights for a return on capital are more important than societal rights. But the world has partly outgrown the enlightenment concept and it is obvious that the balance in American government needs to change.

We are now living in a period where collective worldwide forces such as globalization and technology are more powerful than most individuals’ abilities to respond. And if left unchecked, these forces can damage the very balance that makes up our democracy.

The need for a massive, immediate government program both in education and job training is obvious. The economist John Maynard Keynes originated the idea that the government should prime the pump and create demand during difficult economic times when collective action is necessary.

Today’s spiraling industrial and economic changes have created a similar situation, but substitute the words “retraining” and “education” for “demand.” Of course, politically it is easier to blame the Chinese and NAFTA for the problem than fighting the philosophical and budgetary battles that retraining would cost, but blaming the other is mostly delusional and definitely lying to the citizenry.

All the walls and higher tariffs in the world will not stop the technological revolution and globalization. All they will do is isolate America and make the country politically and economically weaker. The preamble of the U.S. Constitution uses the phrase, “insure domestic tranquility and provide for the common defense.” What is needed is to bring this terminology into the 21st century recognizing that common defense now also should mean defending America’s citizens from economic forces that are beyond the power of most individuals to adapt to.

The historian Yuval Noah Harari recently wrote in the Financial Times, “In the past, human tribes coalesced to form nations because no tribe could deal effectively with vast trade networks and administrative structures. Take, for example, the ancient tribes that lived along the Yellow River. The river was their lifeblood, but every few years it brought disastrous floods and droughts. No tribe could solve this problem by itself. Only a common effort to build huge dams and dig hundreds of kilometres of canals could do so. Consequently the tribes gradually coalesced into a single Chinese nation that had the power to regulate the distribution of water and produce unprecedented prosperity.”

In a situation similar to the China 4,000 years ago, our society is now imperiled by economic floods and droughts caused by the new industrial revolution. Like the ancient Chinese culture, America’s leadership must first honestly recognize that there is a problem, and then use the power of the government to channel the technological sea of change to produce unprecedented prosperity.

Edward Goldberg teaches international political economy at New York University’s Center for Global Affairs. He is also a scholarly practitioner at Baruch College’s Zicklin School of Business, where he specializes in globalization. He is the author of The Joint Ventured Nation: Why America Needs A New Foreign Policy.


The views expressed by contributors are their own and are not the views of The Hill.