People, Place, and Automation

February 7, 2019

Automation has become a source of anxiety for many Americans. Breakthroughs in artificial intelligence and advanced robotics over the last decade have captured the public imagination, with predictions ranging from optimistic visions of an abundant future without work, to dystopian alternatives of staggering inequality and an unemployable underclass. Reality, however, reflects neither naive optimism nor despairing pessimism. Automation has been a core component of human progress and development since the invention of the earliest tools, which reduced the number of tasks humans needed to do on a hunt. The perennial nature of automation does not mean it does not present challenges, but it suggests that solutions are possible. At present, policymakers and researchers have sadly overlooked core components of managing the economic transition brought about by the Fourth Industrial Revolution, and as a result, increasingly face populist backlash.

When it comes to automation, two aspects of an economy that are often neglected are geography and demographics. Too much of the focus in the academic literature has been on what machines can or cannot do, and what kinds of skills are necessary to increase productivity, rather than who this affects and where.

In a lecture entitled “Bots and Tots“, Chief Economist at Google Hal Varian discussed the neglect of demographics in economic predictions. America currently faces a growing labor shortage as birth rates decline and baby boomers begin to retire. Additionally, there is a large discrepancy between what Americans are being educated for and what the market demands. In this analysis, automation is essential to maintain the standard of living people have come to expect as the costs of health care and pensions rise.The geographic effects of automation have closely paralleled the rising political divide between rural regions and cities, what has been termed “somewheres vs. anywheres“. Post-industrial places, such as in America’s heartland, who were hit hardest by the Information Technology (IT) boom in the 70s and 80s, and offshoring since, are the most likely to be affected by newer waves of automation. These areas are also those that have turned to Right-Populists like Trump.

These factors add a complexity to analyses of automation. New technologies are needed to ensure economic growth, but the people benefitting from this growth, such as urbanites and the elderly, are not the same as those being negatively affected by it, such as rural residents and the young. Policies crafted based on macro-level data too often take a one-size-fits-all approach that fails to understand the nuance of different local issues and these demographic-based difficulties, which can be seen by the degree to which Rust-Belt voters and young voters are fed up with the status quo.

recent study by the Brookings Institution thankfully addresses these issues, building upon existing literature by delving into geographic and demographic data. Paradoxically, they suggest the best way to manage growth is by embracing new technologies wholesale. By creating an environment in which new technologies proliferate wider and faster, their productivity effects will provide the necessary growth to develop an economy that benefits all.

While the Brookings study goes through a comprehensive set of fine-tuned suggestions, they neglect certain experimental policy designs that agree with their core aims. The authors support a move to a full employment economy with each person working less hours, but neglect to mention the barriers that occupational licensing places on worker mobility and career transition. Removing these barriers to employment would accelerate the development of new careers for those in rural regions desiring service based work.

Furthermore, they champion all sorts of incentives to revitalize rural regions and support innovation, but they neglect the role that Federal and State regulations play in limiting their innovation potential. Allowing local governments to experiment with regulations to enable the creation of technology hubs, such as Silicon Valley venture capitalist Marc Andreessen’s suggestion of turning Detroit into Drone Valley, would go a long way to improving the conditions of those areas which are left behind.

There are countless ways to improve the conditions for Americans who feel anxious about automation, but they need to allow for local initiatives that vary by place, rather than grand one-size-fits-all schemes by far away decision-makers.

Ryan Khurana is a Catalyst Policy Fellow, Executive Director of the Institute for Advancing Prosperity, and a tech policy fellow at Young Voices.
Catalyst articles by Ryan Khurana