A ten-minute video. A bit of talking past one another. In short, Alex says that smart machines are making us rich, and Tyler says that only some of us are getting rich.
My favorite line was Tyler’s, talking about the challenges of adapting to technological change. He pointed out that even though the transition from agriculture to manufacturing was largely completed more than 50 years ago, to this days we still have lots of farm subsidies. I would add that by contemporary standards, the agriculture-to-manufacturing transition was gradual. We might expect even more dislocation from the transition to the New Commanding Heights.
Alex says that smart machines are making us rich, and Tyler says that only some of us are getting rich.
1) I agree with Tyler but long term living standards are still improving for everybody. So I expect poorer people to be able to eat, have shelter and basic healthcare. There was a lot less hunger in the US than even we had 1960. Also, I do wonder with improved living standards if there will be more focus on home life and community. Look at the increase of Home Schooling in the US. (Also the fall in birth rate is doing a lot to eliminate the number of poor people and this is controlling the issues of transition.)
2) The one aspect of outsourcing to China or Mexico gives the US economy is the transition from manufacturing will be less painful. In my mind a lot of it already happened (so we got Perot 92 and yes that is Trump today is sort of the same.) and won’t be as painful as the 1920 – 1960 agriculture move. It is China that is going to have a harder transition than the US. If you don’t believe me than explain Japan the last 25 years.
3) We don’t know how much certain goods may fall. In 50 years, there may be an over supply driverless taxis powered completely on solar power. (All the basic techonologies are there and by 50 years they could take over. And I am holding out on driverless cars impact in 10 – 15 years.)
4) For the developed world, I still the main driving force of low growth, and low interest rates is impact of the Baby Bust is coming in full effect on both AD and AS curves. Businesses are not going to help their workers have bigger families and governments only have so many tools.
Some will get rich, some will get poor, and many will see some improvement, and where they are will differ, but most of this isn’t here yet as low productivity increases show. As from trade, most of that story is behind us, US and Chinese capitalists got rich, US workers got poor, and Chinese workers and US consumers saw some improvement.