Author Topic: MIT economists: Automation is driving huge increases in wage inequality  (Read 691 times)

rcjordan

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ergophobe

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #1 on: November 22, 2022, 07:23:53 PM »
quote that hits home...

Quote
Why should the better-educated among us care about this, beyond simple empathy for our fellow man? Well, the last 40 years have just been a tasting spoon. The full double-scoop ice cream of automation is being ladled out as we speak, in a technological convergence of artificial intelligence, big data, robotics, connectivity, energy storage and a raft of other factors that promise to make light work of automating a much wider range of jobs.

and

Quote
what is the bargaining power of labor when capital doesn't want it?

rcjordan

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #2 on: November 22, 2022, 07:55:10 PM »
Nicholas Eberstadt Ė On the Rising Non-Working Class and What Their Despair Says About Us All | IWF

https://www.iwf.org/2022/09/14/nicholas-eberstadt-on-the-rising-non-working-class/

ergophobe

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #3 on: November 22, 2022, 08:38:39 PM »
That is not a pretty picture or non-working men, but we have a lot of non-working men and, ahem, partly working men on The Core who do not... okay actually we do spend a lot time in front of screens. But who are social integrated, taking care of family, volunteering, maybe even writing poetry on the side (though let's assume Pelosi is basically nuts in that assertion).

I suspect like most of the macro trends we're looking at in the world today, they can trend in the direction of utopia or dystopia. Barring nuclear catastrophe or something like that, I think we'll have a mix and I think it's still possible to create a utopia for the many and a dystopia for the few rather than the other way around.

We often forget, but late 20thC and early 21stC in the US, Canada, Europe, Australia is actually a utopia for the many. If you look at how people described heaven in popular culture in the sixteenth century[1], we're basically there: everyone is fat and there is lots to eat and you do not go hungry or cold and you don't do endless hours of physical labor and you have an iPhone 14.

1. Based on Carlo Ginzburg's book, The Cheese and the Worms

rcjordan

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #4 on: November 22, 2022, 09:42:41 PM »
I think the situation is actually uglier than portrayed.  We have been fostering & maintaining a caste system since pre-colonial days.  It used to be mostly based on race but now it is increasingly morphing toward education and income.  Drastic's recent post about crime factors into that, IMO. We have a low caste that has a near-zero chance of earning even a middle class position in our economy so crime is their only opportunity.

ergophobe

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #5 on: November 22, 2022, 10:20:06 PM »
When reading your second link, I kept wondering if he was even going to mention growing income inequality.

Last night I just finished Morgan Housel's The Psychology of Money. In the last chapter he talks about the growing separation between rich and poor in America and makes the argument that before 1930, people just accepted this as the normal state of affairs. After the decreasing inequality of the 1950s and 1960s (economic, but also infusions of money into public schools and efforts at more racial equality and so forth) we lived in a society where a tiny percentage of ultra-rich still lived differently in their mansions, but the middle class and the merely wealthy had the same basic experience. Few people had giant homes. Everyone watched the same three TV networks. Everyone in a town read the same newspaper. In less racially-segregated places, everyone went to the same school (I've mentioned this before, but my school had kids in single-wide trailers and the children of the CEO of the power company and the owner of a railroad; I was in the middle and welcome in the homes of all of them). Same, in many cases, with churches and other social organizations.

He argues we are where we are now because that social structure started to break down partly due to income inequality, but also fractioning of media and so forth. Now people don't expect that the haves will have and the rest will not, so that drives massive consumer debt, huge houses and the accompanying mortgages (the size of the average new house in the US more than doubled of the course of 40 years). He has a great quote that most houses in America have more bathrooms than residents.

Anyway, I think it's an interesting idea that a few decades of increasing equality and a sense that everyone was getting richer together destroyed the old comfort people had with that caste system, but we were able to keep the illusion through massive infusions of consumer credit.

Overall, his chapter is meant to be simply about the rise of consumerism and the purpose of the chapter is to help people understand why people with lots of income are nevertheless broke. But your comment dovetails nicely with last night's reading.
« Last Edit: November 22, 2022, 10:22:11 PM by ergophobe »

Rupert

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #6 on: November 23, 2022, 07:08:46 AM »
Quote
Morgan Housel's The Psychology of Money.
  do you recommend it?


If so my BIL might get it for Christmas :)

Combine this with colleges are about to crash.... those that go will be in shorter supply, so perhaps will do better, further separating them from those who don't.
« Last Edit: November 23, 2022, 07:10:21 AM by Rupert »
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rcjordan

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #7 on: November 23, 2022, 12:52:56 PM »
>BIL might get it for Christmas

Great idea. Thanks guys. Ordered.

ergophobe

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #8 on: November 23, 2022, 05:34:20 PM »
do you recommend it?

Not strongly to someone who is older. I would say that I learned very little. That said, part of why I checked out from the library (i.e. wanted to read it, but not own it), is because I heard a long interview with him on Tim Ferriss show and thought he was a finance guy who saw the world much the way I do. That has its obvious pitfall. To a large extent, I felt like it was an exercise in confirmation bias.

Basically
 - time matters more than money
 - the purpose of money is to buy freedom, not luxury
 - Don't try to buy status. Nobody is impressed by your car. They don't look at your cool car and say, "that guy is cool." They look at your car and say, "I want that car so people will look at me and think I'm cool." So the only reason to buy a fancy car is because you really enjoy fancy cars.
 - staying wealthy matters just as much as getting wealthy
 - mediocre strategy over a very long run beats a great strategy over the short run
 - live within your means; don't buy stupid sh##
 - don't buy useful sh## if you can't afford it unless it is basic food and shelter
 - save for no reason at all (he says even some wealthy people only save "for" something like a house or a car or a yacht; his point is that the purpose of saving is so that when things go bad, you do not lose the independence and freedom and security that they money bought you in the first place).

He talks about how, personally, he paid down is mortgage ASAP even though he knew that was not a financially optimal strategy in an environment of low interest rates and a bull market, which is basically exactly what I did. Quote:

Quote
Academic finance is devoted to finding the mathematically optimal investment strategies. My own theory is that, in the real world, people do not want the mathematically optimal strategy. They want the strategy that maximizes for how well they sleep at night.

For better or worse, all of this speaks to me. Again, maybe I'm just looking for validation from a crackpot who happens to agree with me. That said, he is a very successful and educated investor, which is not my case. So even if just for validation, it's nice to know that at least one well-informed crackpot managed to land on top using this approach.

Very basic with a lot of good anecdotes/stories, and personally I learn and teach best through story, so that appeals to me too, whereas some reviewers say the anecdotes weigh down the text.

I'll attach my exported Kindle highlights...
« Last Edit: November 23, 2022, 05:38:57 PM by ergophobe »

Rupert

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #9 on: November 23, 2022, 06:24:38 PM »
Ohhh, lovely summary, perfect.

Your highlighted notes are interesting. Some highlights are the bits I have to read twice to understand. Never thought of Kindle highlights as a way of recommending a book.  Thx for sharing.
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ergophobe

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #10 on: November 23, 2022, 06:35:59 PM »
I do think he has a gift for aphorism - ďCash is the oxygen of independence,Ē for example.

Itís also quite short. Even a slow reader like me can read it in a handful of hours. Itís probably just a leisurely cup of coffee for RC

There is at least one young person I will gift it to when she is a couple years older. Itís a nice companion to Ramit Sethiís book for a young person. Lucy?
« Last Edit: November 23, 2022, 06:38:22 PM by ergophobe »

Rupert

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #11 on: November 24, 2022, 07:41:40 AM »
>>>>> Lucy?  not a great reader... got plenty to read about Neuroscience at present.

Getting the book, and I will find someone.  ;)
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buckworks

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #12 on: November 24, 2022, 08:56:21 AM »
I just listened to the Audible version after seeing it mentioned in this thread. I am going to recommend it to my oldest granddaughter who is starting life on her own.

ergophobe

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Re: MIT economists: Automation is driving huge increases in wage inequality
« Reply #13 on: November 24, 2022, 06:09:34 PM »
Buckworks - if she is receptive to this book, follow it up with Ramit Sethi, I Will Teach You to Be Rich.

Despite the schlocky title, it is aimed at young people just starting to make money. I recommended it to a friend who is 32 and who grew up with food insecurity and has no college degree, and yet has managed save a healthy amount for retirement, buy a house in the Bay Area and is now waiting for their first child. When I told him how impressed I was with how far he had come, he reminded me that I had gotten him to read Ramitís book and said that was a key turning point for getting on the path of saving.

He said that he liked that Ramitís plan is very simple, no gimmick despite the title, requires no spreadsheets or detailed budgets, and is not oriented toward extreme early retirement. Ramit accepts that a young person will want to splurge sometimes and doesnít want to think about their money all the time, but also expects that they will live within their means and work for most of their life. I would probably be in a better position if I had read and accepted these books when I was in my 20s (doubtful though given my highly negative attitudes toward money when I was younger).

I would say Morgan Housselís book is about how to think about money at an abstract level and Ramitís book is about how to manage and think about money at a nuts and bolts level.