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from the utopia-or-bust dept.
There's a new book called A World Without Work by economics scholar/former government policy adviser Daniel Susskind. The Guardian succinctly summarizes its prognostications for the future: It used to be argued that workers who lost their low-skilled jobs
should retrain for more challenging roles, but what happens when the
robots, or drones, or driverless cars, come for those as well?
Predictions vary but up to half of jobs are at least partially
vulnerable to AI, from truck-driving, retail and warehouse work to
medicine, law and accountancy. That's why the former US treasury
secretary Larry Summers confessed in 2013 that he used to think "the
Luddites were wrong, and the believers in technology and technological
progress were right. I'm not so completely certain now." That same year,
the economist and Keynes biographer Robert Skidelsky wrote that fears
of technological unemployment were not so much wrong as premature:
"Sooner or later, we will run out of jobs." Yet Skidelsky, like Keynes,
saw this as an opportunity. If the doomsayers are to be finally proven
right, then why not the utopians, too...?
The work ethic, [Susskind] says, is a modern religion that purports to
be the only source of meaning and purpose. "What do you do for a
living?" is for many people the first question they ask when meeting a
stranger, and there is no entity more beloved of politicians than the
"hard-working family". Yet faced with precarious, unfulfilling jobs and
stagnant wages, many are losing faith in the gospel of work. In a 2015
YouGov survey, 37% of UK workers said their jobs made no meaningful
contribution. Susskind wonders in the final pages "whether the academics
and commentators who write fearfully about a world with less work are
just mistakenly projecting the personal enjoyment they take from their
jobs on to the experience of everyone else".
That deserves to be more than an afterthought. The challenge of a world
without work isn't just economic but political and psychological...
[I]s relying on work to provide self-worth and social status an
inevitable human truth or the relatively recent product of a puritan
work ethic? Keynes regretted that the possibility of an "age of leisure
and abundance" was freighted with dread: "For we have been trained too
long to strive and not to enjoy." The state, Susskind concedes with
ambivalence, will need to smooth the transition. Moving beyond the "Age
of Labour" will require something like a universal basic income (he
prefers a more selective conditional basic income), funded by taxes on
capital to share the proceeds of technological prosperity. The available
work will also need to be more evenly distributed. After decades of a
40-hour week, the recent Labour manifesto, influenced by Skidelsky,
promised 32 hours by 2030. And that's the relatively easy part.
Moving society's centre of gravity away from waged labour will require
visionary "leisure policies" on every level, from urban planning to
education, and a revolution in thinking. "We will be forced to consider
what it really means to live a meaningful life," Susskind writes,
implying that this is above his pay grade.
The review concludes that "if AI really does to employment what previous
technologies did not, radical change can't be postponed indefinitely.
As Economy Grows, Federal Reserve Frets Next Downturn
Photo
Jerome H. Powell, the chairman of the Federal Reserve, which is confronting the question of how quickly to raise interest rates.CreditJoshua Roberts/Reuters
The Federal Reserve on Friday described recent volatility in financial markets as a brief blip and affirmed its plans to raise its benchmark interest rate in the coming months.
The Fed painted economic conditions in bright and happy colors in its biannual report to Congress on the conduct of monetary policy. It said the labor market was “near or a little beyond full employment,” an important milestone in the recovery from the 2008 crisis.
“The U.S. economy appears to be performing very well and, certainly, is in the best shape that it has been in since the crisis and, by many metrics, since well before the crisis,” Randal K. Quarles, the Fed’s vice chairman for supervision, said Thursday in Tokyo.
The immediate problem confronting the Fed is how quickly to raise interest rates. The Fed forecast in December that it would raise rates three times in 2018, just as it did in 2017. Fed officials say stronger growth is fortifying those intentions, and the next rate increase is expected in March. A growing number of Wall Street analysts predict the improving economic forecast will persuade the Fed to raise rates four times this year.
The hot topic on Friday, however, at a conference attended by several Fed officials in New York, was whether the Fed would be ready for the next economic downturn.
The Fed’s benchmark rate is in a range of 1.25 percent to 1.5 percent, and the Fed does not expect it to rise much higher than 3 percent in the current economic expansion. That’s a problem given that, in the last four downturns, the Fed has cut rates by an average of 5.5 percentage points to stimulate renewed growth.
During the last downturn, the Fed reduced the benchmark rate to nearly zero in 2008, and then supplemented its efforts by pledging to keep interest rates at a low level and by purchasing large quantities of Treasuries and mortgage-backed bonds.
Fed officials have said that those policies benefited the economy, and could be used again during a future downturn. Other central banks have relied on similar policies in recent years, and have reached similar conclusions. Benoît Cœuré, a board member of the European Central Bank, said economic research was “fairly clear” that such asset purchases helped to hold down interest rates.
But the main paper presented at the conference on Friday, which is hosted by the University of Chicago’s Booth School of Business, asserted that bond-buying had little economic benefit.
“Our conclusion is that the most important and reliable instrument of monetary policy is the short term interest rate,” wrote the authors, a team of two academics and two bank economists-
The danger of a rapid return to near-zero interest rates seemed particularly acute in the immediate aftermath of the 2008 financial crisis, as the Fed repeatedly delayed any increase in rates. Now, the economy has gained strength and the Fed has raised rates five times. Jan Hatzius, chief economist at Goldman Sachs, said the progress showed the Fed’s policies had helped, and that the Fed might be able to raise interest rates above current expectations.
“My own view about what is possible at the zero lower bound is quite a bit more optimistic than it was back then,” Mr. Hatzius said.
An account of the Fed’s most recent policymaking meeting, in January, reported that some officials had shared that optimism, expressing the view that the Fed might be able to increase its benchmark rate somewhat closer to its precrisis level.
Nonetheless, there is growing support among Fed officials for a review of the Fed’s approach to policy, and of alternatives that might allow it to respond more forcefully to future downturns.
Loretta Mester, the relatively conservative president of the Federal Reserve Bank of Cleveland, told the conference she favored starting such a study “later this year.”
Alternative approaches fall into two broad categories: Permanently replace the Fed’s 2 percent target, or set it aside in the aftermath of downturns.
Raising the target is a simple way of creating more room to respond to crises. Interest rates include expected inflation, so higher inflation would raise rates.
Embracing higher inflation, however, could cause political problems for the Fed.
Alternatively, the Fed could tolerate higher inflation on a temporary basis. For example, the Fed could aim to maintain average inflation at 2 percent over some specified period, meaning that it would compensate for periods of lower inflation, as during the last six years, by allowing periods of higher inflation, thus maintaining a 2 percent average.
Last year, the Fed began to include a comparison between its actual management of interest rates, and the results produced by alternative approaches to monetary policy.
The report on Friday included an inflation-averaging approach among those alternatives for the first time.
