Economists blame technology more for rising inequality

Daron Acemoglu, an influential economist at MIT (Massachusetts Institute of Technology), defends a thesis against what he calls “excessive automation”.

The payoff for the overall savings of investment in machines and software has been stubbornly elusive. But he says the growing inequality that results from these investments, and the public policies that encourage them, is very clear.

Half or more of the widening wage gap of American workers over the past 40 years can be attributed to the automation of tasks once performed by humans, especially men with college degrees, according to some of their recent research.

Globalization and the weakening of unions played a role. “But the most important factor is automation,” Acemoglu said. And the inequality it fuels “is not an act of God or nature,” he added. “It’s the result of choices that corporations and we as a society have made about how to use technology.”

Acemoglu, a broad-ranging academic whose research makes him one of the most cited economists in academic journals, is hardly the only prominent economist to claim that computerized machines and software, with the help of policymakers, have contributed significantly to the widening gaps. income in the United States. Their numbers are growing, and their voices add to the chorus of criticism surrounding the Silicon Valley giants and the unfettered advance of technology.

Paul Romer, who won a Nobel Prize in economics for his work on technological innovation and economic growth, expressed alarm at the skyrocketing market power and influence of big tech companies. “Economists have taught, ‘It’s the market. There’s nothing we can do,'” he said in an interview last year. “This is really very wrong.”

Anton Korinek, an economist at the University of Virginia, and Joseph Stiglitz, a Nobel laureate in economics at Columbia University, wrote a paper, “Driving Technological Progress,” which recommends measures, from tips for entrepreneurs to fiscal changes, to pursue “user-friendly innovations.” workers”.

Erik Brynjolfsson, an economist at Stanford, is an optimist about technology in general. But in an essay to be published this spring in Daedalus, the journal of the American Academy of Arts and Sciences, he warns of “the Turing trap.” The phrase refers to the Turing test, named after Alan Turing, an English pioneer in artificial intelligence, in which the goal is for a computer program to participate in a dialogue so convincingly that it is indistinguishable from a human being.

For decades, Brynjolfsson said, the Turing test — matching human performance — has been the guiding metaphor for technologists, entrepreneurs and policymakers when thinking about AI. This leads to AI systems that are designed to replace workers rather than improve their performance. “I think that’s a mistake,” he said.

The concerns raised by these economists are receiving more attention in Washington at a time when giant tech companies are already under attack on multiple fronts. Officials routinely criticize companies for not doing enough to protect users’ privacy and say they amplify misinformation. State and federal lawsuits accuse Google and Facebook of violating antitrust laws, and Democratic politicians are trying to curb the market power of the industry’s biggest companies through new laws.

Acemoglu testified in November before the House committee on Economic Disparity and Justice in Growth at a hearing on technological innovation, automation and the future of work. The commission, which was created in June, will hold hearings and gather information for a year and report on its findings and recommendations.

Despite the partisan stalemate in Congress, Democratic Representative Jim Himes of Connecticut, chairman of the commission, is confident she can find common ground on some measures to help workers, such as greater support for proven job training programs.

“There is nothing partisan about the economic disparity,” Himes said, referring to the damage to millions of American families, regardless of their political views.

Economists point to the post-war years, 1950 to 1980, as a golden age when technology advanced and workers enjoyed rising incomes.

However, later on many workers began to lag behind. There has been a steady advance of crucial automating technologies—robots and computerized machines in factories and specialized software in offices. To stay ahead, workers needed new techniques.

But technological change has evolved as the growth of post-secondary education has slowed and companies have begun to spend less on employee training. “When technology, education and training go together, you have shared prosperity,” said Lawrence Katz, a labor economist at Harvard. “Otherwise, it doesn’t.”

Growing international trade has tended to encourage companies to adopt automation strategies. For example, companies worried about low-cost competition from Japan, and later from China, invested in machines to replace workers.

Today, the next wave of technology is artificial intelligence. And Acemoglu and others say it can be used primarily to help workers, make them more productive, or to supplant them.
Acemoglu, like some other economists, has changed his mind about technology over time.

In economic theory, technology is almost a magic ingredient that both increases the size of the economic pie and enriches countries. He recalled that more than a decade ago he worked on a textbook that included standard theory. A little later, as he did more research, he thought better of it.

“It’s too restrictive a way of thinking,” he said. “I should have been more open-minded.”

Acemoglu is not an enemy of technology. His innovations, he says, are needed to address society’s biggest challenges, such as climate change, and to deliver economic growth and better standards of living. His wife, Asuman Ozdaglar, is the director of the department of electrical engineering and computer science at MIT.

As Acemoglu delved deeper into economic and demographic data, however, the shifting effects of technology became increasingly apparent. “They were bigger than I thought,” he said. “It made me less optimistic about the future.”

Acemoglu’s estimate that half or more of the widening pay gap in recent decades has been driven by technology was published last year with his frequent collaborator, Pascual Restrepo, an economist at Boston University. The conclusion was based on an analysis of demographic and business data that detail the dwindling share of economic output that goes to workers in the form of wages and the increasing expenditures on machinery and software.

Acemoglu and Restrepo published work on the impact of robots and the adoption of “more or less technologies”, as well as the recent analysis of technology and inequality.

Technologies more or less replace workers, but do not generate large gains in productivity. As examples, Acemoglu cites cashiers for automatic payment in supermarkets and automated customer service on the phone.

Today he sees overinvestment in these technologies more or less, which helps explain the slow rise in productivity in the economy. In contrast, the really important technologies create new jobs elsewhere, raising employment and wages.

The rise of the auto industry, for example, has created jobs in car dealerships, advertising, accounting and financial services.

Well-designed education and training programs for the jobs of the future are essential, Acemoglu said. But he also believes that technological development should be conducted in a “more human-friendly direction”. He draws inspiration from the development of renewable energy over the past two decades, which has been helped by government research, production subsidies and social pressure on corporations to reduce carbon emissions.

“We need to repurpose technology so that it works for people, not against them,” Acemoglu said.

Translated by Luiz Roberto M. Gonçalves