Transcripts For CSPAN3 Technology And The Workforce Panel 2 20240622

Problems that may only be applicable or of interest 20 of individuals. 20 of households. Not everybody does yoga or, you know, we saw propane tanks that were, you could connect to the internet so you could know by looking at your smartphone how full they were. And thats probably not applicable to everyone because not everyone uses a gas grill. We start to move into these smaller niche markets. Actually, i have the opposite response. I think what because the cost of experimentation is so low in the market 9utn, what you actua see is sort of 1,000 experiments, 999 of them fail utterly, but when consumers find the right one, got the thing right. We talked in our book about the game draw something. And how went from zero to millions of users in a matter of days. For whatever reason they got it right, and what happens now, consumers essentially tell each other. It not, you know, its not broadcast marketing like it used to be. Its social media based. They say, all right. This is the one that works. This is the right television, the right smartphone, the right app. Whatever the Consumer Product is. Particularly for electronics is consumers as a group, figure out the winner. And that winner really is very much a winner take all in a lot of these markets. Very short winner take all markets, but essentially one experiment or a couple of experiments succeed. The rest all fail. The cost wasnt that much in the first place. So the investors, whoever they are are willing to keep that system going. Thank you very much. American history tv starts every night this week at 8 00 p. M. On cspan 3. Tonight, speakers look at the styles of modern first ladies, from Florence Harding to michelle obama. The Ohio State University at marion and the National First Ladies Library hosted a discussion starting at 8 00 p. M. Eastern time. Now, a forum discussing the impact of technology on the u. S. Economy and the workforce. Former treasury secretary larry summers, and Defense Advanced Research projects Agency Director and m. I. T. Digital Business Research scientist Andrew Mcafee offer their views at this Brookings Institution event. Thank you all for joining us this morning. My name is melissa carney. I have the privilege of moderating our First Panel Discussion this morning. This panel is going to take the premise that andy and erik laid out for us, that there has been rapid technological advance particularly in the information center. We will ask the question what does that imply for the future of work, the future of workers and the nature of employment in this country in particular . As we tried to lay out in our hamilton project framing paper there are a lot of views on this topic and in particular if this will be good or bad on that or how good or bad on that for society. Fortunately this morning we have a really expert group to discuss these issues with us. Truly, i would say some of the leading minds in the world on these very questions. You have their full bios in your program. I wont run through them in detail. I will just briefly introduce them. To my left is david otter, professor of economics at m. I. T. One of the nations leading labor economists who has probably contributed more to the nations literature on leading trends and labor market than any. We have larry summers, university professor, president emeritus at Harvard University and served in a number of senior policy positions including secretary of the treasury of the United States and director of the National Economic council. And Aneesh Chopra served as our First Nations Technology Officer appointed by president barak obama and served as the virginia leader of technology and now in a technology firm. And erik has already been introduced and still a professor at m. I. T. [ laughter ] the way we will do this, i will pose an opening question to each of our panelists and we will move to a moderated free flowing discussion and leave the final 10 minutes for audience q a. We will be collecting your questions on note cards which then will be brought up to the panel. David, im going to open it up with a question for you. You have written extensively about the nuanced relationship between technology and computers and workers, particularly noting that there are certain things that computers can do that substitute for tasks historically or traditionally performed by humans and other things computers do that complement tasks performed by humans. So, in light of your research and the framework that erik and andy have laid out for us, how do you see this all shaking out for workers . Thats a great question. Im honored to be part of this discussion and really like the work theyve written. Im glad this topic is getting the thoughtful discussion it deserves. 15, 20 years ago, erik and i started talking about this when i was a graduate student and erik was assistant professor. At that time we felt people werent taking this issue seriously, if anything, i thought people should not panic at this point. [ laughter ] i think there are a number of remarks i could make. I think theres reason for some skepticism about how fast things are actually moving and a lot of aggregate data that dont support the idea that the labor market is changing or economy changing as rapidly as the story so dramatically the premium for Higher Education has plateaued over the last 10 years and we see evidence highly skilled workers are moving have less rapid career directories, are important part of the puzzle and productivity not moving rapidly and a lot of growth has been in relatively low education with a Public Service element to it. Its easy looking at these examples to see an Inflection Point but when you look at the aggregate data theres nothing to suggest there is an Inflection Point. It could be in the wrong place, but a reason for skepticism for things not changing that rapidly. The second point i want to make, when we think about how technology interacts with labor markets we think of substitution of labor with machinery. Thats a completely natural thing to do because technologies are made to substitute tasks we were doing. Weve been substituting machinery for labor for as long as weve been able to think of ways to do that. Thats a first order effect, a mechanical effect we can automate transportation, we can automate calculation and automate information stories or retrieval. In general, what is neglected is that complements us as well. Many activities require a mixture of things. It requires a mixture of Information Processing and creativity, motor power and dexterity. If those things need to be done together if you make one cheaper and more productive, you increase the value of the other. Doctors have not become less valuable as medical technology has advanced, right . They can do more, diagnose more and that makes them more valuable. Ultimately, there are three things that sort of contribute to how an aggregate results in the production of technology. And one whether it directly substitutes you or helps you do÷ one thing so you can do something else. If you think about diagnosing medical testing obviously physicians can get a lot more information in the course of a day. The second is how elastic is the demand for those services . We are so much more productive in medicine, we could do all the medicine we did in 1950 in 10 minutes a week and people would probably be healthier given the state of medicine at that time. As people get better at it we get more of it partly because of the medical system and because the services are a much greater value and demand for them is quite elastic. Third, from a labor perspective, it matters how scarce the skillset is thats complemented. It takes a lot of education and training to become a doctor. When doctors become more productive, we dont just get an infinite number of doctors at minimum wage because they have to have a lot of training and it complements slowly and tends to raise incomes. There are many examples productivity increases lead to making jobs nngz interesting and challenging. Thats not the case. I dont want to take up too much time. Thats on one side of the labor market. On the other we see a lot of growth of work that requires generic skills and hard to automate. Let me make my final point. A lot of things that matters is how rapidly things change. If tomorrow amazon introduced the 1,000 bezo spot that could cook for you and clean your house and comes on amazon prime and you could have it by monday, that would be a dramatic advance and we would all buy it. It would be extremely productive because a lot of people, thats their primary activity, driving and childcare and cooking and lawn manicuring. If amazon said we will have this in 2045 for 1,000, we would be well situated to adjust to that, because people would recognize that was not the place they wanted to be over the long term for a career. It matters how quickly we get there. I think i think a lot of thef debate is not whether these things will occur but its whether were at the second half of the chessboard where the Inflection Pointing all of a sudden things are doubling from a small number to small number doubling again to a large number or whether its a very incremental process. I would say the academic Computer Science technology is very divided about this. If you go to Silicon Valley engineers believe everything will be accomplished immediately and you talk to the crowd, thats skeptical. This is hard and making progress not true 20, 30 years ago, but were a long way away. As andy said we live in very interesting times. Im sure we will revisit those ideas as we have our discussion. As our nations chief Technology Officer you were tasked with using technology and innovation to further our nations goals of job creation, reduced health care cost, protecting the homeland, tall order. Youve spoken very optimistically about the power of technology and innovation to improve our lives on a wide scale. Im curious to hear how your view of what technology has done compares to that as andy and erik laid out, and in particular, how have you Seen Technology impact a variety of sectors, including education and health care among others . Thank you very much for the question. I have three general observations, all very bullish on this next decade. The first starts with my first trip to google, which was probably in 06. I was virginia secretary of technology and we were trying to open up Government Data to search engines. To make it more accessible to the american people. Most people were getting information about government through search engines, not coming to the url of xyz. Gov. I saw this globe when i walked in which had a light emitted for every search on google. The globe was spinning. As you get to north korea, it was dark, this stark observation. Large swaths of africa and many parts of the world had darkness. You think about the american economy, what sectors are on that level of darkness as it impacts the internet has had on the sector. Health care, energy and education have not necessarily been plugged into the internet especially around data sets constrained by regulatory policy, medical records arent flourishing on the internet and your Energy Usage Data isnt flourishing on the internet. When you look at all this amazing capability and productivity gains in manufacturing and others you look to more than a quarter of the gdp, youre thinking these groups of sectors have been completely missing from this revolution. Obviously, incentives start to change and data opens up at the same time, you might see an explosion of innovation. Were seeing that now in health care. Weve made Great Strides opening up data, digitizing and eventually connecting medical records systems. More Venture Capital is flowing into this sector than you would have ever imagined, not necessarily because theyre trying to make the traditional system functioning incrementally better, now incentives are changing to reward a different type of Health Care Delivery system which makes it a wide open terrain for entrepreneurs. Thats very exciting because its creating new types of jobs that never existed before in the health care sector. Not all of which require a phd in physics. You can be a relatively low level employee whose utilizing the technologies to help on home health needs so forth. Category number one is were now opening up these big sectors to the internet age and i think that will bode well to ensure productivity gains hit them. Second, again when i was virginias technology secretary, the north carolinavirginia border used to be the worlds hot spot for furniture manufacturing. Thats it. We went through a policy of debates, those jobs arent coming back, how do we build a safety net down there and broadband is the answer and we did everything we could to improve that north carolinavirginia border. Something interesting happened around this concept of automation. Manufacturing is cheaper because you no longer have to have the same labor intensity and can insource jobs back to the u. S. At a faster rate in response to china. So ikea opens up a manufacturing plant for furniture. Where . Right in the heart of the north carolinavirginia border, the same place that was written off for its capacity to build furniture and youre being told in the neighborhood you have to do Different Things because your life as a furniture person is over. All of a sudden, robots as coworkers, automation, you can actually compete on a more effective footing. Were seeing that insourcing trend now all across the country. Manufacturing jobs are coming back. Theyre not the same labor intensity they were when they were previously here but thats still net positive. I would say the third observation if i had any is this democratization of entrepreneurship is pretty much the most exciting thing ive seen. In that same north carolinavirginia border, there are people who used to have parents and grandparents work in textiles as well. Now, theyre Building Designs for clothing that can be 3d printed or their intellectual property can be transmitted over the internet to textile production all over the world and theyre creating economic value in that same market because folks who didnt previously think of themselves as Silicon Valley entrepreneurs can plug in because of the democratization of capital innovation. Im really fired up over the impact this has in the next decade acknowledging in certain sectors the challenge. Too bullish . I dont know, but im very excited. Larry, to you, youve been thinking and commenting on these issues a long time and you wrote a 2013 npr piece. It raised a lot of the, i were talking about this morning. And you sponsored the center for American Progress on inclusive prosperity, the goal of the commission to address rising levels of income inequality and stagnant wages at the bottom of the distribution. In your thoughts and views on all of this, what do you see as the long run implications for the Macro Economy . Thanks, melissa and thanks for the chance to be here. Ill leave the question of what we should do until later. Let me focus on diagnosis and make a confession of ignorance and observation and express a worry. Confession of ignorance is this. I think it should apply to everybody who speaks confidently in this area. On the one hand we have enormous antidotal evidence and visual evidence of the kind that erik marshals, that points to technology having huge and pervasive effects. Whether it is complementing workers and making them much more productive in a happy way, thats one possibility, whether it is substituting for them and leaving them unemployed is a possibility and can be debated. In either of those scenarios you would expect it to be producing a renaissance of higher productivity. So, we on the one hand are convinced of the pervasiveness and far greater pervasiveness of technology in the last few years, on the other hand, the productivity statistics on the last dozen years are dismal. Any fully satisfactory synthetic view has to has to reconcile those two observations and i have not heard it satisfactorily reconciled and something we have to figure out. It is a big problem to believe if you believe technology happens with a big lag and its only going to happen in the future, thats fine. Then, you cant believe its already caused a large amount of inequality and disruption of employment today. So that is a major puzzle, which i think hangs over this subject which i just want to put out there for discussion. Second observation i think it is a mistake to think of the economy as homogeneous producing something called output as we approach these issues. Theres an aspect that doesnt get enough attention, which is sectors through progress working themselves into irrelevance. Let me give an example. The illumination sector, providing light. It actually has had about a tenfold increase in productivity every decade for a century. And we now think of it as a trivial sector in the economy. No doubt we could continue to produce tenfold increases in productivity but actually most of us want it to be dark at night. [ laughter ] so, in fact, there are more Little League night games than there used to be, parking lots lit more brightly than they used to be. Basically, whats happened is illumination has become quasifree and whereas candle making was a major industry in the 1900s, illumination is a trivial industry today. We need to recognize that a sector that has rapid Technological Progress but the world can absorb only so much of just gave you a big hint. If nobodys wondering where most people are going to be working in the future, i just gave you a big hint. If everybodys if anybodys completely confident we will have rapid productivity growth in the future, they should be giving pause because no matter how fast in productivity we have in agricultural or illumination it doesnt really matter for the aggregate economy. Increasingly, thats becoming true of a larger and larger fraction of what it is that we produce. Third, i was when i was an undergraduate at m. I. T. , in the 1960s, there was a whole round of concern about this. Will automation displace all the employment . And what i was taught as an undergraduate was that basically the people who thought it would were a bunch of idiot ledites and obviously there would be enough demand and work itself out and if people got more productive and theyd spend and maybe we needed some transition assistance, but it would all be okay. Thats what i thought and bob solo thought and he was a hero and the other people were all a bunch of goof balls, kind of what i learned. I believed that for many years and actually repeated it often. It has occurred to me that when i was being taught that, about 6 of the men in the United States, between the age of 25 and 54, were not working. And that today, 16 of the men in the United States, between the age of 25 and 54, are not working. And it wont be very different even when the economy is at full employment by any definition. So something very serious has happened with respect to the general availability of quality jobs in our society and we can debate whether its due to technology or whether it is not due to technology, we cannot debate we can debate whether its the cause of dependence or whether it is caused by policies that promote dependence. But i think it is very hard to believe that a society in which the fraction of people in choose whatever your most prime Demographic Group is that should be working, whatever that group is, a society in which the fraction of them who are not working is doubling in a generation, and seems to be on an upwards trend, is going to be a society that is going to function well or at least function well without major social innovations. I would want to leave you with that concern, as there, whether you think its due to technology or think its due to globalization or due to the maldistribution of political power, something very serious is happening in our society. Great. Thank you. I definitely want to make sure we return explicitly to the questions that larry has raised about policy and where we need to push. But before i do, i want to pick up on the first observation larry made, this is a great point, erik, for you to jump in on, given all these technological advances, really celebrated, why is it that gdp per capita isnt rising more rapidly . Why is it that median wages are essentially flat and in particular what does that imply about the Impact Technology is having on our Living Standards . Are we just were not seeing it in the numbers. Are we not measuring it appropriately . Thats a great question. Its good for larry to bring up and what spurred andy and i in the beginning and others talked about a great stagnation and these amazing things, andy touched on a few of them. Theres lots more and we could spend days talking about the wonders of technology were seeing. It is a bit of a paradox there. There are a couple of parts there worth decomposing. The part about Median Income, i dont see that being such a paradox. I think, as i suggested earlier, theres no economic law that says everybody is going to evenly benefit. It could be some small group is left behind. It could be unfortunately a big group. You can have biased technical change that grows the pie and some people are made worse off. I think thats a fair description, at least in my mind, i dont know if other people would disagree about a big part of the story of whats going on, that people with certain types of skills are in much less demand than they were in the past, in part because of technology and many in the Median Income and david is one of the people that has documented this and lots of people have touched on it. The question of overall gdp per capita is more puzzling, although as i showed you the chart, you dont see as much of a problem in that decoupling chart with the median. The angst whether tea party occupying wall street is that even there it hasnt been quite as robust as maybe some of us would have expected. It should have been. Technology has been super and more strong and more potent and more everything than it should have been before. The question isnt whether its slowed down, the question is why didnt these new gale force of Technology Lead to a big acceleration. Thats what you would have expected. Let me address that. Ive spent a lot of time visiting companies installing these technologies. Some are quite complex. An ert system or Customer Relationship management system. We documented it takes five to seven years to roll out. During that process theres a huge amount of organizational disruption and you can do this on a case by case basis and case studies of disasters at m. I. T. And elsewhere trying to roll these things out. Quite disruptive being rolled out and no productivity or decrease while being rolled out and we have aggregate data from hundreds of these firms and ive written papers to show theres a long lag. If you roll that up to an entire supply chain or entire economy you can imagine these organizational disruptions, organizational complements often about 10 times larger than the Technology Investments themselves. They take much longer to roll out, can be part of these enormous disruption and until theyre in place with the complementary pieces are in place you dont get the full benefit but with previous technology, it can take 20, 30 years. That may be part of the story. I think were in a Big Organization of the economy and yes its disruptive, these people see these people have to be laid off, these other people have to be reskilled. And in doing that you dont get the full productivity gain but get a lot of disruption. That can partly answer larrys question how you can have disruption without getting the full payoff. Ailr if i could take a moment to touch on some of the things that david brought up, i think those are also very interesting, partly about the leveling off of skill by technical change or the college premium, i should say, is actually very consistent with changes we see in technology as i have showed addressing, different parts of the labor market. More broadly, i think he raises the right question about complements and substitutes and whats happening. You look, oftentimes technologies initially are broadly complementary as many pieces of the system require humans or others to fill in. You look at horses, the number of horses increased all through the Industrial Revolution up to about 1901, that was peak horse, because, you know, whether sadv,asij p riages or other things made horses much more valuable. But then the numbers plummeted once the remaining component that horses added wasnt so was no longer not automatable, if thats not too many double negatives. You could see similar things potentially, you know, are humans different than horses . Of course were different in many many ways. We have a much broader skillset and can think a lot better mostly. And horses doesnt own capital. Also, once labor starts disappearing, you can have humans own capital or at least some of them. Humans can vote, humans can have guns and do other things if theyre not happy with their Income Distribution. There are a lot of other things potentially different. As an economic fact i dont think theres any necessary inevitability, as larry was saying inevitability that it take cares of itself and we should discuss the policies and in the first Industrial Revolution a lot of policy ;zsj changes helped navigate that in a way we did create shared prosperity or inclusive prosperity. Larry, you want to jump in . Just on the productivity and disruption thing, i think its a difficult argument. Lets take retailing. You can imagine you can have all kinds of spiffy technology so you no longer have to have people behind cash registers all of that. The problem is you wouldnt expect the people behind the cash registers would get fired before the people working the systems got the new systems working. So the challenge about right now is people see that theres a lot of disememployment thats of disemployment thats already come from the technology but they dont see any productivity increase. I understand why it might take years for it all to have an effect. What i have a harder time f0 understanding is how there can be substantial disemployment ahead of the effect of the productivity. That is, if you thought that it just was impossible to put in these systems and so forth, then you might think that in the short run, it would be a big employment boom. You have to keep your old legacy system going and you have to have a million guys running around figuring out how to put the new Computer System in. I understand low productivity. But i think it is hard to square, and its not like i have the answer to this puzzle. But if you think about it hard, i dont think its easy to square low productivity and substantial disemployment. I dont think the lags to reorganization story quite does it. You shouldnt be getting the disemployment ahead of the productivity. It is a complicated story. I dont think ive totally nailed it yet but i think another part of the puzzle is that there are a lot of rents i÷ the economy as well. If you get the types of people who do the reorganization being different than the type of people whose demand is falling, you can have big changes where the rents are happening way ahead of the changes in the overall output. Lets deal with the fact there is disemployment. We all agree we dont want go the way of the horse. [ laughter ] what do we do about this . I want to talk about policy and im going to pose this to the panelists, a twopart question, so bear with me. First, it seems to me in large part the way this is going to play out for the American Worker is going to depend on how labor supply responds, in particular, in terms of skills. In other words, will is there a way to imagine that a sufficient number of people in our population will acquire the skills or the talents that are needed to economically prosper in the second machine age . And what would it take . Is our is our Education System broadly defined up to the task of delivering those skills and talents . The second part of my question is, what about those workers who simply cant acquire those skills or dont possesses those talents or even the ones who do but simply arent enough high paying jobs for everyone. I will admit i am in part worried about a scenario where a small share of the population commands increasingly high wages and a larger share is relegated to low paying service jobs presumably providing services to the high wage folks. It doesnt make me feel much better that robots are not going to be able to give a good manicure or clean houses any time soon. Is that a reasonable thing to worry about . If so, dont we need to really rethink our social contract and dramatically expand our system of wage subsidies and income supports . May i i might want to take a stab at this, starting with the premise that if we applied the same capabilities we said may have a positive or negative effect but to unleash them in this particular question of how efficiently are the skills being communicated by employers, the Training Programs communicating what you get if you join and what the job seeker has or might wish to get. To me, were like in the dark ages of the quality of that experience. You log onto amazon. Com, there is feedback loops theyve been analyzing, whats the probability im there to shop for a video or Lawn Equipment or whatever. If you ask the same question of the workforce, the sad answer to that is drastically, no. We just did a study on the unemployed veterans skills gap. What we tried to do is we read every job posting in the economy and said what are the underlying skills associated with the job postings . We then looked as best we could through open Government Data th underlying skills of unemployed veterans. We took a spotlight on the commonwealth of virginia. You had hundreds of Technology Companies post jobs from employers who made a commitment to hire veterans. Theyre going out of their way to want to hire veterans. And they but they communicate the job in such a manner that feels like its not really available or attainable to some set of the population. By doing this sort of skills assessment, what we figured out was every single Entry Level Technology job, every single one in april of 2014 from an employer who made a veteran hiring commitment could have been filled by a tech trained vet at that time unemployed in the commonwealth of virginia yet neither the employer knew to look for the tech trainable vet whose background might have made the initial screening nor did the vet know they could get that tech job because it wasnt in their suggested career path saying this is an attainable opportunity to get you to the next stage. These New York Times story. How many young people have the ability to get into m. I. T. They didnt know there was financial help available. If every person in the economy had a helper that said given where you are, heres the shortest path to awesomeness to land the best job available to you. Is that anywhere near in our system today . How exciting would there be if there was a marketplace of tools to do that . Would we solve this. Before you get into the Income Subsidy question. Just make the system work better. I think thats an initial place to start. And where is that going to get those skills . From the employer, local Community College . This is the other fascinating question. We did a little panel, the center for American Progress, highlighting this at T Partnership with udacity for six month chunks of learning. Nano degrees. Theyre great for cybersecurity and other interesting areas of growth, so, i asked the question, are any of you regulated as learning programs that qualify for government subsidy, whether they be title iv funding or qualify for the gi benefit or workforce Investment Board vouchers and the sad reality is these innovations are disconnected from any actual Government Support because there arent thoughtful regulatory on ramps for these new entrants to be reimbursed in that manner, so, these are the areas where i think theres opportunity. Sure. I agree with the direction youre going in in terms of skilling. Theres a policy focus on sort of college for all and that has been healthy at some level, but its, its very incomplete. Our Education System is geared towards get people out of high school and college. If they dont go to college, well, it didnt work out. Thats not productive when less than half of young adults are going to complete a fouryear degree and thats not going to be 75 within ten years or 30 years, although there has been an increase in both High School Graduations and college completions over the last ten years. I think we need to think about the skill sets that allow people to do evolving jobs in health care professionals, in technical positions, many of which require real skill sets, but dont require four year liberal arts training, so, i think we push too many people towards expensive fouryear degrees, which are either not as efficient or not as appealing as they could be. There are opportunities in kind of areas, written a lot on kind of this new middle skill occupations. There arent things you can just get with a high school degree. It is foundational, credential, but for further training. I think theres a lot of productive room for investment there. Hopefully, technology will allow us to be better at that. Unclear. As with so many things, theres a Great Potential and uncertainty about how fast and how well it will work. My biggest concern in this is the sort sort of inequality with which people have responded to these market signal, so you might have thought at a time when college had become more valuable and people going to college, the gradient between Household Income and College Going would get shallower and that has not a occurred. The rate in College Going has become much steeper and in college completion, much steeper still. And so, i think that works against economic mobility. It means that kids from low ses backgrounds are less likely to be going to school and be gainfully employed. When larry talks about the declining employment rate among u. S. Workers, were talking about young males, many of them minorities, many from poorer families, so its a pretty concentrated problem, which makes it worse, not better. If you sort of look from the median on up, u. S. Society looks mobile, healthy, looks like its making the right investments. If you look below the median, there are just that message and tools to correct that problem are somehow not coming together. Let me say a few things and im actually more confident about these than i am about the technology stuff. Given the productivity question. First, with great respect, i would engage in the experiments. I think the policies that shes talking about are largely whistling past the graveyard. The core problem is that there arent enough jobs. And if you help some people, you could help them get the jobs, but then someone else wont get the jobs and unless youre doing things that are affecting the demand for jobs, youre helping people win a race to get a fine night number of jobs and there are only so many. This was powerfully demonstrated by a study done in france where they looked at a variety of these kinds of job matching innovations and found that in a low unemployment areas of france, it worked and in the high unemployment areas of france, they only helped some people at the expense of others with no net impact. Folks, Wage Inflation in the United States is 2 . It has not gone up in five years, there are not 3 of the economy where theres any evidence of hyper Wage Inflation of a kind that would go with worker shortages. The idea that you can just have better training and then there are all these jobs, all these places where there are shortages and we just need to train people is an evasion of the problem. It is fundamentally an evasion. Second, what we need is more demand and that goes to short run cyclical policy and the enormous importance of having tighter markets, so that firms have an incentive to reach for workers, rather than workers having to reach for firms. Its quite remarkable to look over the years at the harvard economics department. 30 professors and 40 graduate students, its remarkable how badly graduate students get treated. When theres 30 professors and 20 graduate students, its remark able how well they get treated. People who have been to school in environments where theres 60 men or women are not unfamiliar with this. Having the labor market run tight is fundamentally important. It is important for generating investment and work. Third thing i would say is that i and this is in the same direction as what david was saying. I agree with him and he knows much more about it than i. I think we cant think of education a human blob of capital where more is good. The idea used to be kind of, the way i would have sort of thought about this 30 years ago, was that part of what would be good about having more education is that people would be able to work in an Office Rather than being plumbers. That was good. That would upgrade people and give them new opportunity and plumbers children could work in offices rather than being plumbers. Its kind of the essence of the changes that are being described. That they are more heavily bearing on people who work in offices. Than they are on plumbers and so, the whole idea of working with a craft and a Specialized Skill rather than this generic, general manager with liberal arts competence, is i think central to thinking in a rational way about wages. If i could say one other thing, i think that the broad empowerment of labor in a world where an increasing share of, increasing part of the economy is generating income that has a kind of rent aspect to it and the question of whos going to share in it becomes very large. One of the lesser puzzles, but very large puzzles of our Economy Today is that on the one hand, we have record low real Interest Rates that are expected to be record low for 30 years if you look at the index bond market and on the other hand, we have record high profits. You tend to think record high profits would think record high returns to capital would mean really high Interest Rates and what we actually have is really low Interest Rates. Probably the right way to think about that is theres a lot of rents in what were calling profits that dont really represent a return to investment but represent a rent. And the question of whos going to get those rents, which goes to the minimum wage, goes to the power of union. Goes through the presence of profit sharing, goes to the length of patents and a variety of other Government Policies that confer rent and then when those are received, goes to the question of how progressive the tax and transfer system is, that has got to be a very, very large part of the picture. And i am concerned that if we allow the idea to take hold, that all we need to do is there are all these jobs with skills and if we can just train people a bit, then theyll be able to get into them and the whole problem will go away. I think that is fundamentally an evasion of a profound social challenge. Raise the issue of the minimum wage and unions and Bargaining Power of workers, but it strikes me were faced with a conundrum in a sense these changes make the imperative of giving workers more sort of Bargaining Power and a higher minimum wage make that more compelling and important, but at the same time, those same technologies make it easier for imperative of giving workers more sort of Bargaining Power and a higher minimum wage, make that more compelling and important but at the same time those same technologies make it easier for employers to replace workers who become too expensive with machines. So how do we thread that needle . Well i think that is a real challenge. And one of the ways i think a lot of us have talked about is things not just the minimum wage but the earned income tax credit which is a way of encouraging people to work and sharing the benefits from the economy to the people working and not making very high wages. Through the tax code not the employeremployee relationship . And while it increases the incentive for people to work and rewards but it is a broadly shared cost that a lot of people bear simply as the employer coming up with a way to employ that person. You could make a good argument that those employers, entrepreneurs who figure out how to put some of the people to work, should not be the only ones of bearing the burden of having to raise the incomes of the people who are right now having their skill demands fall. Earned income tax credit and sharing that more broadly. And that is encouraging more people to work and there is a spillover, and could encourage people for creating those kind of jobs. Yeah, lets just have some numbers here, just to put this in perspective. Roughly speaking, if we had the same Income Distribution in the United States that we did in 1979, the top 1 would have 1 trillion less today. And the bottom 80 would have 1 trillion more. And that works out to about 700,000 a family for the top 1 and works out to about 11,000 a year for a family in the bottom 80 . That is a tripp trillion dollars. I think the earned income tax credit is 50 billion. Nobody is doubling the earned income tax credit and the big aggressive agendas for the earned income tax credit are to increase it by a third or a half and so im for it. Im all for it. But we are talking about 2. 5 of the redistribution that has taken place. And so you have to be looking for things, and there is no one thing that is going to do it, my reading of the evidence, i think it is a fairly general reading of the evidence, is that while there may be some elasticity, the elasticity around the current level of the minimum wage is very low. Perhaps a good way to make that point is to observe that the real minimum wage in the United States today is about 20 below where it was when Ronald Reagan was president , and even Ronald Reagan when he was president wasnt really complaining that the then exist ebt minimum wage as doing damage to employment and productivity has productivity has gone up since that time. It is tempting to think that everything is tradeable. But you know, if you ask not between a cross across International Borders and between the United States and other countries if you just take the boston smsa and if you say how much gdp is tradeable, it is less than half. And so there is a lot of scope for raising wages in areas where there isnt going to be some broad kinds ever competition. Good. So we have some questions from the audience and im going to ask one that relates directly to that last point. The question is, what is the role of trade on technology and vice versa. How does this relate to the relative skills of people in Different Countries . Actually, this is one i wanted to bring up. A lot of the disruption that people attribute to Technology Change over the last 1520 years has had a great deal to do with the changes in international trade. And especially the succession of china to the wto in 1991. It led to an enormous surge in imports in the United States and decline in manufacturing and had spillovers to surrounding communities and work ive done with david dorn and hanson and mogul and price. Weve all been surprised by how big of a factor that is. And fortunately were closer to equilibrium. Policy aside, things wont look anything like they do. But this disruptive power is underappreciated and is significant. And im in favor of the receding backtracking for trade negotiation and so forth. But often we look for an effect and we want to attribute it to the most obvious thing rather than something more subtle. We thought the noipt economy was the internet economy was an amazing thing from 1995 to 1999 and i dont see how it became disastrous around 2000. I dont think that is plausible. The other thing i would say is i do think that were you know, that trade does circum jibe or the possibility of trade, some of the things we do. We could not restore unions to where they were 40 years ago without having competitive effects because we face we dont have the kind of rents, the market power. And you can point to countries like germany that have unionization but they are outsourcing their employment to eastern europe. So that is a real constraint. On the other hand, i want to point out, we bring a western central perspective to this globalization and the technology jointly have brought more human beings out of poverty in the last 20 years than in the history. And if you look at what happened in china and india and the things that we view as threatening are creating much broader prosperity. At the same time they create greater concerns. When i think about machines substituting labor, i worry more about indian textile workers than the general employment patterns of the u. S. So i think about this distopia, where can poor people have solar cells but no job for which their skills are scarce. So we should be think being technology and globalization as working hand in hand at this point and the view in the 1980s and the early 90s that trade was irrelevant to what is happening in the United States is at a bait and has not permeated the consciousness of how people thought about developments in the last 20 years. I want to agree in part and disagree in part. I think first it is right to say that trade and technology in a sense are strongly associated with each other. We wouldnt have much more trade but for the much greater ease of communicating and transporting across countries but for the tule that represented the containership and a great deal else. So what we call trade and the great increases in trade are very much tied up with technology, is the first thing i would say. The second, i would agree and be inclined respectfully to disagree with david on within aspect. I agree with david and certainly my thinking would have evolved 20 question of how much has changing trade patterns impacted the u. S. Labor market . I think there is pretty clear evidence that there have been significant impacts. I think some people exaggerate them but i think there are significant impacts. I think it is a quite different state to assert that all of that is due to trade agreements. And i think one has to look carefully for example at the counter factual. David asserted that since chinas asection into the wto, well what is the counterfactual. I have some familiarity with the level of u. S. Tariffs on china prior to the inception into the wto and they were not high. And so a very the main reason why china is exporting more to the United States is that china as it was in 1999 and producing in much more Technology Sophisticated ways. It is true if they had not been in the wto, we could have passed a whole new set of protectionist measures. But i think if you ask the question, if the United States had maintained its trade policies visavis china, as they stood before chooip was admitted china was admitted into the wto, what fraction of the increase in chinese exports to the United States would we have observed . I think the answer is the vast majority of that increase in exports. And i think that is very important because i think there is a tendency to suppose that if trade developments impact the wage distribution importantly in the United States, then presumptively trade agreements are a bad rgj idea. And i think that in order to analyze any given trade agreement one has to ask the question, how much are barriers being changed in the United States and how much are barriers being changed in the effected country. And my reading of the evidence is that in many of the way cases, because rightly or wrongly, the United States market is already substantially open, if you look at the proposed trade agreements, the reduction in barriers and the consequent increase in exports to other countries looms quite large relative to any impact in the United States. And so i think that is an important qualification on the globalization story. Im going to take us in a bit of a different direction. So someone asks, from the end of the 19th Century Technology let the workweek decline. Why cant that process continue with the benefit of technology being a shorter workweek with no loss of income. And im going to add a bit of a maybe existential question or spin to this which is too existential for a Technology Group but all of this Technology Changes our view of the good life and how we think about our time. And aneeshs story about the expert craft furniture makers who now put together ready to assemble products for ikea, maybe this is too nostalgic for an economist but something seems lost in that to me. Erik, im going to open this to you, this must be something youve thought a lot about. And it is a great question. And those who havent read kanes economics for our grandchildren and he talked about what happened to our generation and he was spot on in terms of gdp per capita and extrapolated the functions and and he inferred and looked around that those wealthy in hoiz area, didnt want to work, would go fox hunting but there wasnt that much to do with that wealth and that part he got wrong. People are not working 1015 hours a week, mostly those who are working, are working more than that. And there are a number of reasons for that. Part is we have more things to spend our money on. New goods that people enjoy. And this get news psychology, people enjoy working. There is a meaning that it gives to life for a lot of people. Bob putnam described what happened when work leaves a community and it is really sad to see how all sorts of other social indicators plummet because of the way were wrapped up in having a job and work and Going Forward could we have shorter workweeks, would that be part of it, i think certainly we could. There is somewhat of a trend in that direction, not as rapid as cane imagined but we have to start about ways to get meaning in life. And dont think nas an un i dont think that is an insure moubtsable problem. There would have to be work to do it but i dont think that is unsurmountable. Im uncertain about what i think about this. If you look at a text book from the 1960s or 1970s in about chapter five there is the backward bending labor supply curve and the idea is if the wages work up, at first you work more and more because it is attractive and then after a end then when you have enough income you take a bunch of it in leisure and so the labor supply curve looks like this. If you look at a text book today, that idea is largely not there. And the reason is that it used to kind of be true, that high wage people worked less hours than low wage people. Your image of the 1970s was that the ceo sort of went out to play golf at 4 00 and the workers worked 60 hours a week. And if you look today, for the first time basically in economic history, people who have higher wages on average, very consistently, are choosing to work more or finding themselves working more hours than people who have low wages. And it is in part it is not all because of people with low wages are not able to get more work. There is choices that people are working more hours. And that is why this idea of a more leisurely nirvana is less is less in fashion. That said, i must say, i have to be impressed that americans work about 50 more hours, maybe 45 more hours in a year than northern europeans. And im not sure that i would want to call that a great virtue of american of american society. But i think we have to think very carefully about what the alternative to work it and how meaning an community are found in the absence of work. Classical economics has this simple view which is working is bad, leisure is good. Those who spent time in communities with 28 unemployment, i dont think, find that a riveting formulation of human motivation and desire. And so i think this is something that needs to be thought about a great deal. And the thought i have, without knowing where to go with it, is it sure seems like in our society, whether it is taking care of the young or taking care of the old or repairing a lot that needs to be repaired, there is a huge amount of very valuable work that needs to be done. It is much less clear to use a modern phrase that there is a viable Business Model for getting it done and the reason why i think there is a lot of reflection on the role of government Going Forward is if im right, there is vitally important work to be done for which there is no Standard Capital Business Model to get it done, that suggests important roles for public policy. Good. If i could make a friendly extension of where larry just ended. There is activist work in government to make it with a business return on investment, the social good. So addressing Climate Change feels like a big priority for all of us to do something about and the Fastest Growing job in america the energy job, what is the Fastest Growing job . Solar panel installation. You made comment about trade and technology. This is because of the cost of importing solar panels is low. Now is an interesting conundrum. If you benchmark germany against the u. S. On the cost to install a solar panel in a world where you have Global Competitive prices for importing these fancy panels, what explained the delta. It is a little over a billion dollar delta if you ran it out. What explains it is called the soft cost of solar installation. The lack of automation in something as simple as permitting the ability for a perm t hahp hc bility for a panels on the roofs. So if we took this powerful concept of Information Technology and innovation and if we h we had unit witnessous Beneficial Properties and financing and ready illy match making surfaces so thoses can get them more rapidly with the local installers if it could be put to work that way, we would reduce the tax on the human solar panel economy which is already the Fastest Growing energy job in america. So you create more jobs on the backs of what is essentially a low cost trade import, you would address issues important to the world like Climate Change, you would and what is getting in the way . The lack of the adoption of the innovation capabilities in all of places the mayors or the government. ,n day solar permitting in new york . You cannot. But you can in certain parts of california where they are making an emphasis here. There is too much for the leisure question. But as larry said there is work to be done and no return. We can make it profitable. There should be many, Many Companies organizing labors to put panels in. If we could decost and grow the market and not all of the installation s require a ph. D in physics and so there is growing opportunity to create job products. And well have more on frictions in the labor market and hopefully youll join us again for that. But in the meantime, please join me in thanking our panelists. [ applause ] so well have a tenminute break. The cspan cities tour visits literary and Historic Sites across the nation to hear from authors, and Civic Leaders on cspan book tv a