Transcripts For CSPAN Technology And The Workforce Panel 2 20150405

It is not the trophy or the triumph. It is the respect that is jacks rivals or member of the most. That is what gives the 1986 masters his size. To win, he had to overcome that day norman, and according to some, father time. That day we were a part of something special. Something bigger. Just as we now are today. Is not whether you win or lose, it is how you play the game. And no one has played it better or longer than jack. Today be congressional Gold Medal Ceremony for professional golfer jack nicholas, on cspan. The Brookings Institution recently hosted a forum on the impact of technology on the workforce. Speakers included larry summer. This is just over one hour. Great. Melissa they queue 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 in particular in the information center. Sector. 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 i tried to lay out in our hamilton project framing paper there are a wide range of views on this topic, in particular if this will be good or bad or how good or bad on 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 will just briefly introduce them. To my left is david otter, professor of economics at mit one of the nations leading economists who has probably contributed more to the nations 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 anish chopra served as our First Nations Technology Officer appointed by president obama and served as the virginias leader of technology and now in a technology firm. And erik has already been introduced and still a professor at mit. [ laughter ] melissa 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. 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 . David 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 deserved. 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 were not 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 the labor market is changing or economy changing as rapidly as the story so dramatically the premium for Higher Education has plateaud over the last 10 years and we see evidence highly skilled workers are moving, have less skilled jobs. A lot of employment growth has been in 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 it is a reason for skepticism. But a reins for skepticism for things not changing that rapidly. The second point i want to make, when we think about how technology interacts with labor market 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 and reduction in one activity implements production of technology. One whether it indirectly 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 years of training. It complements slowly and tends to raise incomes. There are many examples productivity results in making jobs more interesting and challenging. That is not always the case. I dont want to take up more time. That is on one side, on the other, we see a lot of growth of work that require ss 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 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 disruptive 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 a lot of the 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 technology especially academic entrepreneurs believe everything will be accomplished immediately and you talk to the crowd thats skeptical. Their view is these problems are hard. But were a long way away. As andy said we live in very interesting times. Melissa i am going to turn to you, as a nation you are tasked with using Technology Information for job creation, reduce health care costs. You have spoken optimistically about the power of technology and innovation to improve our lives. I am curious to hear how your view of what technology has done compares to that as andy and eric laid out. In particular, how have you Seen Technology impact of variety of sectors. Anish i have three observations. The first starts with my trip to google. We were trying to open up Government Data 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 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 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 utilizings 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 insure productivity gains hit them. Second, again when i was virginias Technology Secretary the north carolinavirginia border used to be the hot spot for furniture manufacturing. Thats it. We went through a policy of debate, 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 carolina, virginia border. Something interesting happened around this concept of automation. Manufacturing is cheaper becausemanufacturing is cheaper because you no longer have to have the same labor intensity and can insource jobs back at faster rate in response to china. So ikea opens up a manufacturing plant for furniture. Where . Right in the heart of that north carolinavirginia border, the same place that was written off for its capacity to build furniture and was being told, in the neighborhood you have to do , Different Things because your life as a furniture person is over. All of a sudden, because of 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 as they were when they were previously here, but thats still net positive. I would say the third observation, if i had any, is this democrization 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 democrization of capital innovation. Im really fired up over the impact visit is going to have in the next decade, acknowledging in certain sectors. 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. And you sponsored the center for American Progress inclusive prosperity, the goal of the commission being 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 anecdotal evidence and visual evidence of the kind that erik marshals, that points to technology having huge and pervasive effects. Whether it is complementing complimenting workers and making them much more productive in a happy way, thats one pocketssibility, whether it is substituting for them and leaving them unemployed is a possibility and can be debated. But 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 for the last dozen years are dismal. Any fully satisfactory synthetic view has to reconcile those two observations, and i have not heard it satisfactorily reconciled, which leads me to think that we do not have this all figured 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. But 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 output as we a 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. 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 so much of it becomes ultimately unimportant in the economy. Is that kind of thing relevant in thinking about the world . Heres a fact that continues to astonish me. I concede there are a million measurement problems around it. But it is a fact, what im going to say. In the way they compute the Consumer Price indices, by definition, they were all set to be 100 for every good in 1983. Consider two goods today. A Television Set and a year at a university. And instead of using a year at a university, i could use a day in a hospital. [laughter] the Consumer Price index for the latter two categories is in the neighborhood of 600. The Consumer Price index for the former category is 6. So there has been a hundredfold change in the relative price of tv sets and the provision of basic education and health care services. If anybody is wondering why governments cannot afford to do the things they used to do, i just gave you a big hint. If anybody is wondering where most people are going to be working in the future, i just gave you a big hint. If anybodys completely confident we will have rapid productivity growth in the future, they should be giving pause, because no matter how much 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 mit, 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 basically be okay. That is what i was taught 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. Director kearney 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 we are not seeing in the numbers. Are we not measuring it appropriately . Brynjolfsson thats a great question. It is good for you 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 but 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 is 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. 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 there as with the median. I think the big part of the angst whether its the tea party occupying wall street is that median line, not the top line, 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 forces of Technology Lead to a big acceleration. Thats what you would have expected. Brynjolfsson let me address that. Ive spent a lot of time visiting companies installing these technologies. Some of them are quite complex. An ert system or Customer Relationship management system. We documented it. It takes five to seven years to roll out. During that process theres a huge amount of organizational this option. And you can do this on a case by case basis and case studies of disasters at mit and elsewhere trying to roll these things out. Quite disruptive being rolled out. No productivity gained or even a 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 both enormous disruption and until the kabul terry pieces are in place you dont get the full benefits. But with previous technology, it can take 20 years for significant productivity gains. I think were in a Big Organization of the economy. Yes, it is disruptive. And we see these people have to be laid off and other people hired and other people 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. 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 what we see changes in the technology, as i have showed and am addressing, is 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 saddles or carriages 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. Brynjolfsson 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. But as an economic fact, i dont think theres any necessary inevitability, as larry was saying, that people sign the 1960s, that do not worry, it automatically self takes care of itself. And i think this is where we should have this discussion and discuss the policies. Even in the first Industrial Revolution, a lot of policy changes helped navigate that in a way we did create shared prosperity or inclusive prosperity. Kearney larry, you want to jump in . Summers 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 and 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 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 understanding is how there can be substantial disememployment 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. Because you have to keep your old system going 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 disappointment this employment disemployment. I dont think the lags to reorganization story quite does it. You shouldnt be getting the disemployment ahead of the productivity. Brynjolfsson 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 in 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. Kearney lets deal with the fact that there is disemp loyment. Brynjolfsson i think we agree with that. Kearney we all agree with that. We all agree we dont want go the way of the horse. [laughter] kearney 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 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 possess 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 the 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. [laughter] 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 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 that theyve been analyzing to know 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 the 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 failed by a filled by a tech trainable 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. If there is lot level of a number inefficiency to just match basic talents. Every one of these New York Times story, how many people have the skills to get into a harvard or m. I. T. Did not even apply because they did not know Financial Aid was available . So, were making bad decisions in our economy. So, if we unleashed recommendations engines, the go game or whatever, if the same capability, if every person in the economy had a helper that said given where you are and where you want to be 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 least leased marketplace of tools to do that . Just make the system work better. I think thats an initial place to start. Kearney and where is the vet going to get those skills . From the employer, local Community College . Chopra this is the other fascinating question. We did a little panel, the center for American Progress highlighting this at T Partnership with udacity for nana degrees. This is six month chunks of learning. Here is the irony. 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 bill 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. Kearney one to jump in want to jump in . 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, we sort of well, it didnt work out. Thats not productive when less than half of young adults are going to complete a fouryear degree. And that is not going to be 75 in 10 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, and 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, which was written a lot on kind of this new middle skill occupations. There arent things you can just hopefully, technology will allow us to be better at that. Unclear. As with so many thing, theres a Great Potential and great uncertainty about how fast and how well it will work. My biggest concern in this is the inequality with which people have responded to these market signals. So you might have thought at a time when college had become more valuable and more people are 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 in family income, and College College completion, much 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 make making the right investments. If you look below the median there are just that message and the tools to correct that problem are somehow not coming together. Let me say a few things. Im actually more confident about these things 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 aneesh is 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 effecting the demand for jobs, youre helping people youre helping a finite number of people win the race 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 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 huge shortages and we just need the train people is an evasion of the problem. It is fundamentally an evasion. And that goes to short run cyclical policy that it goes more generally to the way we operate on an Economic Policy and enormous importance of having tiger markets so that firms have an incentive to reach workers than workers having an incentive to reach for firms. It is quite remarkable to look over the years at the harvards Economic Department where there are 30 processes or festers and 40 students. When there are 30 professors and 20 graduate students, is remarkable how well the graduate students do. People who have been the school and environments where there are 60 men or 60 women are not unfamiliar with this phenomenon having the labor market run tight is fundamentally important for fairness. It is fundamentally important for generating workers. The third thing i would say is and this is in the same direction as what david was saying and i agree with him and he knows much more about it than i. I think we cannot think of education as just an undifferentiated blob, keeping tabs of where more is good. The idea used to be kind of the way that i wouldve thought about this 30 years ago was part of what is good about having more education is that people would be able to work in Office Rather than being plumbers. That is part of what was good. Of great people and give them opportunities and plumbers children to work in offices rather than being plumbers. It is kind of the absence of the technological changes being described that they are much 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 is central to thinking in a rational way about wages. I just say one of the thing. One other thing. The broad powermate of labor in a world where empowerment of labor in the world where the increasing part of the economy is generating income that has the kind of rent aspect to it and the question of who is going to share in it becomes fair large. One of the lesser puzzles in the very large puzzle of our Economy Today is 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. On the other hand, we have record high profits. You would tend to think that record high profits would mean record returns to capital and what we actually have is really low real Interest Rates. Probably the right way to think about that is that there a lot of rents and what we call profit that do not really represent a return to the investment, but represent a rents. The question of who is going to get those rents which goes to a minimum wage, goes to the power of unions, goes to the presence of profit sharing, goes to the length of patents and a variety of over Government Policies that prefer rents. And then when those rents are received, a ghost to the question of how progressive the transfer system is. That has got to be a very large part of the picture. And im concerned that if we allow the idea to take hold that all we need to do is all these jobs the skills that we just trained people it, they will be able to get in them and it the whole problem will go away. I think that is an ovation of a profound social challenge. Melissa you raise the issue of minimum wage and unions in the Bargaining Power of workers, but it strikes me that we are faced with a conundrum in the sense that these technological changes that we have been talking about meet the imperative of giving workers more Bargaining Power and a higher minimum wage makes that more compelling and important time about the same time, the same technologies make it easier for employers to replace workers who have become too expensive with machines. How do we thread that needle . David i think that is a real challenge. One of the benefits to the economy is melissa do the tax code and not the employer. Erik while it increases the incentive in Income Distribution , it is a broadly share costs and lots of people buried as is posted as opposed to the employer hiring that person. I think you can make a good argument that those employers and entrepreneurs figure out how to put the sum of peoples work should not be only want to bear the burden of having to raise the income so that people who are right now having their skill demands fall. There should be a tax credit and ensuring that more broadly. That would encourage people to work and also spill over and encourage more people to look for creating this country jobs. David lets us have some numbers to put this in perspective. If we have the same Income Distribution as we did in 1979 the top 1 would have 1 trillion less today in the bottom 80 in the bottom 80 would have one trillion dollars more. That works to about 107,000 for the top 1 and that is a trillion dollars. Lawrence i dont not know what the number is, but the total cost of the income tracks credit is 50 million. No one has an agenda to doubled and come tax credit. The big aggressive agendas for the income tax credit are probably increased by a third or a half. Im for it. Im all for it. But we are talking about 2. 5 of the redistribution that has taken place. You have to be looking for things and there is no one thing that is going to do it. My reading of the evidence is a fairly general reading of the evidence. 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 one Ronald Reagan was president. Even Ronald Reagan when he was president was not complaining at the existent minimum wage and that it was doing a lot of damage to employment. Productivity has gone up since that time. It is tempting to think that everything is tradable, but if you ask not across International Borders in between the United States and other countries and you just take the boston as a is tradable and it is less than half. There is a lot of scope for raising wages and area where there is not going to be some broad kinds of competition. Melissa we have some questions from the audience and im going to ask one directly to that last point. What is the role of trade on technology and vice versa yuc . And how does that relate to people in Different Countries . David a lot has to do with changes in International Trade and with china in 2001, everybody is surprised with the enormous search in imports the u. S. In a very sharp decline in manufacturing and are very large spillovers to surrounding communities and the words that ive done with Gordon Hanson and brennan price and it really documents this. I think we have all been surprised by how big a factor that is an fortunately that we were much most closer to a hologram. I think this kind of disruptive power is underappreciated and it is going to be quite significant. Im actually in favor of the fast track for negotiating trade agreements on it. We often find an effect on the cause and try to get it wrong. We want to attribute it to the most obvious thing rather than something more subtle. We thought the internet economy was an amazing thing from 1995 to 1999. I do not see how it all the sudden became a disastrous thing in 2006. I do not think that is possible. The other thing that i would say is that i do think that trade does circumscribe some of the things that we do. We could not, in my opinion restore unions to where they were 40 years ago without having very substantial effects because we face and we do not have the rents and market power. You can point to countries like germany that have much stronger unionization, but German Companies are outsourcing to eastern europe. On the other hand, i also want to point out that we bring a very western perspective and globalization and technology jointly have brought more human beings out of poverty in the last two years than any time in world history. That is a percentage if we look at what has happened in china and india. A lot of the things that leave the u. S. Threatening are created much broader prosperity. When i think about machine substituted labor, i much more worry about indian tech workers that i do about the general employment power in the u. S. If im thinking about this kind of utopia, i think about a world where poor people in kenya have solar cells, but they do not have jobs for which their skills are really scares. I think we should think about technology and globalization working handinhand of this point in the view that trade was irrelevant and 1980s and 1990s is quite out of date and still has not fully permeated the consciousness of how people thought about development. Lawrence i want to agree in part and i want to disagree in. I think it is fair to say that trade in technology are strongly associated with each other. I think who would not have much more trade if not for greater ease of communicating and transporting across countries but for the technology that represented the container ship and a great deal else. Will be called trade and a great increases in trade are very much tied up with technology. Second i would agree and be inclined to respectfully disagree with david on one aspect. I agree with david, and my taking has evolved over the last 20 years, on the question of how much changing trade patterns and packed in the u. S. Labor market. I think there is pretty clear evidence that there have been significant impacts and some people exaggerate them, but i think there are significant impacts. I think there is a quite different statement to assert that all of that is due to trade agreements. I think one has to look carefully at the counterfactual. David asserted that since china succession into the wto what is the counterfactual. I have some familiarity with the level of u. S. Tariffs on china prior to chinas succession into the wto and they were not hard high. The main reason why china is a since is exporting more to United States and producing six times as much as a was in 1999 and producing in a much more technologically sophisticated way. It is true that they are not been in the wto and we could us past a whole new set of protection measures, but i think if you ask the question if the United States had maintained its trade policies visavis china as they stood before china was admitted into the wto what fraction of the increase in chinese exports to United States would we have observed and i think the answer is the vast majority of increase in exports. I think that is very important and i think theres a tendency to suppose that if trade developments impact wage distribution in the United States than presumptively trade agreements are a bad idea. I think that in order to analyze any given trade agreement one has to ask the question how much are very is being change the United States and how much are being changed in the affected countries . My reading of the evidence is that many of the cases because rightly or wrongly the United States market is already substantially open. You look at the proposed trade agreements and the reduction and barriers and the consequent increase in countries looks quite large relative to any impact the United States. I think that is an important qualification on the globalization story. Melissa im going to ask a different one that takes things in a different direction. Someone asked from the end of 19 century, technology let the workweek defined. Why cant that process continue with the benefit of Technology Mean a short work week with no loss of income . Im going to ask a bit of an exceptional existential question. All this technology will really changes our view of the good life and how we think about our time. Aneeshs story about the expert craft furniture makers who can put together ready to assemble products for ikea maybe this is to establish estelle just for an economist, but that seems lost to me. Eric, im going to open with you. Erik this is a great question. If you are not read the great article for economics for our grandchildren, he talked about predictions on what would happen to our generation. He was more or less spot on on gdp per capita. He those funds and got that right. He inferred and looked around people and so that people would not want to work a lot and maybe go foxhunting occasionally or whatever. It was not my there was not much else to do with that well. People are working not tend to 15 hours a week and those who are working are working a lot more than that. There are a number of reasons for that. Part of it is that we have a lot more that we can spend our money on now and new goods that people enjoy. Part of it is also that people enjoy working. And there was a meeting that it gives to life for a lot of people about how putnam describes when it releases the community and have shorter work weeks. There is somewhat of a trend in that direction. We probably have to start thinking about new ways to get meaning in life and i do not think that is an insurmountable problem. We would have to have enough productivity drills to make that work. Lawrence if you look at a textbook in the 1970s, chapter five past discussion on the backward ending labor supply curve. If the wages go up at first the work will be more because of the tract of the work after a while you have enough income. When you have enough income, you take a bunch of it in leisure. The labor supply curve looks like this. If you look at an introductory economics textbook today, the ideas largely not there. And the reason is that it used to kind of be true. The high wage people worked less hours than lowwage people. Your image of the 1930s was that the ceo sort of went out to play golf at 4 00 and the workers worked 60 hours a week. If you look today, for the first time in basically economic history, people have higher wages, on average consistently, are finding souls working more hours than people who have low wages and it is in part a matter not because people with low wages are not getting more work and there are choices that people are getting more hours. That is why this idea of a more leisurely nirvana is less in fashion. With that said, i must say that i have to be impressed that americans worked about 50 more hours in a year the northern europeans. Im not sure that i would want to call that a great virtue of american society. But i think we have to think very carefully about what the alternative to work is and how meaning and community are found in the absence of work. Classical economics has the simple view which is working as bad and leisures good. Those who have spent time in communities with 28 unemployment dont think that is a riveting formulation of human motivation and desire. I think it is something that needs to be thought about a great deal. The thought i have without knowing where to go with this is that it sure seems like, and our society, whether this taking care of the young are 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. I guess the reason why i think there is going to be a lot of government Going Forward is that if im right that there is vitally important work to be done for which there is no Standard Capital Business Model that we will get it done. That suggests important roles for public policy. Aneesh theres some activist work in government to make a business return on investment to social good. Addressing Climate Change feels like a big priority for all of us to do something about. The fastestgrowing job in america was the Fastest Growing job it in america . Solar panel installation. You made comments about trade and technology. Partially because the cost and reporting solar panels as low. Heres an interesting conundrum. If you benchmark germany against the u. S. On the cost to install solar panels, and a world where you have globally competitive prices for importing these technologies and fancy panels, what is once the delta . It is well over a billion dollar delta if you rented out. What explains it is something called the soft cost of solar installation. The lack of automation and something as simple as permitting the availability the ability for a home or business to put solar on the roofs. If we took this powerful concept of Information Technology and innovation and we add ubiquitous same day a much more efficient markets for credit to finance these things and we had much more relevant available readily available Matchmaking Services for folks who want to get these panels at a low price can get to installers, and if all those technologies can be put to work that way, he will reduce this billion dollar hidden tax on the American Solar Panel Company which is already the fastestgrowing energy job in america. You would create more jobs on the backs of what is essentially a low crossed cost trade import. You would address issues important to the world like Climate Change. What is getting in the way i . The Mayors Office of the government. Can you do same day solar in new york city . You cannot. The you can do it in certain parts of california where they are making it in emphasis. My only comment upon the too much work to do leisure and larry said theres so much work to be done and overturned we can make it profitable. There are Many Companies that are organizing labor to put in solar panels. If we can grow the market and create jobs and not all this installation jobs require a phd in physics you can do them with different level of skills and economy. I think there is a role of government to create opportunity to. Melissa we will have another panel so hopefully you will all join us again for that. In the meantime, please join me in thanking our panelists. [applause] melissa we will have a 10 minute break. [applause] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] the Brookings Institution for the impact of technology in the workforce also included a discussion on entrepreneurship and technological innovations. This portion is an hour