getting this sort of thoughtful discussion it deserved. i think 15 or 20 years ago, erik and i talked about this when i was a graduate student and erik was a professor and we felt that people weren't taking the issue seriously. if anything, i would say people should not panic at this point. and i think -- you know, there are a number of remarks i could make. i think there are season for some skepticism or at least a -- a little bit about how fast things are actually moving. and i would think there is a lot of aggregate data that don't suppo support the idea that the labor market or the idea is changing as a dramatic story. so the premium to higher education has plateaued over the last ten years. and in fact, we see evidence that highly skilled workers are moving -- have less rapid career directors and moving into less skills and productivity is not growing rapidly and the unemployment growth we've seen have been in relatively low education, in person serve occupations which has a technology element to it. so i would just say that it is easy looking at examples to see an in flexion point but when you look at the aggregate data there is nothing that suggested we are at an in flexion point. the data could be wrong. i have skepticism for thinking things are not changing that rapidly. the second point i want to make is that when we think about how technology interacts with labor markets we think in terms of substitution of labor with machinery and that is a completely natural thing to do because technology is made to do some task that they were doing. but we've been substituting machinery for labor for, you know, as long as we could think of ways to do that. and that is a kind of a first order effect, a mechanical effect that we can automate transportation or calculations or information storage and retriev retrieval. but what is neglected is many activities require a mixture of things. a require creativive and mixture of motor power and dexterity and if those things need to be done together when you make one of them cheaper and more productive you increase the value of the other. so doctors have not become less valuable as medical technology has advanced. they can do more, diagnose more and that makesrñ÷ them more valuable. ultimately there are three things that sort of contribute to how an aggregate -- reduction in the cost of one activity effects employment more broadly. one is whether the technology directly substitutes you individually or whether it helps you do one thing so -- does one thing so you can do something else. so if you think about diagnosing medical testing, physicians can get more information in the course of a day. the second is how elastic is the demand for those services. so if we are so much more productive as medicine, if we could do all of the medicine we did in 1950 in 10 minutes a week and people will be healthier if that was the case given the state of medicine at the time. as we get better at it, people kmum more of it, because there is problems with the health care delivery system but because of the service is of much greater value and demand is elastic. and third, from a labor perspective, it matters how scarce the skill set is that is complemented. it takes training and education to become a doctor and when they become more productive we don't get them at minimum wage because they have to have years of training so they are complemented and the supply moves slowly but that tends to raise the income. so productivity increases lead to growing wages and employment and making jobs more interesting and challenging. but that is not always the case. i don't want to take much more time. but that is on one side of the labor market. on the other we do see growth of work in nontechnical jobs that require generic skills and those are hard to automate. and let me make my final point. a lot of what matters is how rapidly things change. so if tomorrow amazon -- introduced the $1,000 bezos bot and it came on amazon prime so you could have it by monday, that would be a dramatic advance and we would all buy it. but it would be extremely disruptive because there are people that that is the activity because child and driving and cleaning and cooking and lawn manicuring. but if amazon said we're going to have this in 2045 for $1,000, we'd be well situated to adjust to that because that is not where we want to be over our long-term career. so it matters how quickly we get there. and i think a lot of the debate is not whether these things will occur but whether we're at the second half of the chess point and the inflection point and things are doubling from a small number to a large number and doubling again, but would you say the technology community and the academic community family is effected. and if you talk to the mit's they are skeptical but their view is the problems are hard, we are making progress which was not true 30 years ago but we're a very long way away. so as andy said and put it well, we live in very interesting times. >> thank you. i'm sure we'll revisit those ideas when we have our discussion. so aneesh, i'm going to turn to you. with the chief technology officer you were tasked with using technology and innovation to further our nation's goals of job creation, reduced health care costs, protecting the homeland, tall order. but you've spoken very optimistically about the power of technology and innovation to improve our lives often a wide -- on a wide scale. so i'm curious to hear how your view of what technology has done skpars to that -- skpars to that as erik and andy have laid out and ho have you seen technology effect sectors, including technology and education and others. >> thank you. i have three opinions, all very bullish on the next decade. the first started with my first trip to google. i was the virginia secretary of technology and we were trying to open up government data to search enk ipgs to make it more accessible to more people. people were getting information through search engines now coming to the url of xyz.gov. and i saw a globe when i walked in that had a light emitted for every search conducted on goorg and you would get to north korea and it was dark and the stark observation. and large swaths of africa and many parts of the world had darkness. if you think about the american economy, what sectors are on the functional equivalent of that level of darkness as it relates to the impact that the health -- the internet has had on the sector. health care, energy and education have not necessarily been plugged into the internet, specially around data sets that have been constrained by regulatory policy. medical records aren't flourishing on the internet and your energy usage data isn't flourishing on the internet. and when you look at the amazing capability and frod prod -- productivity and you look at a quarter of the gdp and you think the group of the sectors have been completely missing from this revolution and obviously if incentives start to change and data opens up at the same time you might see an explosion of innovation and we're seeing that now in health care. we made great strides opening updata and connecting medical record systems an more venture capitalists flowing into this sector than you imagined not because they are trying to make the traditional system function better but now the incentives are changing to deliver a different kind of health care delivery system which makes it wide open for entrepreneurs because it is creating new types of jobs never existed before in the health care sector. not all requires a hpd in physician -- a ph.d in physics. so category number one is we are now opening up big sectors to the internet age and that will bode well to ensure productivity gains hit them. second, again when i was virginia's technology secretary, the north carolina-virginia border used to be like the world's hot spot for furniture manufacturing. that was it. and we've gop through a series -- gone through a series of policy debates about those jobs aren't coming back and how do we build a safety net and brought broad band to try to improve the border. and something happened. manufacturing is cheaper because you no longer have to have the same labor intensity so we can insource many manufacturing jobs in response to china. so ikea opens up a manufacturer plan for furniture. where? right in the heart of the border. sim plame writ -- the same place written off for the capacity to build furniture and told you have to do different things because your life as a furniture person is over because robots as co-workers an automation, you can compete on a footing and we've seeing that insourcing across the country. they are coming back. they are not the same labor as intensive but that is still net positive. and the third opinion is the democracy of entrepreneurship is the most exciting thing i've seen because in the same new york -- north carolina-virginia border, there were grandparents working in textiles and now they're building designs for clothing that can be 3-d prints or the intellectual property can be transmitted over the international all over the -- internet all over the world and they creating value in that market and they can plug in because of the capital and information. so i'm fired up about the impact this is going to have over the next decade. acknowledging that obviously in certain sectors we'll see challenge. too bullish, but i'm very excited. >> okay. larry, we'll talk to you. you've been thinking and commenting about this for a long time. you wrote a 2013 npr issue that we are talking about and you talked about inclusive prosperity, the gloel of the commission -- the goal of the commission to address rising levels of in cam equality and the stagnant wages at the bottom of the distribution. so 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. i'll leave the question of what we should do until later. and so let me focus on diagnosis and make a confession of ignorance and observation and express a worry. confession of ignorance is this and i think it should apply for anybody who speaks confidently in this area, on the one hand, we have enormous anecdotal and visual evidence of the kind of erik marshals is technology having huge and pervasive effect. whether it is complementing workers and making them much more product nif in a happy way, that is a possibility. whether it is substituting them and leaving them unemployed is another possibility that can be debated but in either of the scenarios you expect 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 and on the other hand the productivity numbers are dismal. and any fully satisfactory synthetic view has to reconcile these two observations and i have not heard them satisfactorily sec on siled which -- reconciled which leads me to think we don't have this all figured out. and it is a big problem to believe -- and if you believe that technology happens with a big lag, and it is only going to happen in the future, that is fine. but then you can't believe it is already caused a large amount of in equality 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. and there is an aspect that doesn't get enough attention. which is, sectors through progress working themselves into irrelevant. let me give you an example. the illumination sector, providing light. it has had a ten-fold increase in productivity every decade for a century. achd we think of it as a trivial sector in the economy. no doubt we could continue to produce ten fold increases in productivity but most of us want it to be dark at night. and more little league night games than there used to be and parking lots are lit more brightly than they used to be but basically illumination is quasi free and where candle making was an industry in the 1900s, illumination is trivial today. and we need to recognize that when a sector that has rapid technology prog regular, but the world can absorb only so much of it, becomes ultimately unimportant in the economy. is that kind of thing relevant in thinking about the world? here is a fact that continues to astonish mish and i concede there are a million measurement problems around it but it is a fact what i'm going to say. in the way they compute the consumers price indices, they were 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 six. so there has been 100-fold change in the relative price of tv sets and the provision of basic education and health care services. if anybody is wondering why governments can't afford to do the things they used to do, i just gave you a big hint. if anybody is wondering why most people are going to be working in the future, i just gave you a big hint. if everybody is completely confident that we're going to have rapid productivity growth in the future, they should be given pause. because no matter how fast productivity we have in agriculture or illumination, it doesn't matter for the aggregate economy and increasingly that is becoming true of a larger and larger fraction of what it is that we produce. third, i was -- when i was a undergraduate at m.i.t. in the 1960s, there was a whole round of concern about this. will automation displace all of the employment. and what i was taught as an undergraduate was that basically the people who thought it would, were a bunch ofiddiots and eventually there would be enough demand and it would work itself out and people would be productive and we need transition assistance but it was basically going to be okay. that is what i was tout and bob sullivan taught and everybody else was good afterno-- was goo. and i believed that and i 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 25-54 are not working. and it won't be very different even when the economy is at full employment, by any definition. and so something very serious has happened with respect to the general availability of quality jobs in our society. and we can debate whether it is due to technology or whether it is not due to technology. we cannot debate -- we can debate whether it is the cause of dependence or whether it is caused by policies that promote dependen 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 that are not working is doubling in a generation. and it seems to be an upward trend and it will function well and function well without major social innovations and i would want to leave you with that concern as there, whether you think it is due to technology or whether you think it is due to globalization or due to the maldistribution of political power, something very serious is happening in our society. >> great. thank you. so i definitely want to make sure we return explicitly to the questions that larry raised about policy and where we need to push. but before i do, i want to pick up on the first observation larry made and erik this a great point for you to jump in on. which is given all of the technology advances, really celebrated, why is it that gdp per capita isn't 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? we're not seeing it in the numbers. are we not measuring it appropriately? >> that is a great question. it is good for larry to bring up and spurred andy and i to work in this stream. people like gordon and others talked about the great stagnation. and at the same time we are seeing great things, andy touched on them. we could spend days talking about the wonders of technology we've seen. so it is a bit of a paradox there. there are a couple of parts of it though that are worth decomposing. the part about median income, i don't see that being such a paradox. as i suggested earlier, there is no economic law that said everybody is going to eventually benefit. it could be a small or a big group left behind, 50. so you could grow the pie but some people are made worse off and i think that is a fair description, at least in mie mind, i don't know other people would disagree, about a big part of the story of what is going on. is people with certain type of skills are in much less demand than in the past in part because of technology and many of them are in the median income and david mentioned that and a lot of people have touched on it. the question of overall gdp per capita is more puzzling. although as i showed you the chart, you don't see as much of a problem in the coupling chart as you do with the media. whether it is the tea party or "occupy" wall street, and may there it hasn't been as robust as we expected. >> it should have been. if technology has been super and more strong and more potent and more everything, than it should have been before, the question isn't whether it slowed down, the question is why didn't these new gale forces of technology lead to a big accelerations. >> so let me address that. so i've spent companies installing these technologies and some of them are quite compete competent. you can install a crp, customer management system, it takes five to seven years for them to roll out and during that process there is organizational disruption and you can do this on a case by case study, including at m.i.t. and elsewhere, trying to roll them out, no productivity gain and decrease while they are being rolled out and we have aggregate data from hundreds of firms that we've written papers on this that shows there is a long lag. if you roll that up to an entire supply chain or economy, you can imagine that these organizational disruptions or complements which are often about ten times larger than the technology investments themselves, and they take much longer to roll out, can be part of these -- these both enormous disruption but also until the complementary pieces are in pace you don't get the productivity. people like paul david said when you went back to electricity, it took 30 years for significant productivity gains. so that is part of the story. we're in the midst of a big reorganization of the economy. yes that is disruptive and see these people have to be laid off and other people have to be rehired or reskilled and as you are doing that you don't instantly get the full productivity gain but you do get the disruption so that can i think can partly answer the question about how you could have disruption without getting the full payoff. if i could take a moment to touch on the things that david brought up because those are interesting. partly about the leveling off of skill biased technical change or the college premiums i should say is very consistent with what we see as far as changes in the technology as i am showing addressing, in different parts of the labor market and more broadly i think he raises the right questions about complements and substitutes and what is happening. and often times the technology initially is broadly complementary as many pieces of the system require humans or others to fill in. if you look at horses, the number of horses increased all through the industrial revolution up to 1901, that was peak horse, because whether it was saddles or carriages that made them valuable but then the numbers plummeting once the remaining component that horses added wasn't -- was no longer not automatable, if that is not too many double negatives. and you could see things potentially -- our humans different than horses. of course we're different than many ways. we have a much broughter skill set and we can think -- >> and horses don't own the capital -- >> and once labor starts disappearing you can have humans that can have capital and vote and have guns and do other things if they are not happy with the income distribution. but as an economic factor, i don't think there is any necessary inevitability as larry was saying, what people thousand in maybe the '60s, don't worry, it will self- -- take care of itself. and that is one of the reasons we should have this discussion to take care of the policies to take care of it. and in the industrial revolution, there are ways that change that that include prosperity. >> larry do you want to jump in? >> just on the productivity and disruption thing. i think it is a difficult argument. so let's take retailing. you can imagine you'll have spiffy technology and no longer have people behind cash registers and all of that. the problem is you won't expect that the people behind the cash registers would get fired before the people working the systems got the new systems working. and so the challenge about right now is people see that there is a lot of disemployment already come from the technology. but they don't see any productivity increase. and i understand why it might take years for it all to have an effect, what i have a harder time understanding is how there could be substantial disemployment ahead of the effect of the productivity. if you thought that -- if you thought that it was and i don't think the lag to reorganization story does it. because you shouldn't be getting the [ technical difficulties ] >> real different from the people of team whose demand is falling, you could have big changes in where the rents are happening way ahead of the changes in the over all the ch overall let's deal with the fac that there is disemployment >> the bottom line, that part i think we agree. >> we all agree we don't want to go the way of the horse. so what do we do about this -- you know, i want to talk about the policy and i'm going to pose this to the panelists as a two-part question, so bear with me. so first, it seems to me that in large part the way this is going to play out for the american worker is going to depend on how labor supply response in terms of particular skills. in other words, is there a way to imagine that a suspicious number of people in our population will acquire the skills or the talent 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? and the second part of my question is what about those workers who simply can't acquire those skills or don't possess these talents. or even the ones who do, but there simply are not enough jobs for everyone. so 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 higher wage earners. it doesn't make me feel that robots are going to be able to clean houses any time soon. i mean, is that a reasonable think to worry about? and if so don't we really need to rethink our social contract and dramatically change our wage subsidies and income import. >> i want to take a stab at this. if we provide the same capabilities that we said may have the same particular effect, but to unleash this in the sense of how are skills being implemented by employers, communicating who you will get if you join and what the job seeker will get, to me we're in the dark ages of that experience. you log onto amazon.com and there are feedback loops to be able to analyze what the product is, to be able to shop for a video or lawn equipment or whatever. and if you ask the same question of the work force, the sad answer to that is dramatically no. we just did a study on the unemployed veteran skills gap. and what we tried to do is we read every job posting in the economy and said what are the underlying skill sets with the job postings. and then we looked as best we could through the government data. the underlying skills. we took a stab at the commonwealth of virginia. and you had hundreds of technology companies post jobs from employers who made a commitment to higher veterans. and they're going out of their way to want to hire veterans. but they communicate the job in such a manner that feels like it's not really available or attainable to some set of the population. so by doing this sort of skills assessment, what we figured out is every single entry level technology job, every single one in april 2014, from a veteran who made a hiring commitment, could have been filled by a tech trainable vet who was at that moment unemployed in the commonwealth of virginia. yet neither the employer knew to look for that vet whose background met the screening, nor did they know who could get that tech job because there was nobody in that career path, to say this is a very simple attainable move to get you to that next level. so if there is just that basic problem with the talent, how many young people have the skills to get into a harvard-type school, don't even apply because they didn't think they were even eligible. the gentleman that talked about the go game or whatever, if the same capability -- if every person in the economy had a little helper that said given who you are and where you want to be, here is the shortest path to awesomeness based on the limited skill you need to obtain, to land an available job is that anywhere in our system today? how exciting it would be if it were an unleashed marketplace to do that? just make the system work better. i think that is an initial place to start. >> and where is the vet going to get the skills? from the employer, the local community college? >> this is another fascinating question. we set up a panel highlighting this at&t partnership with udacity for nano degrees. here is the irony of it. they're great for cyber security and other areas of growth. so i asked the question, are any of you regulated as learning programs that qualify for government subsidy whether it is titled for funding or qualify for the gi benefit or work force investment. the vouchers, the sad reality is that these innovations are disconnected from any actual government support, because there are not any on-ramps to be reimbursed in that manner. these are areas where i think there is opportunity. >> can i jump in -- >> sure. >> i agree with the direction they're going in terms of skilling. there is a policy focusing on sort of college for all. and you know that has been healthy at some level but it's very incomplete. our education system is geared towards get people out of high school into college. if they don't go to college, it's sort of well, it didn't work out. that is not productive when less than half of young adults are going to complete a four-year degree and that will not be 75% -- although there is an increase in 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. health care professionals. in technical positions. many of which require real skill sets. but they don't require four-year liberal arts training. so i think we push too many people towards expensive four-year degrees, which means either they're not as efficient as they could have been, there are opportunities. there has been a lot written on sort of this new middle school occupations. there are not just things you can get with a high school degree. i think there is a lot of productive room for investment there. hopefully technology will allow us to be better at that. unclear, there is -- where we -- as with so many things, there is great potential and great uncertainty about how fast and how well it will work. my biggest concern in all of this is the sort of -- the inequality with which people have responded to the market signals. so you might thought in a time where college became more valuable and more and more people go to college, that is sort of gradient where more people went to college. the gradient has become much steeper, and in college completion, much steeper still. that works against economic mobility. it means that kids from lower backgrounds will be much less likely to go to school and be gainfully employed. so when larry talks about the declining employment rate among u.s. workers we're primarily talking about young males, many of them minorities. many of them from poor families. and so it's a pretty concentrated problem which makes it worse, not better. you know if you sort of look from the median on up, the u.s. society looks mobile, healthy, making right investments. if you look below the median, there is just that message and the tools to correct that problem are somehow not coming together. >> let me say -- let me say a few things that i'm 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 they are talking about are largely whistling past the graveyard. the core problem is that there are not enough jobs. and if you help some people you can help them get the job but then someone else won't get the jobs. and unless you're doing things that are affecting the demand for jobs you're helping people win a race to get a finite number of jobs and there are only so many of them. this was very powerfully demonstrated by experts who examined it in france where they looked at a lot of job varieties matching the innovation. and they basically found that in low unemployment areas of france they worked and in high employment areas in france they only helped some people with net experience and didn't help others. the wage inflation in the united states is 2%. it has not gone up in five years. there are not a great percentage of the economy where there is any evidence of hyper wage inflation of the kind that would go with worker shortages. the idea you can just have better training and there are all of these jobs, well, there are places with huge shortages and we just need to train people. i'm all for trying to do it but it is fundamentally innovative. secondly what we need is more demand. and that goes to short run cyclical policies. it goes more generally to the way we operate, and the enormous importance of having tighter markets so that firms have an incentive to reach for workers rather than workers having an incentive to reach for firms. quite remarkable to look over the years at the harvard economics department when there are 30 professors and 40 graduate students. it's remarkable how badly the graduate students get treated. when there are 30 professors and 20 graduate students and every professor wants a graduate student, it's remarkably how well the graduate students get treated. you know that process where people have been to school in 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 investment in workers. third thing i would say is that i -- and this is in the same direction, is what david was saying. and i agree with him and he knows much more about it than i. i think we can't think of education as just an undifferentiated kind of capital. part of what would be good having more education is that people would be able to work in an office rather than being plumbers. and that was good. that would upgrade people and give them new opportunity and plumber's children could work in offices rather than being plumbers. it's kind of the essence of the technical changes that are much more daring on people who work in offices than they are on plumbers. so the whole idea of working with craft and the specialized skill rather than this generic general manager with a liberal art competent, is i think central to thinking in a rational way about wages. and i'd just say one other thing. i think the broad empowerment of labor in a world where an increasing share -- increasing part of the economy is generating income that has a kind of rent aspect to it. and the question of who is going to share in it becomes very large. one of the lesser puzzles but very large puzzle of our economy today is that on the one hand we have record low real interest rate 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 profit. and you would tend to think record high profits would mean record high returns to profit would mean high interest rate, and what we actually have is low interest rate. probably the right way to think about that is there is a lot of rent in what we're calling profit that don't really represent a return to investment but represent a rent. and the question of who is going to get those rents which goes to the minimum wage, goes to the power of union. goes to 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 rents 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 of these jobs with skills and if we can just train people a bit then they will be able to get into them and then the whole problem will go away, i think that is fundamentally an evasion of a profound social challenge. >> so let me ask you, you raised the issue of the minimum wage and unions and the bargaining power of workers. but it strikes me that we're faced with a conundrum in the sense that these technological change makes them in a bargaining power, making it more compelling and important. but at the same time it makes it easier for employers to replace worker who become too expensive with machines. how do we thread that needle? >> well, i think it's a real challenge. and one of the ways to talk about it, not just memory wage but the earned income tax credit which is a way to encourage people to work and sharing some of the benefits from the economy to people who are working and maybe not making very high wages. >> through the tax code, not the employer/employee relationship. >> one of the differences while it increases the income distribution it's a broadly shared cost that lots of people bear as opposed to specifically the employer who comes up with a way of employing that person. and i think that you could make a good argument that those employers, those entrepreneurs who figure out how to put some of those people to work should not be the ones to bear the burden of having to raise the incomes of the people who are right now having their skill demands fall. an earned income tax credit is a way to share it more broadly. the effect is not only encouraging more people to work but actually it could encourage more people to look for creating those kinds of jobs. >> let's 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 to the top 1%, works out to about $11,000 a year for a family in the bottom 80%. that is a trillion dollars. i don't know what the number is. my guess is that the total cost of the earned income credit is 50 billi$50 billion. nobody has gotten in on the policy of income tax credit -- it's probably to increase it by a third or a half. i'm 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's 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, was not really complaining that the then existing minimum wage was doing a lot of damage to employment. and productivity has -- productivity has gone up -- since that time. it's tempting to think that everything is tradeable. but you know if you ask not between -- across international borders, between the united states and other countries if you just take the boston msma, and you say how much is tradeable? it's less than half. so there is a lot of scope for raising wages in areas where there is not going to be some broad kinds of competition. >> so we have some questions from the audience. and i'm going to ask one that relates directly to that last point. so 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. you know, a lot of the disruption that people have alluded to has a great deal to do with international trade. and especially china, wto in 2001, see everybody is surprised that there was an enormous surge in imports in the united states and a very sharp decline of exports and in surrounding communities that i worked in. it really documents -- i think we've all been surprised by how big a factor that is. and fortunately that we're much closer to equalibrium. i do think that we do -- often you know we find an effect and look for cause and sometimes we get it wrong. we want to attribute it to the most obvious thing rather than something more subtle. you know, we thought the internet economy was an amazing thing from 1995 to 1999. i don't see how it became a disastrous thing -- i don't see how it's plausible. the other thing i would say is i do think that we're, you know, that trade does circumscribe -- we could not restore unions 30 years ago without having a substantial cause and effect. we don't have the kind of rents, market power. you can point to countries like germany that have much stronger unionization. but then german companies are out-sourcing a lot of their goods to europe. on the other hand, i want to point out we bring a very sort of western technology -- jointly bringing more human beings out of poverty in the last 20 years in any time in world history and that is not just because we have a larger population. a lot of the things we view as threatening are creating much broader prosperity, at the same time they create more concern. when i think about machines and labor we think much more about labor and textile workers than i do on the general employment pattern in the u.s. i think about a world where you know, poor people in kenya have solar cells, but there are no jobs for which their skills are really scarce. we should think about technology and globalization as working hand in hand at this point. and the view in the '80s and '90s and trade was sort of irrelevant to whether it was having the u.s. -- is out of date and really not fully conscious of how it developed -- >> i want to agree in part and disagree in part. first of all, i think it's right to say that trade and technology in a stronger sense are associated with each other. we wouldn't have much more trade but for the much greater ease of communicating and transporting across countries. but for the technology 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. second, i would agree but be inclined respectfully to disagree with david in one aspect. i agree with david, and certainly my thinking would have evolved over the last 20 years, and the question of how much changing trade patterns impacted the u.s. labor market. i think there is pretty clear evidence that there have been significant impacts. people exaggerate them, but there are significant impacts. i think it is quite a statement 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 china's accession into the wto, i have accession on the tariffs, and they were not high. the main reason that china exported to the united states is that china is producing six times as much as it was in 1999 and producing much more technologically sophisticated ways. now it's true if they had not been in the wto, conceivably we could have passed a whole new variety of measures. but i think if you asked a question, if the united states had maintained its trade policies, vis-a-vis china, what fraction of the exports to the united states would we have observed? i think the vast majority is an increase in exports. and i think that is very important because i think there is a tendency to suppose that if trade developments impacted the wage distribution importantly in the united states, then presumptively trade agreements are a bad idea. one has to ask the question how much are barriers being changed in the united states, and how much are barrier's being changed in the affected country? and my reading of the evidence is that in many of the 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 subsequent increase in exports to other countries looms quite large relative to any impact in the united states. so i just think that is an important qualification on the globalization story. >> i'm going to ask a different one that takes these things in a bit of a different direction. so someone asked, from the end of the 19th century, technology let the work week decline. why can't that process continue with the benefit of technology being a shorter work week with no loss of income. and i'm going to add a bit of a maybe existential question. you know, all of this technology really changes our view of the good life and how we think about our time. and the story about you know, the expert craft furniture makers who now put together ready to assemble products for ikea, i mean, something seems loss -- >> this is a great question, and those who have not already read the great article, economic possibilities for our grandchildren. he talked about possibilities for our children. more or less spot on, on the gdp capital. he got that right. he inferred that he looked around people in his area that people may not want to work a lot. they may go fox hunting, but there wasn't much else to do without income. and he got that wrong, people were working ten to 15 hours a week, those working are working a lot more than that. there are a number of reasons for that. part of it is we have a lot more money to spend now, new goods that people enjoy. part of it is the sociology, there is a joy of working, the meaning it gives to a lot of people, what they described when work leaves the community. it is sad to see all sort of social indicators plummet because of the way we are wrapped up in having a job and working. going forward, could we have shorter work weeks? would that be part of it? we could. and there is somewhat a trend in that direction. we probably have to start thinking about new ways to get -- how we get meaning in life. i don't think that that is an insurmountable problem. we have to have enough productivity growth to make it work. >> i'm uncertain what i think about this -- if you look at the introduction to the textbooks to 1970. in chapter five there is always something about the backward lending labor supply curve. the idea is as the wages go up you work more because it's attractive to work, and after a while you have enough income. and when you have enough income you take a bunch of it in leisure. so the labor supply curve looks like this, if you like at an economic textbook today that idea is largely not there. and the reason is that it used to kind of be true. the high wage people work less hours than low wage people. your image of the 1930s was that the ceo sort of went out to play golf at 4:00. and the workers work 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 are finding themselves working more hours than people who have low wages. and it's in part a matter of -- it's not all because people who have 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 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 i'm 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 is and how meaning and community are found in the absence of work. classical economics has a simple view which is working is bad, leisure is good. those who spent time in communities with 28% unemployment, i don't think find that a riveting formulation of human motivation and desire. so i think it's something that needs to be thought about a great deal. and i guess 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's much less clear to use a modern phrase that there is a viable business model for getting it done. and i guess the reason why i think there is going to be a lot of reflection on the role of government going forward is that if i'm right, that there is vitally important work to be done for which there is no standard capital business model that will get it done that suggests important roles for public policy. >> if i could make a friendly extension of where larry just ended, which is there is actually some activist work in governments that make it with a business return on investment to social goods. addressing climate change feels like a big priority for all of us to do something about. and the fastest growing job in america is, what is the fastest growing energy job in america? solar panel installation. you made a comment about productivity. the cost of solar panels is low. here is an interesting conundrum. if you benchmark germany on the u.s. on the cost to install solar panel in a world where you have global technology for importing the panels, what explains the delta? a billion dollar delta if you kind of ran it out, what explains it is the soft cost of installation. the lack of something as simple as permitting the ability for a home or business to put solar panels on the roof. so if we took this powerful concept of information technology and innovation and if we had ubiquitous policies and much more efficient financial markets for credit in order to finance these things and we had much more readily available matchmaking services so that folks who want the solar panels at a lower price can get them more quickly with the local installers, if all of those technologies could be put to work that way we would reduce this billion dollar hidden tax on the american solar panel economy which is already the fastest growing energy job in america. you would address important issues like climate change, and what is getting in the way of all places? the mayor's office or government. can you do solar producing in new york city? you cannot. but you can in certain parts of california where they're making an emphasis here. so my only comments, there is too much leisure work to have questions, there is too much work to be done, we can do it to make it profitable. many companies organizing labor to put solar panels in if we could incentive and create jobs and not all of those installation jobs requires a phd in physics. i think there is a role in government to create marketplaces where we need it. >> we will have a panel focused on removing frictions in the labor market and the incentive to create jobs so hopefully you will join us all for that. but in the meantime, please join me in thanking our panelists. zwloo wilgz actio >> wednesday, we'll begin with two panels, following with a debate on finance, and then senators leahy will be at an awards ceremony hosted by the constitution project. >> a hearing now on new technologies to improve the safety and efficiency of the nation's transportation system. officials from volvo group in north america, amazon.com, the port of long beach testified before the senate commerce committe committee. >> good afternoon, everyone. i am pleased to convene the senate subcommittee on infrastructure, safety and security for its sixth hearing, which is titled technologies, transforming transportation, is the government keeping up? ranking member booker suggested holding this hearing, and he and i are excited to bring together a range of issues that we have worked together on the senate. for example we underscored the important role that technology plays in our daily lives by collaborating on the inner thin things resolution at the beginning of the congress. i was pleased to see it passed earlier this year. we have made progress on the maritime rail and higher infrastructure. our hearing brings our work on these various issues together. today we will explore the federal government's response to the current technological developments in our nation's transportation industry. in order to maximize the efficiency and safety gains being made by the private sector, the federal government must ensure that it is keeping up with modern technology. regulatory frameworks must facilitate rather than hinder technological advancements. in some ways our hearing is entering governmental territory because the government is reacting rather than pro active. today is an opportunity to look into the future and for ideas to make innovation easier so that we can grow quicker, safer and easier. automated driving for instance has the potential to make trucks more efficient and could result in thousands in annual savings. additionally, automation has the ability to make global markets more competitor. holding back the ability that technology provides, clearly more should be done to foster innovation and streamline obsolete regulations. step one, educating policymakers and innovators on what exists and how to facilitate to our transportation challenges with cutting edge technology. technology has the potential to automatically process, sink and coordinate transportation systems. increased automation and productivity make logistical networks more efficient. most importantly there are tremendous opportunities to improve safety. tracking technologies will strengthen driver awareness and reduce accidents on our nation's roads. additionally we will hear how the increased use of the monitoring devices and the development of robust data bases will provide the railroad industry with the ability to repair and upgrade critical infrastructure. in other words, the internet of things and big data are identifying the challenges of tomorrow with technologies that we have today. we must also appreciate the role our nation's ports play, the centers of innermoto connections with our transportation network. to keep globally efficient and keep goods moving throughout the country. the benefits of technological advancements are critical for our safety and transportation networks. i look forward to hearing from our witnesses about the kinds of policies that will promote innovation. our country is the leader in innovation, constantly creating the next big thing to drive the global economic engine. and i would now invite senator booker to offer his opening remarks. >> thank you, senator fisher. i would also just acknowledge that senator, it's good to have you here this afternoon. i appreciate that senator fisher is holding this hearing. we've done extensive work together on both technology and transportation and i'm excited to examine further where government can help and conversely, where government can stop hindering. and in meeting the infrastructure challenges especially, this is important. senator fisher and i discussed the tremendous innovation happening in this country. we're both excited by it and how some of our government agencies may not actually be equipped to keep up with the innovation. this is a theme i'm sure our panel of witnesses will update us on today. technology is quickly changing in

Related Keywords

United States , New York , Kenya , Germany , China , Boston , Massachusetts , California , Virginia , North Korea , France , Americans , America , American , German , Paul David , Sim Plame , Bob Sullivan , Ronald Reagan ,