Continuing Conversation... McAfee, McArdle, and Ohanian on the Future of Work

EconTalk Extra
by Amy Willis
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McAfee, McArdle, and Ohanian o... Edward Lazear on Becker...

This week's EconTalk was a live episode.

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Check Your Understanding:

1. Ohanian argues that recent changes in the workforce are not the result of the recent recession, but many years in the making. What sorts of changes is he referring to? What factors does he think will govern the future of work?

2. McArdle argues that to improve the future of work, we need to improve the culture of work. What does she have in mind, and how likely is the cultural change she seeks?

3. McAfee argues that cries of "technological unemployment" have all been wrong. Why does he make this claim, and to what extent do you think he'll be correct into the future?


Going Deeper:

4. Lee Ohanian suggests that a reduction in new business creation is making it harder for unemployed workers to find new jobs that pay well. Andrew McAfee argues that we're doing a bad job with entrepreneurship in America. What policies might encourage entrepreneurship in America? Or are there policies that should be changed that are making it hard to start new businesses?


Extra Credit:

5. Roberts suggests that education is broken and that the current model of 15-30 students in a room learning from the teacher is not very effective. What might replace that model? What is stopping change?

6. McAfee notes Schumpeter's famed creative destruction and argues that technology today shifts the balance more toward "creation" than "destruction. Kevin Kelly is another optimist regarding the potential of technology. Kelly thinks robots can- and should- take over the jobs of many individuals. Is his more "destructive" view of technology's path more or less optimistic than McAfee's? Why?

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COMMENTS (17 to date)
Steven writes:

1. For starters, Ohanian was referring to the effects of globalization and technology, and possibly to political changes in the US, regarding taxation, regulations, corporations, etc.

2. When McArdle talks about culture, she's referring to everything from the family to society; she's referring to foundations. It starts with how the children of a society are raised, with stability, care, love, discipline, integrity, education, critical thinking, creativity, hard work, etc. All of these values are extended throughout society, in various forms.

3. I don't think it's quite accurate to say that McAfee claims that "cries of technological unemployment have all been wrong." McAfee certainly believes that technology will create tremendous bounty, but he sees a potential problem with the distribution of that bounty and he's concerned that "a lot of people will be left behind."

4. It's been said that government regulations and requirements have made it overly cumbersome and complex for entrepreneurs to start businesses. So obviously we need to look at those policies. McAfee seems to think a higher priority should be placed on what he calls EIEIO - entrepreneurship, infrastructure, education, immigration, and original research.

5. I can think of many ways that education could be improved. When it comes to education I'm what I call a radical pragmatist. Education at all levels is a huge topic unto itself. I would be very interested in hearing some of Russ' ideas. Russ has promised to devote some episodes to his ideas on social welfare; I hope he also devotes some episodes to his ideas on education.

6. Actually, I think that McAfee and Kelly share the same vision of the future. I think that the way they use the terms "creative" and "destructive" in an economic context is entirely incidental and not a reflection of any significant differences between them.

Tom Coss writes:

During these brilliant conversations “technology” was mentioned 39 times, “education” 30 times, “labor” 7 times and “government” 5 times; that strikes me as the right proportions of relevance.

In world of technology where there are about 5 internet years to every human year, and Moor’s law shows no evidence of slowing down. The best governments and institutions can do is stay out of the way and when they don’t we are all worse off. Technology is producing its own back-wind and unique rapid-fire challenges in all areas of the labor economy. The speed of technology and innovation, independent of national boarders, expects humility of its users and those who seek to “manage” it. Culture, as Megan points out, is crucial and conscientiousness as culture in action.

A good example of government not getting it are HIPAA regulations in healthcare first passed in 1996, the same year Google started, and 7 years before facebook. Today we are all annoyed by HIPAA privacy documents we sign when visiting a physician and which produce net negative value to the economy.

Finally, technology is intolerant of monopoly, including the monopoly in education and governance. How can we possibly tolerate a high school science teacher who has never written a line of computer code in his or her life, and be serious about educating for the future? The speed of technology development and adoption will not stand still for the educational system to catch up, hence employers will need to look to things other than diplomas in assessing worker qualifications, and HR departments of businesses will need to stop outsourcing their due diligence to college admissions boards.

Steven writes:

Tom, your objections to HIPAA bring up an interesting question: How do we protect patient privacy without causing a serious impediment to medical research?

When I visit a physician, I don't recall any annoying HIPAA forms, but maybe I just wasn't paying much attention. I'll be visiting my doctor soon so I'll try to remember to look for that.

Regarding the educational system "keeping up" with technology, I'm afraid the only solution for that is continuing education throughout one's career, in one way or another. I'm an engineer, and boy can I relate to that. I'm at the point where I don't have time to take courses for fun. For example, I'd love to take a two-semester course in macro and micro economics, but I can't because I'm constantly updating the knowledge required for my job. Many other professional fields must also update their knowledge throughout their careers.

anonman writes:

4. What factors prevent entrepreneurship and business creation? Simple, the mortgage. Eliminate it and our nation will blossom......will never, ever happen, though I don't feel particularly absurd for suggesting it, since one of your previous guests has done exactly that, albeit for different reasons.
Every once in a while, I hear someone calling out that albatross for what it is. An article with the mention here, another over here, how it prevents scientific innovation in the medical field, being that the mortgage must be payed for with at-risk venture capital, etc.
Furthermore, people don't know how to practice capitalism very well, and as good as it is, not very many people understand wealth, and beyond taking some money and using it to be productive, not much else is understood.
Regulations may be a factor, but I think it's less about the regulations than people knowing what they are to begin with, which is why a central website should be created with all the rules and regulations and instructions about how to practice capitalism. You could even call it monopoly and get Milton Bradley to co-sponsor it.
That's all for now though, just throwing in my two cents.

Steven writes:

Once again I must apologize for my denseness, but what do you mean by eliminating mortgages? Do you mean eliminate loans to purchase property of any kind, and that all property must be purchased with cash? Or do you mean eliminate the mortgage interest deduction on taxes?

anonman writes:

Every once in a while, I speculate about pure hypotheticals. In a society where people would be free from constraint in paying the bills, all sorts of good things could happen.
Entrepreneurs must be able to float finances for a while in order to be successful.
If you just project into a successful American future, this could hopefully naturally be the case just from sheer force and time.
I can't remember the guy's name that said that we could forgive mortgages up to 300,000. He was just speculating and throwing out ideas that are interesting. He also said that there is precedence for it from ancient Greece.
So, although a structure for changing the nature of paying for housing would be fine with me, like an open market for feed-in payments under land trusts that accumulate over time, for ultimate purchase or high mobility between houses of comparable value in older age without further payments, in order to prevent people from being on the hook for a whole house, I'm just nakedly speculating a fight club scenario.
It's not all that serious. I just know that requirements for living, specifically the mortgage, prevent innovations all the time and I have seen it mentioned in numerous articles, preventing entrepreneurship and research. That is all.

Steven writes:

Anonman, over the past year I've read quite a few articles related to various kinds of debt forgiveness, as a way to "get things going" again. Of course it's a controversial topic.

Trent writes:

5. What is stopping change? All of the people, organizations, and instituions that have vested interests/incentives to maintain the status quo in public education. All together, they're a powerful political bloc that has a sympathetic media on its side.

I also think that they way public schools are funded (property taxes paid by all) plays a part. If parents actually had to write out checks to pay for their children's education, there would be much more of a push for change.

What might replace the current model (15-30 students in a room learning from the teacher)? It's problematic to predict the future because you almost always end up with egg on your face. But I think it'll be driven by technological advancements (of course, demand for educational changes could also drive technological advancements). Some trends I could see happening:

* Flipping the model - via the internet, 1 student in a room in front of a computer could have access to a group of 5-10 teachers presenting a subject. Imagine watching a lecture on the history of WWII where you have experts on US history, British history, Russian history, German history, etc., all interacting to tell the story.

* Increased "On Demand" education - students can access the material on their own schedules, meeting the needs of morning vs. afternoon vs. nighttime learners & meeting the needs of immersion (students who want a 3-week deep dive in, say, Algebra) vs. traditional multi-subject curriculum students....and so on.

* Increased adaptability - different programs can be tailored to meet students' different learning styles (e.g. visual, audio, tactile) and different speeds of learning. Further, students with learning disabilities will be able to access curriculum that's better tailored to their special needs.

Steven writes:

Trent, I don't know if you're looking for feedback, but I'll provide some.

Do you really believe that the news media has not been critical of public education, of teachers, and teachers' unions?

Most people I know are very much aware of how much money they're paying for public education. I'm not sure if "writing out a check" would make them more aware. I suppose I'm some kind of outlier on this topic, because I think the primary problem with public education is with our culture, parents and kids. My kids went to public schools and my wife taught high school math for a while. I've seen that the attitude of the parents and the kids make all the difference in the world. How can anyone argue against that?

When you say "one student in a room," are you talking about kids at home?

How do we provide all of the individual "tailoring" you're talking about?

Well, like I said before, education is a huge topic unto itself. :-)

Trent writes:

Steven,

Based on the places where I've lived, the media have been very sympathetic to public education - critical of those who would not raise (or support cutting) teachers' pay and other public education spending. Sure, there are outliers (e.g. Stoessel on Fox Business), but as a whole, they're mostly sympathetic to public education.

We'll have to agree to disagree on the payment side. I don't think most parents have any idea how much it costs to educate their children in a public school. And it doesn't fully show up in property taxes, because all that does is spread out the burden among myriad other people who don't have kids in the schools. Remove that subsidy and make parents write the full check, and there would be an impetus for change!

As for my predictions about the future, I don't know the specifics because I sure don't know what the future will bring in terms of technological advancements. What I do know, thanks to Hayek's work, is that new trends, new solutions, new ways of thinking about education will emerge...hopefully there will be enough freedom and liberty in our system to allow for emergent trends to develop and change to happen. As I previously wrote, there's a powerful political bloc that I think will try to suppress change.

Dallas Weaver, Ph.D. writes:

On the question of the jobs of the future.

Predicting the future is hard and no one really knows for sure. However, we do know that technology will continue to progress and new inventions become possible. We also know that every new invention interacts with all existing inventions and ideas (N) creating new possible combinations that no one imagines today and that will create new jobs.

That means the number of new job niches increases at an N! type rate (Factorial =N*(N-1)*(N-2)...1 or stone tools). Note that N! grows even faster than exponential functions like Moore's Law so there will be lots of different jobs with narrow niches.

That N factorial rate of possible niches may be why technological unemployment has been predicted many times but never became a reality. Somehow the stable boys and manure shovelers that the car and tractor put out of business evolved into factory workers who will now evolve into who know what type of job.

PS: I made a living and small business (dozen jobs) in narrow, world wide niche areas. I supplied specialized frozen zebra fish embryos at specific developmental stages and other specialized products to major biological research labs from Germany to Singapore and everyone in between.

The previous inventions/innovations making my niche possible required FedEX, DHL, cDNA tecnology, gene chips, massive gene data bases, e-mail/fax, styrofoam shipping containers with dry ice, etc., etc. be invented before my niche was possible and my customers could see what genes are up regulated and down regulated during neural tube closure (spinal bifida research -- zebra fish genes are homologous to ours).

Ben Hughes writes:

I think there's a more interesting question that came out of the discussion. The panel seemed to generally feel that Germany working less total hours was a bad sign, but given the broader conversation, I think it's instructive to think about this a bit more.

Firstly, it's not obvious to me why working less hours is bad, in and of itself. The potential problems come from related issues, like how income is distributed. Personally, I'm a growth optimist, distribution skeptic, so I think balancing those two factors is going to be the main challenge we face in the medium term.

So the important question is: in this new "superstar economy", can you continue to grow per capita income without letting inequality get to socially unstable levels?

The data is a bit sparse, but I had a quick play in gapminder.

Norway, presumably because of its size and natural resources, manages a grand combination of income, equality and leisure. I'm not sure it sheds much light policy-wise though.

The US stands out both for its relative inequality, productivity and income. The question becomes: is that balance sustainable going forward?

While not at Norwegian levels, Germany's balance of equality, income and leisure is interesting. While per capital income is around 70% of the US, the reduced inequality likely means that most individuals are better off. And they're working 20% less than Americans.

Hans Kristian Moslund writes:

Good episode, enjoyed the discussions. It reminded me of another podcast from 1966 - J K Galbraith: The New Industrial State – ep5 (part of the Reith lectures) - seams that the discussions 50 years ago were very very similar to this one.

Looking back at the wealth created, and opportunities created for individuals it is mind blowing. In the 50 years we doubled the population of the earth and living standards for the middleclass has improved beyond our wildest dreams. We will do so again. The question I have is "if we could redo the last 50 years - would we that have a passion for Economics have focused on the same issues ?". What is the goal of Economics ? unemployment ? happiness ? wealth ? GDP ? interest rate ? - looking back - we probably got them all right ?

Have a listen here - it will blow your mind : http://www.bbc.co.uk/programmes/p00h9l82

@Ross and team – I have been a long time listener, and wanted to thank you for your great work.

Steven writes:

Trent wrote: "I don't think most parents have any idea how much it costs to educate their children in a public school"

Trent, before we agree to disagree on that point, are you a parent? I'm wondering what you're basing this assertion on. My kids are grown. I don't know any parent, or any homeowner for that matter, who doesn't have "any idea how much it costs to educate" kids in public schools.

Steven writes:

Ben, I'm not sure what point was being made about Germany's average work hours. It was mentioned but not elaborated on.

Steven writes:

Hans, all of the guests expressed concerns about (middle class) people getting left behind in the new economy. None of them seemed as certain as you that we will "do again" for the middle class what we did in the previous (post WWII) 50 years.

Amy Willis writes:

@Steven and @Ben, are either of you reading Piketty's "Capital," by chance? He contends that the exogenous shocks of WWI and WW2 were responsible for leveling wealth, and allowing the emergence of a patrimonial middle class...Aside from war, the only alternative he suggests to prevent future increases in the concentration of wealth is a confiscatory tax. Your thoughts?

FYI, Sumner has started commenting on the book section-by-section. Here's his latest.

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