Gregory Clark Uses Computer over Phone, Predicts "Economic Redundancy" of Working Class

Gregory Clark’s basic assumption would seem to be that some people are born idiots. His argument in this Washington Post op-ed goes something like this: real wages of idiots have not increased because the demand for idiot labor has fallen due to the rise of the machines. Soon, the machines will be able to do anything an idiot can do for less than it costs to pay idiot subsistence wages. So idiots will be left “socially needy but economically redundant.” What will we do?! “There is only one answer,” Clark says. “You tax the winners — those with the still uniquely human skills, and those owning the capital and land — to provide for the losers.”

What to say? Tim Worstall says a good deal of it. This diagnosis by Bruce Wilder in Mark Thoma’s discussion thread seems to me in about the right neighborhood:

[In his book Farewll to Alms] Clark could find few institutional differences between 12th century England and 20th century Britain. In his mind, Henry II laid down the law of equity securing property rights, and nothing else much mattered. If anything, he regards the 12th century, with its low tax rates, as much more amenable to economic growth and innovation than the burdensome 20th century welfare state. So, I’m not surprised that he doesn’t credit institutional changes for changes in income distribution over the last three decades.

So, the shape of his fears that machines will soon displace the near-cretins serving him hamburgers at McDonald’s form a unitary theme. He sees his class burdened by taxes to support the no-account lower classes, who are even more useless now than in centuries past, but, perhaps, can reconcile himself to it as his paternalistic obligation.

Here is what I said some time ago at Free Exchange about Clark’s baseless truculence toward institutional explanations in economics.

Here’s what I think about Clark’s op-ed.

First, technological innovation over the past two centuries has been incredibly rapid, and workers have been repeatedly displaced by technology only to move on to different kinds of jobs. Why hasn’t technological change so far created much higher rates of unemployment? Does Clark think this is a historical fluke? Why does he think this pattern is about to be broken? Why does he think technological change is finally reaching a tipping point? His failure to address this obvious point at all is glaring. Is this whole conjecture really built on his experience with an automated phone call to United Airlines?

Second, I think that Clark wrongly accepts that real wages toward the bottom of the distribution have not risen. This is, to my opinion, an artifact of mistaken measurement techniques. See Broda and Weinstein. There is no reason to believe that the market forces which have improved standards of living for the poor will not continue to do so. Indeed, Clark’s assumptions about the efficiency gains from future technology provide us reason to think the real prices of many goods will continue to decline.

Third, insofar as wages have stagnated toward the bottom, a decline in hours worked for low-skilled workers explains a good deal of it. Doesn’t this show Clark is right?! No. It shows that badly structured welfare policy has provided an incentive for many low-skilled workers to work fewer hours in order to qualify for transfer payments. Because experience (hours worked at a task) is a main determinant of skill level, and skill level is a main determinant of wage levels, an incentive to reduce hours worked is an incentive to remain at a lower level of skill and thus wages. See Deere and Welch ($$$).

Fourth, Clark’s theory of blood-born idiocy leads him to conclude that there are little or no gains to be had from improvements in education. Here’s what he says:

Others see education as a way out of this dystopia. The root problem is, after all, the widening of the income gap between the skilled and the unskilled. Can expanded education give the poorest the tools to resist the march of the machines? I’m skeptical. Already, much of the supposed improvement in high school and college graduation rates has come by asking less of graduates. We can certainly arrange to have everyone “graduate” from high school, but whether they will have the skills needed to make it is doubtful.

This is maddeningly dense. Clark apparently believes the only way to make graduation rates go up is to devalue diplomas by giving them to irremediable idiots. That is to say, idiots are idiots and education can’t do anything about that. A more plausible view is that so many young people graduate high school (or don’t) with such poor abilities because the American public education system has failed disastrously to provide a minimally acceptable level of training to children who grow up in poor, predominately minority neighborhoods. The best explanation for this failure is an institutional explanation. The political forces in control of public schools in low-income neighborhoods have strong incentives to resist almost every potentially effective reform. There are no competitive markets in educational services for low-income families because such markets are, in effect, against the law. Were low-income families to have access to a competitive market in educational services, there is every reason to believe the quality of training would rise, the real level of ability of high-school graduates would rise, and the portion of high-school graduates prepared to benefit from higher education would rise.

The fundamental bone of contention here is over the fixity or flexibility of the human capacity to gain and improve economically relevant skills. Here is Cato Unbound’s issue on IQ.

Fifth, the piece is short-sighted. If robots can crowd out all low-skilled workers, there is no reason they cannot also crowd out all high-skilled workers. See Hanson. Would this be bad? Growth would proceed so rapidly that the returns to even small amounts of capital should be outrageously high. The gap will be between those with income from capital gains and those with none. To prevent this, some version of Clark’s recommendation might be desirable. I’d recommend Charles Murray’s scheme for replacing the United States’ social insurance apparatus with basic income grants and mandatory retirement and medical savings accounts. In a world of doubling-every-fifteen-minutes Hansonian robot growth, the portion of GDP necessary to fund universal grants sufficient to ensure a modestly lavish level of consumption would be so trifling that no one would even notice. For now, we should try to hasten the arrival of this post-human economy, in which case we should try to optimize incentives to innovation and growth. Higher taxes and higher levels of welfare spending is about the opposite of that.

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39 thoughts on “Gregory Clark Uses Computer over Phone, Predicts "Economic Redundancy" of Working Class

  1. “For now, we should try to hasten the arrival of this post-human economy.”As I suspected, Will Wilkinson is merely a libertarian robot from the future sent here to hasten robot world domination.

  2. “Were low-income families to have access to a competitive market in educational services, there is every reason to believe the quality of training would rise, the real level of ability of high-school graduates would rise, and the the number of students prepared to benefit from higher education would rise.”Actual voucher experiments, e.g. in Milwaukee, generally don't show large effect sizes on learning outcomes. Vouchers could save money by bypassing public-sector unions and regulatory burden, lead to happier parents (especially religious parents who want to pass on their religion to their children) and enable more radical innovation (although the existing private school market has not been a hotbed of innovation), but simply transferring students from poor backgrounds into the schools attended by students from higher-SES backgrounds via vouchers doesn't seem to be very effective.Libertarians seem to get over-excited about vouchers as a chance to claim moral superiority over liberals, and then get caught up in their valorization and the affect heuristic until they start claiming miraculous powers.

  3. The prediction is for systemic changes over a generation or two. The status quo apartheid public school system is an integral part of the culture of urban poverty and its unreasonable for isolated, short-term experiments to make much of a dent. The fact that the results are as good or better and that parents are more satisfied when there are small gestures toward choice should be more than enough to convince decent people to expand efforts toward legalizing markets in education, but alas.

  4. He's wrong, to the extent a “chair of my department” can be wrong, because he assumes there's a fixed class of idiots. Even if you accept stagnant wages at the bottom, which you shouldn't, the people at the bottom yesterday aren't the same as the people at the bottom today. Much of the increase in inequality in recent decades can be attributed to an increased volatility of wages within individual people's lifetimes. Furthermore, it turns out much of this increased volatility is insurable. This is why consumption inequality isn't rising much, if at all.

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  6. So you're saying that maybe given heroic (and extremely politically difficult) educational reforms in a couple generations there will be big changes (time to reform the schools, for those graduates to do slightly better, for that to rebound back to the culture, and so on and so forth) through nebulous indirect positive feedbacks about which we have little scientific knowledge? And so Greg Clark is silly to think that we might still have a large low-skill underclass to deal with in coming years? Your model seems to predict the same thing with high probability.

  7. What's the argument against “blood-born idiocy”? The evidence from twin studies seems to suggest a significant genetic component to intelligence.

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  10. There are, uh, a lot of methodological problems with twin studies. They can “suggest” a significant genetic component to intelligence if that's what you want to read from them, but heritability is totally logically independent of genetic causation.

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  12. The trick is use language in a hyperbolic and sarcastic way, e.g., ” blood-born idiocy”, so that decent but uniformed people will assume that anyone who talks about cognitive differences being largely due to genes — something anyone who's looked into will find impossible to deny — can be looked at as someone who is just a mean, cold-hearted, name-calling jerk.

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  15. First, I feel that if you talk about Hanson, you should also acknowledge that generally he thinks that pushing education onto people isn't particularly effective – i.e. Gregory Clark is generally correct that morons will remain morons, if they have a degree or not.Second, while it is certain that eventually computers will be able to replicate high-skill jobs, for the moment, we have absolutely no idea how to do that. We do know how to make computers do basic tasks, perform consistent physical labor and recognize standard objects. Drawing a straight line between those points is like saying “it takes 1 hour to walk up to the top of Stone Mountain, and Stone Mountain is 1/15th the size of Mt Everest so it should take about 15 hours to reach the top of Mount Everest… what's the big deal?I am optimistic about our ability to use ever-smarter computers to improve our growth rate, but I don't think we should base public policy on that concept. On the other hand, the destruction of unskilled labor seems to be ongoing at a fairly rapid pace.

  16. “Why hasn’t technological change so far created much higher rates of unemployment? Does Clark think this is a historical fluke? Why does he think this pattern is about to be broken? Why does he think technological change is finally reaching a tipping point? His failure to address this obvious point at all is glaring.”It is glaring.So much that gets written about skill biased technological change is simplistic — written as if 'skill' was unidimensional (ie skill=IQ). There was a time when many people thought that playing chess was a uniquely human ability — a true test of the intellect. But now computers play chess better than most people.But at the same time, it doesn't seem like we're anywhere close to getting a machine that can drive a taxi cab, run a cafe or do simple household chores like replacing light bulbs, changing tap washers or hanging doors. As for interpersonal skills … And it's amazing that anyone would claim that we've reached the limits of what education can achieve. The US hasn't even managed to get many low income kids through early childhood without squandering their potential.This reminds me of Kurt Vonnegut's dystopian novel Player Piano — a story that must have seemed much more plausible when it was written in 1953.

  17. The debate about education, intelligence distributions and how much they can be shifted aside, I think Greg has a pretty strong point about the shift from cyclical unemployment risk to structural unemployment risk. No matter how smart or educated a person is it takes a long time to build up a certain kind and amount of human capital, and if demand for that capital permanently declines the probability of retraining is low and inversely proportional with age. If automation starts to replace large segments of the labor market at a fast enough rate this could be a problem, at least in theory. Anyway, I think we are seeing a shift from cyclical to structural unemployment as a result of hyper-specialization and I think it is a real difference from the last 200 years. Arnold Kling has been making this point for a while now and I am curious to hear what he has to say about Greg's Op-ed. On a lighter note, I certainly welcome the overlords crowding us all out so we can play music and tennis all day. Work is boring after all.

  18. On second reading, I see that Greg never made this point. Sorry about that, I read his piece yesterday. Sometimes I really have no idea how my memory of what I read is what it is.

  19. While I totally accept the idea that over long enough periods supply and demand equilibrate, it seems worth noting that there is a technology coming up over the horizon that could cause a *lot* of short-term turmoil in the unskilled and semi-skilled labor markets: cheap, flexible, vision-based categorization or sorting software. Once you have categorization down you can do most assembly operations, and once you can automate categorization and assembly both maybe 30% of the jobs in the labor force will vanish into the machines. This is a well-identified problem that is attracting billions in R&D around the world, and there doesn't seem to be any obvious reason why it won't get to where it wants to go in a few years.

  20. The massive wealth transfer payments that Clark recommends from his ivory tower would squelch the innovation and entrepreneurship needed to create the capital in the first place. It would take place gradually, but it would occur.

  21. I just want to interrupt for one minute to thank all of you for a very stimulating discussion. If the web was filled with more quality dialogue like this, it would be a much better world.

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  23. So what evidence does exists contradicts your claim that the private sector will solve everything because government is the source of all ills, and yet it makes not a dent in your claims (for which you have no supporting evidence, much like the liberals who think we can fix it by pouring in more money or just clapping our hands and believing real hard). I'm a radical libertarian who wants to abolish public education, but I'm not going to claim more for private schools than is warranted just because it fits my ideological presuppositions. The mere fact that public schools are unpleasant places to have to spend 7 hours a day is enough, no need to claim they actually do a worse job of educating children than any alternative we've seen.You often reply to the inequality doom'n'gloomers that consumption data gives a different picture. However, the poor are able to consume as much as they are precisely BECAUSE of transfers. Libertarian optimists like Stephen Moore acknowledge this. Many government jobs and “private sector” make work (such as we see with various jobs bills like the latest stimulus) are essentially that kind of transfer in disguise. The unemployment rate would also look a lot worse if the incarcerated were included. The explosion in imprisonment occurred around the same time as the divergence in income.Although IQ is correlated with economic success, it is not the only factor. In fact, Clark's book is premised on a different trait of individual variation (time preference) causing the industrial revolution. To learn that other traits are important is not to conclude that they are any more malleable. Executive function is actually far more heritable than IQ (which is not to say we know it can't be improved, but that makes it less likely).

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  25. Isn't it a little unfair to say Will is advocating heroic and politically difficult policy changes? My impression was Greg Clark was advocating massive increases in redistribution, and apparently, i.e., before we have any evidence that for once the broken clock happens to be right and this time economic and technological growth will actually turn out to be bad for the poor. Is this not a heroic and politically difficult change? At least Will is responding to a problem that isn't merely speculative. [Not to mention that Clark infers from the health care debate that there exists massive demand for equality of outcomes, despite (a) having already pointed out that Americans have no such desire with regard to most other things, suggesting that maybe people's political notions about health care are radically different from those about other issues, and (b) that there is growing evidence that Americans want lower costs a lot more than they want universal coverage, to say nothing of equality of coverage.]

  26. Excellent point. Some of the literature seems to acknowledge that unidimensional skill might not be a reasonable approximation but points out that modeling with multiple dimensions is just too complex to be tractable. (Sometimes it's suggested that if you say “skill” has multiple dimensions, it's really hard to get clear policy prescriptions like “cut taxes” or “make taxes more progressive.” Which I suppose might be kind of damning about the whole business.)

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