Summers echoes Piketty: Robots are not stealing jobs

The FT has reported that, speaking at the Inclusive Capitalism Conference yesterday, Larry Summers, former US Treasury Secretary and Chair of Obama’s National Economic Council, suggested that “robots are already stealing our jobs”.

Yet listening to Summers’ speech, and even just the excerpts quoted in the FT), Summers puts the spotlight on skills:

“It is already happening, that we are seeing less and less opportunity for what average people – people lacking in certain skills – are going to be able to do. 

“It is not true that innovation always makes more employment … There is nothing in the logic of the market or human experience to suggest that it must necessarily be so that there will be jobs for all at acceptable wages, no matter how technology evolves.”

Summers’ comments are very similar to Piketty’s view, which places the onus on the supply of skills, not technology:

“This leads to the idea of a race between education and technology: if the supply of skills does not increase at the same pace as the needs of technology, then groups whose training is not sufficiently advanced will earn less and be relegated to devalued lines of work, and inequality with respect to labour will increase.”

When it comes to technology, we’re quite used to talking about the ‘useful economic life’ of a bit of kit. The original iPod might still work, but smart phones (never mind smart homes) have sent it the way of the old Walkman: they are functionally operational, but provide relatively little value in everyday life.

We need to think about skills in the same way: a variety of factors – including shifts in consumer tastes, changing business models and new technologies – can limit the useful economic life of skills (and so the shelf life of a particular job).

The rate of depreciation of skills is likely to be increasing (again as consumer tastes, technology and business models advance) with more jobs and skill-sets becoming obsolete more quickly.

Think about driverless taxis. Eventually, they’ll replace regular taxis, but not until long-after the technology is proven and made cost-effective: only when potential passengers get over the fact the car doesn’t have a driver. It’s not just technology that determines when a taxi driver’s job becomes obsolete.

So what do Summers and Piketty say is the solution to skills not keeping pace with technology? Piketty turns to the educational system:

“In order to avoid this, the educational system must increase its supply of new types of training and its output of new skills at a sufficiently rapid pace.  If equality is to decrease, moreover, the supply of new skills must increase even more rapidly, especially for the least well educated.”

And on this point, Summers agrees, pointing to education (and public investment to address the US’ underinvestment in infrastructure) to ensure everyone has the skills and abilities to benefit from changes in technology:

“Part of the answer surely lies in education, part surely lies in … public investments … part of the answer lies in channelling technological change so it reinforces the abilities of all, not just levers the abilities of those who are most able.

“That is going to be the largest challenge for capitalism going forward. And the first step is to recognise it.”

Which is why, at a very instinctual and intellectual level, I’m wary of policies like Basic or Universal Income: it feels like giving up on the skills system (and in fact, Paul Krugman and Martin Wolf raise doubts about education and skills being the answer. Wolf goes as far to suggest a Citizens’ Income could be a solution.)

So repeat after me (and Summers and Piketty): Robots are not stealing jobs. Never have. Never will.

The increasing depreciation rate for skills on the other hand…it’s stealing jobs everyday.