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Fear The Terminator

The problem with prolonged stagnation is that the costs associated with it are not strictly economic in nature. There is, of course, the substantial loss in terms of opportunity cost or output that should have happened. But more than that, any society caught within the viselike grip of such malaise is a frail one subject to marginal erosion at the edges. By its end, it may not be much the same as when it started.

Some would argue that’s a good thing, a progressive thing. Rarely is that ever the case, however, as what follows lengthy economic dysfunction is rarely progress in any meaningful sense.

If there is a hysteria over inflation and an economic boom of late, it is already a curious one. Moving against it is another lurking a bit further beneath the surface. It’s as if 1980’s sci-fi has come to life, where a good many Americans and foreigners are afraid of the machines. Skynet may have been proven to be the great faceless villain for the Terminator franchise, but in 2018 it’s bordering on the ridiculous.

I don’t mean, obviously, that people are building bomb shelters for the looming nuclear holocaust once the central supercomputer becomes self-aware and thus far beyond our ability to stop its forward reaching controls (in the movies, that was 1997, anyway). The intersection of fantasy and reality has been an economic one. More and more it’s the robots in the labor market that draw such negative emotions.

Why? Or, as we ask about what’s going on in China, why now?

Believe it or not, there are still elevator operators working within the various canyons of NYC (and for other places, for all I know). Humans whose job it is to push a button, essentially. They were far more common decades ago when cheap electronics weren’t available because they either weren’t cheap or hadn’t yet been invented.

We don’t mourn the loss of elevator operators any more than we do telephone switchboard operators. We celebrate companies like Cisco who turned what was an information bottleneck of labor constraint into an opportunity that put at our fingertips more information than whole societies used to have available. That’s progress.

The elevator and switchboard operators were replaced by robots, and they went elsewhere for employment. This is an ages-old process by which things go forward. A century and a quarter ago, it was the resentment of agricultural workers, some family farm owners, who banded together to decry the deflation ruining their businesses (while at the same time providing more food cheaper than ever before in history).

Though agricultural anxiety was an almost constant feature of the post-Civil War era, it wasn’t until the 1890’s that it became a movement. The face of that movement, and its economic component in the form of silver agitation against that gold-backed deflation, was Williams Jennings Bryan.

Bryan caught fire in 1896 on this populist revolt, the fear of agricultural workers losing out their livelihoods and facing the prospects of moving toward a city for industrial labor instead. While that was in general what happened, the truth was a bit more complex. The dread that drove Bryan’s popularity wasn’t necessarily the transition from agriculture to industry, it was the very real possibility for many of losing the former and finding nothing in the latter.

The backlash against industrialization in that decade was more easily explained by the defining feature of it – what was first called the Great Depression. Before 1929 there was 1893. Before Japan lost a decade in the nineties, there was America in this last part of the Gilded Age.

Transformation is a constant part of capitalist business. We tend to notice it, and bother about it, when it appears to be a net negative to far too many. The truth is there will always be people on the wrong side of progress, those elevator operators who through no fault of their own are pushed out by the robot. If the economy is growing, really growing, it’s not so much of a front burner issue because opportunity beckons anyway. That’s the real issue.

Gallup reported yesterday some very troubling results. According to a survey in partnership with Northeastern University conducted in September and October last year, 48% of the people would support a universal basic income “as a way to help Americans who lose their jobs because of advances in artificial intelligence.” In a CNBC article reporting on the survey numbers, one economist was enthusiastic about them given that he remembers the same or a similar survey ten years ago showing only 12% support.

Why now?

This sudden angst over robots is an irrational one, but understandable nonetheless. I mean, the time period of comparison is not difficult to figure out. What’s changed between ten years ago and today? In 2008, Economists were assuring everyone there would be no recession or any substantial fallout from that housing thing. In 2018, despite massive problems, Economists are now assuring everyone the economy is recovered and even booming.

Why not fear the robots, especially if you aren’t disposed to challenge the Economist appearing on TV about the boom? There is an unnerving parallel between things like Brexit and Donald Trump in our current age, and Williams Jennings Bryan in that long ago one.

Bryan was eventually defeated (twice) by common sense more than William McKinley. He was offering the wrong ideas, solutions to problems that weren’t really problems. Industrialization, while messy, was an unqualified success. Once that older Great Depression passed and true recovery solidified (on a firmer commitment to gold, no less), silver agitation and populism just disappeared into history, an odd if temporary impression upon the history books.

We can’t say the same for today. At some point, populism better start offering some answers because the status quo doesn’t offer any, either. It can’t be merely a critique of the way things are, or it risks becoming the gateway to more radical “solutions.” Brexit and Trump (and whatever may follow in the coming years) had better get to work, accomplishing something more than embracing the unemployment rate they once appropriately brushed aside as “fake.”

Economists say there is nothing wrong with the economy. Thus, robots are an easy if unhelpful target. The problem isn’t the relative cost of deploying electronics over flesh and blood, it’s the clear lack of actual opportunity for all labor, not just that which is and might still be displaced by them. When there is no upside, humans quite naturally will focus and concentrate on what they see as the downside.

A Universal Basic Income as an anti-robot measure sounds like the plotline from some cheesy eighties sci-fi knockoff. Yet, here we are ten years into a recovery that isn’t a recovery and still nobody will do anything about it. The only universal trend is that what seemed radical today will in two years seem only quaint. It only stops when the economy starts growing. The boom has to boom at some point, or the costs will only rise and in far more than economic terms.

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