Through the Eyes of Yankelovich
Challenging the Economist Worldview
IN a recent New York Times article, the noted American economist Tyler Cowen challenged one of the truisms of economic theory: the assumption that it is just a matter of time before technological innovation replaces all the jobs that it destroys. Economists have taken this assumption for granted ever since Britain proved the Luddite challenge unfounded in the late 18th century. The Luddites wanted to destroy the new machines that they felt were destroying their jobs. But as time passed, technology came to be seen as a mighty creator as well as destroyer of jobs.
Cowen points to an ever-growing abundance of evidence that technology in today’s global economy is threatening skilled middle-class jobs and low-skilled ones. This is reducing the ranks of highly paid workers and lowering the wages of the typical four-year-college graduates.
As a non-economist, I have been waiting a long time for an economist of Cowen’s stature to point to a threat that is increasingly recognized outside the economist profession. For non-economists, there is something mystical and illogical about the assumption that there will always be enough good jobs to go around. It reveals a superstitious faith in the concept of a self-sustaining economy always striving for equilibrium. Indeed, I think Cowen’s question should be reframed in stronger terms: “Why, we should ask ourselves, should we go on believing in the ‘old normal’ when the evidence all points in a different direction?”
Could the reasons we hold onto the old faith simply be that (1) it serves the selfish interests of a lot of people in positions of power, and/or (2) it reflects the arbitrary and mostly incorrect assumption of many traditional economists that a capitalist economy works best on automatic pilot?
If current trends continue, the situation will become so threatening to the stability of our societies that economists will lose their credibility and we will be plunged into a serious political crisis.
I propose that our two economies — that of Japan and that of the United States — provisionally adopt the hypothesis that, as Cowen puts it, “We are witnessing a fundamental transformation unveiled in bits and pieces.” I propose that we form a Japan-U.S. Commission consisting of the most insightful and least ideological industrialists, political leaders, social scientists, journalists and public intellectuals of both nations.
Economists and lawyers can serve as outside consultants but not be a part of the commission. Their input would be highly valued, but not decisive. It would be funded and staffed to produce a range of possible solutions, some far-reaching in nature.
If we do not take this sort of initiative, we may lose one or two decades before we are forced to face the fundamental nature of this transformation. The delay could have harsh and unacceptable consequences. tj
The complete article can be found in Issue #278 of the Tokyo Journal. Click here to order from Amazon.