Are robots and technology behind the income gap?

[jpatter666]

Interesting article on how robots and technology (and quasi-monopolies therein via patents) might be responsible for part of the income gap.

So, robot and technology power is reducing the natural employment rate. But rather than our subsidising those who have lost jobs to technology, so as to spread that manna wealth that’s literally dropped onto the surface of the earth at no-one’s physical disadvantage, companies are using monopoly power to extort rents on the capital that is creating all that free wealth.
That’s why inequality is rising.
As technology proceeds in a patent-obsessed world, the fruits of innovation flow to the owners of the capital and invention, forming a whole new rentier class. The financial assets/debts that back the innovation technology, meanwhile, get disproportionally valuable as their purchasing power gets completely out of whack with the output they radically accelerate.

http://ftalphaville.ft.com/2012/12/1...rentier-class/

[lektrode]

Re: Are robots and technology behind the income gap?

krugman was on this topic yest (and i think this was the point of the alphaville piece, but not reg'd there, so no can see)

More specifically, while it’s true that the finance guys are still making out like bandits — in part because, as we now know, some of them actually are bandits — the wage gap between workers with a college education and those without, which grew a lot in the 1980s and early 1990s, hasn’t changed much since then. Indeed, recent college graduates had stagnant incomes even before the financial crisis struck. Increasingly, profits have been rising at the expense of workers in general, including workers with the skills that were supposed to lead to success in today’s economy.


Why is this happening? As best as I can tell, there are two plausible explanations, both of which could be true to some extent. One is that technology has taken a turn that places labor at a disadvantage; the other is that we’re looking at the effects of a sharp increase in monopoly power. Think of these two stories as emphasizing robots on one side, robber barons on the other.


About the robots: there’s no question that in some high-profile industries, technology is displacing workers of all, or almost all, kinds. For example, one of the reasons some high-technology manufacturing has lately been moving back to the United States is that these days the most valuable piece of a computer, the motherboard, is basically made by robots, so cheap Asian labor is no longer a reason to produce them abroad.

interesting that he apparently equates mfg jobs coming back to the US with bad news somehow - in contrast with GE's re-opening/re-investing in one of their US plants to make appliances

[Polish_Silver]

Re: Are robots and technology behind the income gap?--Most Definitely!

I think technology is definitely changing the income distribution by changing the demand for different types of labor. The atlantic monthly has had several articles on this. The best example is airline check in. In 1995, you wait in line, and finally get to a check in agent. He does not need college.
he does need to be literate, organized, on time, dress well, good communicator, and never get mad at customers. These people got decent wages because it was hard to find someone with all these traits.

Their numbers are a fraction of what they used to be. The kiosk machine does the work highly accurately and for a fraction of the cost of the human. So a $5k machine has replaced a $50k/year person.

This is happening in many sectors of the economy. Semi-skilled, and even skilled workers are being made obsolete by electronics technology.

[shiny!]

Re: Are robots and technology behind the income gap?--Most Definitely!

I think technology is definitely changing the income distribution by changing the demand for different types of labor. The atlantic monthly has had several articles on this. The best example is airline check in. In 1995, you wait in line, and finally get to a check in agent. He does not need college.
he does need to be literate, organized, on time, dress well, good communicator, and never get mad at customers. These people got decent wages because it was hard to find someone with all these traits.

Their numbers are a fraction of what they used to be. The kiosk machine does the work highly accurately and for a fraction of the cost of the human. So a $5k machine has replaced a $50k/year person.

This is happening in many sectors of the economy. Semi-skilled, and even skilled workers are being made obsolete by electronics technology.

I agree in principle, but $50/year for an airline check-in clerk? I highly doubt they get paid that much even now.

[jpatter666]

Re: Are robots and technology behind the income gap?--Most Definitely!

Actually what I found most interesting was the allusion that technology would drive prices down even further, but that patents allowed the company holding the patent to exert a quasi-monopoly and achieve a very high profit margin. This has led to patent troll companies and suing over the most ridiculous of patent design issues (witness the recent Apple/Samsung battles).

I recall of the the startups EJ was interested in attempts to better address this issue (patent troll wars)

[Polish_Silver]

Airline pay

Salaries at airlines tend to be fairly high compared to comparable work in other sectors. This is because the unions got wage concessions for all the employees, even those not critical to the union's striking power.
(That was true during 1950-1980, maybe less so now)

The airlines had fairly strong unions because there were three employee groups that could shut down the company: Pilots, flight stewards, mechanics. The groups did not coordinate much, but management was aware of the need not to piss any of them off.

$50 k could include the medical and retirement benefits.
But I wouldn't be surprise if they get $50k gross income each year.
People with those jobs were able to raise families.

[RebbePete]

Re: Airline pay

I plead guilty to contributing to the hijacking of a thread, but here's airport salary data. The ticket agents make more like $24K/year, but the point is still well taken - a $5K kiosk vs. a $24K/year agent. With benefits, that agent probably costs about $38K/year, since the formula I've seen in private industry is about a third of overall compensation for overhead.

By the way, the reason I see that tech job salaries haven't increased as much as you'd expect is because of the "S-curve" of technology development. For example, in the very early days of personal computers, there were literally dozens of approaches, each requiring a design team. Anyone remember the Osborne? The Acorn (which gave birth to the ARM processor now used in a large proportion of portable devices)? Once a product line becomes mature, less development is required, and it gets commoditized thanks, not due to monopolies, but to standardization. Microsoft is discovering the hard way that it's apps that sell the device, and you don't get developers to write apps unless you have market share, and you don't get market share unless you have apps. Anyone remember DesqView? OS-2? Bulldozed by Windows, not because of monopoly power, but because the market determined the winner, and after that, and in technology in a lot of cases, "winner take all."

Demand for tech jobs will lag until the next big paradigm shift. I suspect it might be personal robotics, but who knows. That could, however put more people out of work, and at lower skill levels. Picture one robotic lawnmower to replace that squadron of low-paid help.

By instead weakening patent protection, all you're doing is discouraging innovation.

[aaron]

Re: Airline pay

A lot of tech work can be outsourced. Strike One.
We allow companies to import tech workers on the cheap. This further keeps the salaries down. Strike Two.

Supply is low for highly skilled, high tech workers. It is not for low-level expertise.

What I see is companies importing the first group from all over the world. Wages are depressed in this way, but still quite good. On the low end, things can be farmed out to India. ANYTHING to avoid training employees.

[jpatter666]

Re: Airline pay

By instead weakening patent protection, all you're doing is discouraging innovation.

The point I was aiming at was IMHO nonsense patents -- like Apple's rounded corners on a cell phone (might be wrong, but I think that was one....)

REALLY? Patentable?

[seobook]

Re: Airline pay

Maybe there could be a graduated fine for applied for but non-granted patents. You get so many free / no fine (this could either be a % of submitted or a flat number), but then as you get more denied the cost per denial increases geometrically (either based on raw count of denied patents or number of denied patents that year).

First denial is say something like a grand, the next is 5k, the next is 20k, the next is 60k, the next is 120k, the next is 180k, etc. ... and for good measure, allow public reviews of patents with anyone who can show prior art in claims that is seen as valid getting 1/3 to 1/2 of the fine.

This would prevent there from being prohibitive fines against individuals, while providing the greatest disincentive to those who had intent to abuse the system.

The above solution would also require a block to the loophole of one entity running 3,000 LLCs with 3 patent applications each too.

Of course any rational solution would be unacceptable on principal. Thus rounded corners are innovative ;)

[Polish_Silver]

Re: Airline pay

A lot of tech work can be outsourced. Strike One.
We allow companies to import tech workers on the cheap. This further keeps the salaries down. Strike Two.

I agree with this. Congress is always passing laws to import more engineers. Where there is a "shortage" seems to be CEOs. They get huge salaries regardless of performance. Why don't we bring in a bunch of Indian CEO's and crash the CEO salary market?

[Polish_Silver]

Re: Airline pay

I'm impressed that you found the data. I am wondering though, if the real salary hasn't gone down because computers have made the job easier.

[jpatter666]

Re: Airline pay

I'm impressed that you found the data. I am wondering though, if the real salary hasn't gone down because computers have made the job easier.

Possible, but it always depends. Technology might make the job easier (once you learn it) but you can be far more productive. Usually, the question is -- just how hard is the technology to learn (special skill sets?) and how pervasive (read: how easily can you be replaced) is it?

[c1ue]

Re: Airline pay

The clerks aren't there to scan your boarding pass, although they do that.

They're there because of many other reasons:

1) Problems with the flight - communicating to passengers
2) Enforcing FAA regulations on carryons
3) Providing gate customer service (like rerouting should a flight be cancelled)
4) Enforcing boarding queues
5) Enforcing boarding security (i.e. preventing those without correct boarding passes from getting on the plane)
6) Upgrades
7) Standbys

There are many other duties a gate agent must fulfill - none of which your magic $5K scanner will.

[Polish_Silver]

Re: Airline pay

Very true---that's why there are still some of them. But far fewer than in days gone by.
You would think that since their works is now "less routine" and more problem solving, they would get more pay, not less.