I’m wondering who owns the rights to make them.
AI is coming. The robots are coming. Automation is taking over our work.
That’s what I see in the headlines every week when I read the news. That’s what I hear in the message of candidate for president, Andrew Yang. That’s what I hear in the story of inequality in America. Every time I see a conservative meme for $15 an hour with a kiosk at McDonald's, I see the threat that robots will take our jobs. This is how the economy works, right?
At least, that is what someone would have us believe. We’re supposed to believe that robots are quickly overtaking us in the work that we do. As someone who has been working with computers since 1987, I can tell you firsthand, that computers haven’t made our lives any easier. For some reason, our lives have become even more complex, and we’re making work for ourselves in the process.
Economist Dean Baker at the Center for Economic Policy Research has been making the case that data disputes what he likes to call, “The Scary Robots” story. He has amply demonstrated that if the automation story is to be believed, we must see it in the data, and it’s not there. Where would we see it? In a number called “productivity growth”.
The Federal Reserve tracks the data for productivity growth and they came up with some interesting figures. In 2017, the Federal Reserve issued the following report, Government Policy and Labor Productivity Remarks by Stanley Fischer Vice Chairman Board of Governors of the Federal Reserve System. The report includes charts that give a nice, big-picture view of productivity growth from 1890–2016. The first chart is one that many people might be familiar with:
The chart above shows notable periods of great productivity growth, 1948–1973, and 1996–2003. The remaining periods are relatively flat, averaging around 1.5% a year. In the cases where the productivity growth rate exceeded 3%, the first is known to economists as “The Golden Age”, the post-WWII period of great productivity and prosperity shared by most Americans of that time. The second period is right around the time that the personal computer came into popular use at work and at home during the Clinton Administration.
The last period, 2004–2016, went back to 1.5% annual productivity growth. Yet, economist Dean Baker notes that productivity growth appeared to pick up some to 1.8% in 2018. So even in a time of rapid technological progress, productivity isn’t going anywhere. If the robots were really taking over, we’d see productivity growth rising well above 3% a year.
But even if the robots were taking over, the problem is not so much the robots. For if the robots were doing more work, that would mean more free time for the rest of us, right? That would mean greater productivity per employee, for someone has to tend to the robots.
If we look at all the talk in the last debate, we see a refreshing trend. All of the candidates talked about how the laws tend to distribute income upward, in one way or another, but they were indirect about it. This is a central point in Baker’s work for at least the last decade. No one on the stage in the last two Democratic debates, talked about intellectual property as a means of consolidation wealth. No one talked about who would have the patent rights to build the robots. I know because I checked the transcripts here and here.
Another chart provided by the Fed in that report shows their estimate of contributions of labor, innovation, and investment:
The first thing to notice is that the quality of labor is relatively flat, even with more people going to college than ever. According to the Fed, despite all of the training and education poured into people, the quality of labor is not improving yet, all of us contributed to labor productivity growth in some way.
The second thing to notice is that when productivity growth hit 3%, we see very large contributions by innovation. When I think, “innovation”, I think, “patents”.
If we want to understand income inequality, we must look at the length and the strength of patents and what they claim to protect. Congress has been making patents longer and stronger to be sure. But who owns the patents is what really matters.
Patents can hinder downstream innovation. Patents can make a new technology prohibitively expensive to implement. Patents take money from the rest of us and divert it to the top 1%. And it is an open question as to whether patents incentivize innovation.
In their book, Against Intellectual Monopoly, Michele Boldrin and David K. Levine make the case that patents hinder innovation by demonstrating how patents hindered innovation in steam engines. They showed that the patent owners used the courts to prevent competition by enforcing a government-sanctioned monopoly called a patent.
Baker estimates that patents cost the economy $1 trillion in a $21 trillion economy. That is a huge diversion of cash to the top 1%. That is about 60% of after-tax profits. That is also a huge government intervention in the markets. Many of the candidates we have and will see on stage in the coming months will speak as if what we have now is how the market naturally works. At least now they are plainly stating that the economy has been rigged for the top 1%.
They’re even starting to use the word “rigged”. Only other candidate used the word “rigged” and that was Beto in the first debate. “Rigged” is a word we need to use more frequently. And until changes are made to allow everyone to enjoy the financial benefits of innovation in this economy are made, we must remind the upper class that they’re rigging the economy for themselves. We may even have to show them the pitchforks.
The ideas offered and promoted by the candidates, free childcare, universal health care, tuition-free public college, etc, they’re all great ideas. But they don’t address the root of the problem, that the economy has been rigged for the last 40 years by the top one percent. Once we can admit that the economy is rigged in favor of the one percent, once we demonstrate vigilance about how the rules are written, we can have those solutions.
Remember what the Fed said about how the quality of labor has not improved in more than 100 years? Labor includes executive and management performance. That’s how we know the economy is rigged. That’s how we lose the fear of robots.