Tuesday, April 4, 2017

New "Deal", or New Template for Growth?

James Pethokoukis in a recent post, highlights an article from Rob LoCascio at Tech Crunch, "We need a New Deal to address the economic risks of automation". Pethokoukis explains the basic premise of LoCascio's suggestions:
Rather than taxing robots or giving everyone a basic income, the author, LivePerson CEO Rob LoCascio, wants a "new New Deal" to deal with automation. He has two suggestions. First, "government should fund education and retraining programs that provide an opportunity for at-risk employees to learn new skills, geared towards those industries that will be around longer term." Uncle Sam could also work with business, in raising public awareness since his company's research found that "88 percent of Americans reported not being worried about losing their jobs"...
In addition to investing in people, "LoCascio thinks government should invest in companies or startups creating platforms that use "human labor" to do uniquely human activities...
Pethokoukis was more inclined to agree with the first suggestion. My initial reaction is one of relief, if future employment conversations such as these can safely set aside robot taxation or basic income. Determining what is not realistic (on any number of levels), makes it easier to consider more feasible possibilities. That said, I still have concerns about both suggestions, much as Pethokoukis noted his reservations regarding the second suggestion. I'll briefly explain why.

1) Government retraining programs for "left behind" employees would still have placement problems, given the monetary and supply side cutbacks which decreased overall capacity after the Great Recession. Higher education has already experienced its own difficulties in graduate placement, given a fairly rigid template for high skill participation in the workplace. Even though today's high skills capacity can still be monetarily compensated on generous terms, its high wage structure can only be extended so far. This factors into the struggle college graduates may experience, for employment which matches their extensive personal commitments and human capital investments.

2) As to the second suggestion, it could be difficult for goverments to invest in startup platforms. Why so? In order to be feasible, governments would need to tap into production and consumption design which varies extensively from the template already established with the "blessings" of private enterprise. Even though all concerned seek continued long term growth, it could be confusing for private interests, should start ups become government supported in ways which detract from already established terms of general equilibrium engagement.

Nevertheless, the difficulties in approaching a "New Deal" on the above terms, doesn't mean new growth is impossible to achieve. A new template for growth - one which incorporates personal effort in the form of measurable time - would make room for economic participation on broader terms.

A new template for growth would not have to make further demands on already existing revenue. Instead, human capital would serve as a starting point: one in which time value would be tapped, so that knowledge can contribute to a new social safety net of time based product. Even though it's difficult to create a new deal from the tightly defined limits of general equilibrium, a new template is still possible on alternative equilibrium terms. With a little luck, society can build a new labour force participation template for the 21st century.

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