3 March 2018   Leave a comment

The McKinsey Global Institute has released a new report entitled “How will automation affect economies around the world?”  It is a transcript of a podcast, so one can read or listen to it.  There are three interviews, one on China, one on Europe, and one on India.  Overall, the report is consistent with how automation will be accompanied by job displacement, but there are some very creative and interesting ideas on how to address job losses and adding new skills to the current workforce.  For example, one possibility is to integrate job training into current jobs:

“Why not make sure that instead of working so many hours a week, ensure a portion of it—2 percent, 3 percent, 5 percent of that—is actually devoted for new learnings. And these learnings, if you do them right, will give you the rights basically to get points for your pension in the future. In this concept, instead of adjusting the number of hours to work, because there will likely be a bit less work in the future, you will still work. But you work for the future. Firms have an incentive to possibly even co-finance because firms are not bad guys. They’re not there to take people out. They want people that are good at doing their job and complementary with capital. And for them, they need these skills, and these skills come from job trainings most of the time.”

The description of the Chinese response to automation is particularly interesting given the large population and the rate of economic change in China.  The Chinese seem to have thought long and hard about how to deal with unemployed workers.  McKinsey also has a report entitled “What can history teach us about technology and jobs?” and one entitled “How do we create meaningful work in an age of automation?

European Commission chief Jean-Claude Juncker has responded to US President Trump’s plan to raise tariffs on imports of steel and aluminum.  Speaking in Hamburg, Germany, Juncker said:
“So now we will also impose import tariffs. This is basically a stupid process, the fact that we have to do this. But we have to do it. We will now impose tariffs on motorcycles, Harley Davidson, on blue jeans, Levis, on Bourbon. We can also do stupid. We also have to be this stupid.”
In response, President Trump threatened in a tweet that if Europe does raise its tariffs on US products, then the US will reciprocate by placing a tariff on imported European cars.  The illogic of such a move is manifest in the nature of the European car industry in the US.  According to the Washington Post:
“His attack on European automakers is mostly a direct threat at Germany, which exported $23 billion in cars to the United States in 2016, according to data aggregated by the Massachusetts Institute of Technology. But large German automakers also have a sizable presence in the United States, with BMW employing thousands of workers in South Carolina and Volkswagen employing thousands more in Tennessee. Those manufacturers produce hundreds of thousands of cars in the United States each year, many of which are later exported to buyers in Asia and Europe.”
This is the logic of a trade war which will make most everyone worse off in the long run.
New York magazine has published a very disturbing story about foreign policy decision-making in the US.  Early in the Trump Administration, the US supported a Saudi-inspired boycott of Qatar ostensibly because Qatar supported terrorists.  The evidence was thin and even the US State Department was not supportive of the move.  The New York article indicates that President Trump’s son-in-law, Jared Kushner, had approached Qatar for a loan to help him make payments on a real estate holding that was losing a great deal of money.  Qatar refused to make the loan to Kushner who was a senior aide to President Trump.  There is no direct evidence between the Trump decision and the Qatari decision, but the possibility of private interests determining US foreign policy is unconscionable.

Posted March 3, 2018 by vferraro1971 in World Politics

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