INSIGHTS: AUTOMATION PERPETUATES THE RED-BLUE DIVIDE
Guest Columnists: Mark Muro, Senior Fellow and Policy Director, Metropolitan Policy Program, Brookings Institute; Jacob Whiton, Senior Research Assistant, Metropolitan Policy Program, Brookings Institute; and Robert Maxim, Senior Research Analyst, Metropolitan Policy Program, Brookings Institute. This post was originally published on brookings.edu.
If economic anxiety is a factor in the nation’s backlash politics, the spread of automation is likely an important context for understanding it.
Economist Jed Kolko has explored this link with federal data organized to map the geography of “routine” jobs most at risk of automation. Additionally, the economist Carl Benedikt Frey and his colleagues conclude that “automation in recent years tilted the electorate into opting for radical political change.”
Which raises the question: What do Brookings’s new automation and artificial intelligence (AI) data and analyses say about the nation’s tense political geography?
Derived from assessments of occupations’ automatability provided by David Autor and McKinsey Global Institute, our analyses are based on quantifications of the likelihood the current task mix of hundreds of occupations could be automated with current technology. As such, our numbers estimate occupational vulnerability and, essentially, worker precariousness or anxiety about the future—hence their political relevance.
What do our data show? Our data confirm both a stark history of automation in Trump country and substantial future exposure—exposure that points to more work flux, more job uncertainty, and potentially more political disruption.
Along these lines, while our backward-looking look at of “routine” job concentrations and work disruption clearly points to parts of the 2016 backlash map, our forward-looking analyses of automatability makes the link even more tightly.
At the state level, all but one of the ten states most heavily exposed to future job market changes cast its electoral votes for President Trump in 2016.
Specifically, Heartland states like Indiana and Kentucky, with heavy manufacturing histories and low educational attainment, contain not only the nation’s highest employment-weighted automation risks (48.7 and 48.2 percent of tasks vulnerable to replacement, respectively), but also registered some of the widest Trump victory margins. By contrast, all but one of the states with the least exposure to automation, and possessing the highest levels of educational attainment, voted for Hillary Clinton, perhaps reflecting greater comfort with tech trends that have most benefited these same states. The strong association of 2016 Electoral College outcomes and state automation exposure—leaving aside questions of deeper causality—very much suggests that the spread of workplace automation and associated worker anxiety about the future may have played some role in the Trump backlash and Republican appeals.
Turn now to the 2018 midterm election, and it’s clear that the finer-grained evidence of congressional district voting reinforces the impression of automation-driven job precariousness and Republican voting. To be sure, no single factor such as tech-driven worker anxiety determines local political behavior. But there’s no mistaking that districts that voted Republican in the 2018 election are subject to higher levels of automation exposure, reflecting GOP voters’ lower education levels and higher involvement with factory, transportation, and lower-skill service-sector jobs.
The average automation potential of Republican districts is now 47.5 percent of all tasks compared to the 44.7 percent figure for Democratic areas—revealing a modest but noticeable gap that also reflects Republican dependence on higher-exposed smaller towns and rural communities in the Heartland.
Such places in general tend to have lower education levels and greater relative exposure to manufacturing, transportation, or other “routine” activities.
With that said, the party contrast on automation exposure becomes much more dramatic when we look at the range of individual congressional districts’ levels of susceptibility. Now the differences look much larger than they did across states or in aggregate. Specifically, only 4 of the 50 most automation-exposed congressional districts are represented by Democrats, while every one of the 50 least-exposed districts is represented by Democrats.
What’s more, the differences of automation risk across geography and community type are revealing. The 10 least-exposed congressional districts to automation driven task displacement include big, Democratic high-tech and professional-services oriented districts as Virginia’s 10th and 11thdistricts (covering Arlington and Fairfax counties in the northern-Virginia tech hub); New York’s 8th, 9th, 10th, 12th, 13th, and 15th districts around New York City; and California’s 19th district encompassing much of Silicon Valley. Other low-exposure districts around the country include Massachusetts’ 7th reaching into downtown Boston, Colorado’s 6th in suburban Denver, and Pennsylvania’s 3rd in central Philadelphia.
By contrast, the most automation-exposed districts in the country include rural or small-town districts such as Alabama’s 4th district; Georgia’s 14th; industrial and nearby rural locations like Indiana’s 2nd and 4th districts or northern Ohio’s 4th, 5th, and 7th districts; and the agricultural area of Wisconsin’s 7th district. Other high-exposure Republican-voting districts include political backlash examples such as Iowa’s 2nd in the southeastern part of that state and Minnesota’s 1st, south of the Twin Cities.
The story told by congressional-district voting very much confirms that jurisdictions exposed to the most automation-based dislocation are some of the most likely to vote Republican. To be sure, as Jed Kolko has noted, it’s nearly impossible to fully disentangle automation from other economic and demographic factors, because “demographic characteristics and economic conditions are themselves related.” But even so, it is clear that to the extent that places experiencing high automation threats are experiencing greater economic stress, that stress is a factor in their voting behavior.
Which suggests two takeaways. One is that automation, and the worker anxieties associated with it, appears to be a subtle, real, and far-reaching factor in voting behavior that may be triggering even more anxiety in red America than blue America, with more stress to come. Such trends underscore the importance of problem-solving to help mitigate the transitions ahead and suggest that it would behoove the presidential candidates to begin describing their responses.
The second takeaway is that while the two Americas are experiencing somewhat different trends, automation is impacting both realms, with large pools of lower-skilled production, transportation, service, and clerical workers at risk across red-blue lines. That means there may be room and reason for cross-party cooperation on efforts to facilitate smoother transitions and reducing hardships for displaced workers and communities affected by automation.
Appendix of average automation potential by congressional district is available to download here.
ON THE ECONOMY: MODERN LOVE
John Dunham, Managing Partner, John Dunham & Associates
(Modern love) walks on by. (Modern love) gets me to the church on time. (Church on time) terrifies me. (Church on time) makes me party. (Church on time) puts my trust in God and man. (God and man) no confession. (God and man) no religion. (God and man) don’t believe in modern love. The late great David Bowie might as well have been singing about the new rage in economic theory, the purported free lunch promised by so-called Modern Monetary theory. Some amazing things happened in 1983 when David Bowie wrote and recorded this song as the opening track to his album Let’s Dance. The internet officially came on line, the Space Shuttle Challenger is launched on its maiden voyage, and the Global Positioning System (GPS) was made available for civilian use. It was also the year that the last episode of M*A*S*H was broadcast.
How have we gone so far backwards in the 26 years since then. A recent story in The Wall Street Journal discussed the new economic theory on the block known as Modern Monetary Theory (MMT). This is a concept that was developed over time, but its birth as a “theory” came around 1947 in an article written by economist Abba Lerner. It is an extension of an older concept known as Chartalism, which was developed by German economist, Georg Friedrich Knapp, as an argument against the gold standard. Knapp argued that governments could create paper money and recognize it as legal tender, and that money could serve as a means of exchange in the same way as gold.
The MMT goes much further in suggesting that states can create an unlimited amount of paper money as long as there is enough slack in the economy to keep the growth in currency from being inflationary. Deficits do not matter, and the economy is only constrained by the specter of inflation.
The popularity of the theory among political elites is obvious in that it gives them a blank check to spend.
Like most economic theories, MMT does make some good points. There is much merit to the argument that governments cannot effectively control the economy by tinkering with interest rates, so too is the idea that fiscal policy is much more useful than monetary policy at actually guiding growth. However, suggesting that governments have a free lunch and can have the economy follow their bidding simply by printing money is patently absurd.
In fact, MMT is based on the false presumption that money is inherently valuable. This is simply not true, as even commodity-based money, in and of itself has no value at all. Money is effectively no different than a check – you know those old fangled things that we all used to write – acknowledging the payment of a debt. It’s a means of transaction and a representation of value, but not valuable itself.
The first purpose of money is to facilitate exchange. If money did not exist, transactions would have to involve barter. If I want a shirt but I only have a pig to pay for it, the transaction with the tailor becomes difficult. However, if I can represent the value of the pig using a generally accepted token, be it a shell, a gold coin or a Federal Reserve Note, and the tailor can do the same with the shirt, then we only need to trade tokens, not physical commodities.
The second purpose of money is as a representation of value – in effect a unit of measurement much like an inch, a pound or a gallon. Again, it is difficult to store, save, and often times use, physical commodities or the results of physical labor. I can pick hundreds of pecks of apples over the course of a week, but I can’t eat them all or even trade them all for the goods that I need to last the remainder of the year. I can, however, trade them to a fruit wholesaler for a certain measure of money. That money represents my week’s work, and can be easily stored in a mattress, a bank or traded for other goods and services over time.
Unless money has value in and of itself, then the ideas of MMT simply can’t hold water. It is true that the supply of money in an economy can and should grow along with the amount of value created. If it didn’t then there would be downward pressure of prices. On the other hand, if the amount of money in the system grows faster than the value produced, there would be upward pressure on prices. Neither is good, as they would in effect change the measurements represented by money. How could a building be built when the length of a meter changes every day, or milk be bottled when the volume of a gallon goes up and down with the wind. Neither can work, and neither can the economy when money no longer serves as a reliable unit of measurement. Examples abound. Imperial Rome fell in part due to a debasement of its money, so too did Weimar Germany, and more recently Zimbabwe, Argentina and Venezuela. Just by looking at the news we can all see that simply printing Bolivars has not done much to grow the Venezuelan economy, and printing dollars will not create wealth in the United States.
Economic theories can be powerful tools to help guide business, consumers, investors and government. Unfortunately, the public will always be susceptible to the siren song of charlatans selling snake oil, and a free lunch. MMT is nothing more than another Ponzi scheme posing as a solution to today’s woes. (God and man) don’t believe in Modern Monetary theory.