New data has a lot of economists primarily blaming Chinese trade, and not robots, for the implosion of U.S. manufacturing jobs across the Ohio and Mississippi river belts. But a pioneer of automation studies is sticking to his assertion that robotization played a leading role in the bloodletting.
Why it matters: Within the answer may lie the answer to resurrecting at least some of the hollowed out manufacturing heartland, or at least not making the same mistakes again. And it may also help explain the rise of populist leaders like President Trump.
The background: In a piece earlier this month, Quartz's Gwynn Guilford profiled the work of Susan Houseman, an economist with the Upjohn Institute. Houseman had found that, when you strip away productivity gains by the computer sector, the rest of the manufacturing economy had flat growth since about 1947.
- That is, most of manufacturing had no real productivity growth for seven decades.
- That is odd because a productivity bump should have been present if manufacturing was automating in spades, as was claimed.
- Therefore something else was responsible for the wiping out of jobs.
The suggestion was that that something was China's 2001 accession to the WTO.
David Autor, an MIT economist, told me that Houseman's work provided the final pieces of data proving that Chinese trade was primarily to blame. "She has cracked a big puzzle," he said.
Other economists said the same thing.
- At the McKinsey Global Institute, Sree Ramaswamy said the hardest-hit companies were small and medium in size.
- Karen Harris, director of Bain Macro Trends, said it's now clear that trade led to the rising income inequality that has dogged the U.S. economy.
But, but, but: In so doing, they challenge the work of Carl Frey, an Oxford economist and co-author of a 2013 paper that's the baseline for the study of automation and jobs.
- Frey told me that he had taken account of Chinese trade. "We control ... for Chinese import competition in our study. Doing so, robots still have a significant impact," he said.
In addition, in terms of the populist wave, a study by U Penn political scientist Diane Metz found a wholly separate explanation from job destruction: people have reacted not to lost income, but to a perceived threat to their local status. In other words, the blame for the wave is tribalism.
Read the whole post.