Lazaro Gamio / Axios

The traditional exit from poverty for poor countries — followed over the decades by Japan, Taiwan and South Korea, among others -- is to be the cheap labor for rich nations. But the robotics revolution may be foreclosing that route to the middle class, MIT economist Daron Acemoglu tells Axios.

Among the potential losers: Vietnam, China and Indonesia, said Acemoglu, co-author of some of the world's most influential recent papers on the impact of robotics.

Speaking in his office, Acemoglu said that for seven decades, every fast-growing country has used export-focused manufacturing built on cheap labor to undercut foreign competition.

But, said Acemoglu: "If robotics makes labor uncompetitive in these lowest-skill and sometimes in the medium-skill occupations, this development path would be closed to the next group of developing countries and would make the further development of countries, such as China or Vietnam, also very difficult."

One of the crowning achievements of global capitalism has been a sharp reduction in global income inequality. The embrace of capitalism by populous Asian nations like China and India has prodded incomes up, even if it was paired with stagnant middle class incomes in the wealthy world. But robots make all that different, Acemoglu said. Here he is summing up the situation now.

Why it's bad for the West: The wealthy world has grown more so as a result of China's rise, even if that wealth has been mostly captured by the already rich. In fact, 80% of all global economic growth since the 2008 financial crisis has flowed from developing and emerging economies, meaning that an increasing number of U.S. jobs are dependent on exports to those countries. If these countries can no longer rely on manufacturing as a source of jobs and productivity growth, it could deal a serious blow to the U.S. economy, too.

Go deeper

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 6:30 p.m. ET: 32,390,204 — Total deaths: 985,302 — Total recoveries: 22,286,345Map.
  2. U.S.: Total confirmed cases as of 6:30 p.m ET: 7,020,967 — Total deaths: 203,481 — Total recoveries: 2,710,183 — Total tests: 98,476,600Map.
  3. States: "We’re not closing anything going forward": Florida fully lifts COVID restaurant restrictions — Virginia Gov. Ralph Northam tests positive for coronavirus.
  4. Health: Young people accounted for 20% of cases this summer.
  5. Business: Coronavirus has made airports happier places The expiration of Pandemic Unemployment Assistance looms.
  6. Education: Where bringing students back to school is most risky.
Mike Allen, author of AM
1 hour ago - Politics & Policy

Biden pushes unity message in new TV wave

A fresh Joe Biden ad, "New Start," signals an effort by his campaign to make unity a central theme, underscoring a new passage in his stump speech that says he won't be a president just for Democrats but for all Americans.

What he's saying: The ad — which began Friday night, and is a follow-up to "Fresh Start" — draws from a Biden speech earlier in the week in Manitowoc, Wisconsin:

Trump prepares to announce Amy Coney Barrett as Supreme Court replacement

Judge Amy Coney Barrett. Photo: Matt Cashore/Notre Dame University via Reuters

President Trump is preparing to nominate federal appeals court Judge Amy Coney Barrett of Indiana, a favorite of both the social conservative base and Republican elected officials, to succeed Justice Ruth Bader Ginsburg, Republican sources tell Axios.

Why it matters: Barrett would push the already conservative court further and harder to the right, for decades to come, on the most important issues in American politics — from abortion to the limits of presidential power. If confirmed, she would give conservatives a 6-3 majority on the high court.