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USA: Great disappointment of the great illusions

USA: Great disappointment of the great illusions

Tags: US, Opinion, Economy, Research, Robot, Trump

"The Great Depression brought a real growth of wages and income, and had a profound effect on economic inequality", - says Walter Szydlow in his book "The Great Equalizer: Violence and inequality history from the Stone to the XXI-st century"

"Yes, it has brought immense suffering and dire poverty. But it was she who saved millions from dying of grief ... You can compare the scale before and after, "writes Mr. Szydlow, a historian at Stanford University, which brings to the discussion of the increase in inequality, as well as considering the circumstances under which it can be reduced.

"Inequality almost always increases due to the fact that political and economic power conflicts with each other, and all this passes through generations. It does not carry, as some believe, the seeds of its own doom, "the scientist writes. According to Shidl, the cause of large-scale "leveling" can be epidemics and pandemics, such as "black death", when the plague changed the meaning of land and labor in medieval Europe. Labor became a scarce commodity - there were free-lance masons who toured and agreed to work only with gentlemen who offered a competitive price.

"It could also be the collapse of the state and economic systems, as in the end of the Tang Dynasty in China, or the collapse of the Western Roman Empire. In general impoverishment of the rich lose the most. Revolution, Russian or Chinese, also meets these requirements, as well as sisters of revolutions in the XX-th century: World War II with the obligatory mass mobilization ", - adds the historian wrote Szydlow publication The Economist.

"Financial crises increase inequality as often as it reduces. Political reforms are ineffective in part because they are largely aimed at balancing power between the rich and the politically powerful, but they do not count with the have-nots. Land reform, debt cancellation and the release of slaves are not always able to reverse the trend, although the chances increase slightly if this happens with the use of force. But violence, in itself, does not lead to greater equality, unless it occurs on a mass scale. "The most numerous unrest in history has not been able to equalize everyone," Shidla quotes The Economist.

Perhaps the most exciting part of this book - the careful selection of facts indicating that the mass-mobilizing the war were the main reason for defining and unprecedented reduction of inequality in much of the Western world between the 1910 and 1970 years (although the old-fashioned Great Depression and has left its mark). Universal sacrifice were required and the involvement of national resources on such a scale and in such circumstances, which have become extremely strong and rich layers involved.

The income tax and property taxes grew very much after both world wars (the upper income tax rate reached 94% in America in 1944, the property tax peaked at 77% in 1941). Physical damage to the real estate market has reduced the assets of the rich, as well as postwar inflation. Wars also led to an increase in trade union membership - one of the factors associated with the war, which played a role in maintaining a low level of inequality for the generation after 1945, before it began to rise again in the 1980.

The 20th century was a century of democratization. But Shidl thinks this is another consequence of world wars. He follows Max Weber, one of the founders of sociology, in reflecting on the fact that democracy is the price that elites paid for their cooperation with non-aristocratic classes in the mass struggle against a common enemy. In the course of this process, economic equalization was legalized. Referring to the work of other colleagues, Shidl argues that democracy does not have a clear impact on inequality at another time [not post-war]. A good parallel to this is the classical Athens - democracy with a comparatively low level of income inequality, which was also built on mass mobilization.

Such catastrophic alignments will be less likely in the future. Pandemics continued to carry a real risk, but those that are similar in their impact on the Black Death will be no more. There will be no more wars and at such speed that took place over many years - millions of troops. In addition, the general well-being after the industrial revolution, regardless of inequality, has risen. And in recent decades, global inequality has fallen.

In general, good news, but some readers would like to see their own countries less unequal. Shidl believes that in attempts to reduce inequality democratically - the policy of redistribution and empowerment of labor - there are no signs of actual harm, at least. Perhaps this will help keep the further growth of inequality under control, but is unlikely to be able to identify a direction for change. And this can conceal the costs - in the form of closed opportunities; if history itself does not support the idea that a peaceful and effective reduction of inequality is still possible, maybe our progressives should set themselves other tasks?

There are other scenarios and possibilities. One of them - changing historical circumstances. As Szydlow shows, XX century is quite different from previous ones. Can there be other, less terrible, but equally profound ways of converting people to the peoples and got along with each other, or not? Or is it yet to come? If, for example, more economically important intelligent machines suddenly decide that they do not simply belong to anyone, and confiscate themselves from their owners in the future?

Another possibility is that some people will just consider civilizational collapse to be the price that is worth paying for Utopia, which they could build on the ruins ... or maybe they just want to see how everything is burning with fire. Today, individuals and small groups can have the means of nuclear or biotechnological violence to the extent that was unthinkable in the past ... Wealth can concentrate in one hand for a long period of time; the ability to destroy - no, "- writes The Economist. Will such a kamikaze be the last generation of modern children - the generation of Trump voters?

"Donald Trump shows off his mantra of" America First ", as well as the economic policy of return well-paid jobs and manufacturing back to America. For voters, it is probably the most important performance indicator Trump. But is it possible?

Trump won the presidential election in part because American workers expressed anger over job losses and wage cuts. But he misled the whole country, arguing that trade - the main reason for the loss of jobs, and that the negotiations on the revision of trade agreements will help raise the average class.

Trump offers palliative measures, which have already led to false hopes. He believes that some good bargains revive a rusty belt and return the good old days of flourishing industry. That will not happen, and to pretend that it will be - pure and simple mystification.

"World trade took away American jobs!" To fix this Trump "killed" Trans-Pacific Partnership (TTP) in the first week of the presidency and now requires the adoption of changes to the agreement of NAFTA and other trade agreements. He referred to several statements of some US corporations that allegedly claimed that "doomed plants were saved and jobs are already starting to come back."

Stephen Bannon, Trump's chief strategist, designed this economic nationalism into a full-blown ideology that puts the focus on the confrontation between workers who have suffered from globalization and the elite. Bannon said recently that Trump brought "us out of the trade agreement, and our sovereignty will return to us." But the numbers show that Trump and Bannon are fighting the wrong fight. Employment, indeed, has declined sharply in the last decade, but the main reason lies in automation, and not in trade. It is the robots that perform the majority of the disappeared American handicraft, and not the foreign workers. But instead of helping dismissed workers to acquire a new specialty, Trump promises to restore lost jobs, not understanding or not wanting to understand that they may be in a much worse situation - people will simply not be ready for a much larger wave of automation and even greater loss jobs, which awaits us ahead.

The most compelling figures were collected in 2015 by Michael Hicks and Srikanth Devaraj in Ball State University. They showed that the current production in the United States actually experienced something of a revival. Despite the Great Recession, output grew by 17,6%, or about 2,2% per year, according to the 2006 2013 years. It was only slightly slower than the growth of the economy as a whole.

But even when the output, for example, the manufacturing industry grew, jobs continued to decline. In the decade (with 2000 2010 on year) was the largest decline in employment in the manufacturing industry in US history, economists have concluded from Ball State University. What killed those jobs? For the most part, it was not trade but productivity gains through automation. For ten years, the report says, while productivity growth jobs lost 87,8% of workers, while the trade was responsible for the loss of 13,4% of all jobs.

Robotics allows manufacturers to create more products, employing fewer people. This is not a conspiracy entered the global elite. It's just a fact of life and economic progress. Suffer not only blue-collar workers. Intelligent machines are killing workers in the field of finance jobs, rights and even journalism.

85,5% of job losses in the production of motor vehicles was accompanied by an increase in productivity; in the steel and other primary metals - 76,7%; in paper production - 93,2%; in the textile industry - 97,6%.

Trump offers a "Buy American". But in a world of global supply chains, whether there is such a thing at all - American car? Can we expect that the Toyota Camry is made in Kentucky? Truck Ford F-150 assembled in Kansas City, but some of its parts were made in Mexico. The interdependence of global production - the reason why the "Ford" and "Toyota" remain healthy and profitable production for the employees and shareholders of both companies. As Trump is going to remove the thread from the needle that sews this quilt?

Trump wants to fulfill his campaign promises. Good. But, pointing to the wrong source of unhappiness rust belt, he has his supporters double disservice. He gives them false hope that jobs have long been replaced by machines, they will be released to people. Alas, the economic history does not move in the opposite direction. To make matters worse, the Trump gives people a reason not to take further training to prepare them for the next tsunami of automation, which is forecast can destroy more than half of all existing jobs.

"What will happen to the electorate Trump: workers in Michigan, Ohio and West Virginia who believed in him (who thought that the old jobs back) and are doomed to lose them even more in the future" - writes David Ignatios pages Real Clear World .

Elena Hanenkova
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