Fri. Jul 19th, 2019

Ashenfelter: "The robots have not increased productivity. They break all the time "| Economy

Ashenfelter: "The robots have not increased productivity. They break all the time "| Economy

The professor gives this interview before giving a talk on labor automation at the Barcelona Graduate School of Economics, of which he is part of his council of international advisors.

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Question. What does the index show us today? Big Mac?

Answer. The most interesting case is China, because it has happened of not being so different from India to be very above. But it has nothing to do with the United States: [en China] the man who makes his iPhone earns two dollars an hour but in Pakistan they are 35 cents. The Chinese are really the only success story since the financial crisis.

P. In the last recession, Spain carried out an internal wage devaluation to try to gain competitiveness in its economy. But it is the second country with the highest unemployment in the EU (14.1%) and the third in children under 25 (32.6%).

"The Chinese are really the only success story after the financial crisis"

R. The problem is that I did not have many more options if I was going to stay in the European Union. I think the Greeks could have been better if they had left [del euro]. In Spain, general unemployment has fallen but the figures on young people are still very high. A common rule is that unemployment under 25 years is double that of the general. In most countries it is fulfilled. But in Spain it is still 32%, when it is expected that it would have been located in the upper part of the 20% range. I suppose there is a lesson behind this: you have to be careful with fiscal policy in a world where you are disciplined by the labor costs of others.

P. What can Spain do to combat such high systemic unemployment?

R. It takes a long time to adjust it. One should assume that in the long term we should return to what we had, although perhaps not at pre-crisis levels, because they may have been lower than normal.

P. Could the solution be related to some kind of reform regarding dismissals, salaries or temporality?

R. I have never believed that [la regulación] It was a big issue. It is true that flexibility is facilitated in the United States, but I never thought it was so important. Otherwise, flexibility would be expected to matter at the time of entering the labor market. But that's not true. Even after the crisis, the gap between youth unemployment and the rest is practically the same in most countries. The surprising [de España] is that this figure of more than 30% of unemployment makes you wonder if there may be some inflexibility in the entry levels [al mercado laboral].

P. The Spanish Government has raised the minimum salary from 735.90 euros per month to 900. Do you think it is right?

R. Everything depends on how productive you can become.

P. So, is it good to raise the minimum wage?

R. Ideally, you should leave the market alone and this achieves its equilibrium. The problem is that it is very slow. We do not have strong evidence that increases in the minimum wage in the ranges seen have a real effect in reducing employment.

"There is no evidence that raising the minimum wage has an effect on employment"

P. How important is automation in the labor market?

R. In fact, the desmiento. If robotics were dramatically changing everything, we would see a fantastic growth in productivity and we do not see it. Right now in the United States we have a small boost in productivity, but everyone talked about what was going down. What are these robots doing? I think the real issue is that we see robots everywhere, except in productivity statistics. When I was a student we assumed that real salary growth was equivalent to productivity growth. At the beginning of the seventies, that rule broke. Salary growth is now not at the same level as productivity growth.

P. What future do you see robotics if it minimizes automation?

R. I am totally in favor of automation, we should have the maximum level that we can. But, if it were important, it should ideally come out in the productivity statistics, because those robots would be doing something. I do not think it's true that there is more production thanks to robots. They break all the time.

P. Can a human be equal?

R. I have a story about a friend of mine who has a hot sauce factory in Los Angeles. They have automated almost all the production. I visited it 10 years ago and I went back last week. The only difference I saw is that they have a machine that can pick up the cans that fall off the assembly line, put them in a box and crush them. The increase in manufacturing productivity is 3% per year, it would be 30% in 10 years and that is perhaps what they have achieved. But that is not revolutionary, nobody has lost his job.

P. Is automation not revolutionary?

R. Automation has existed since the nineteenth century. What has thrilled people is the big data, which is used to sell you things. If you think about Facebook and Google, your product is advertising, all you have done is to destroy newspapers and drown other forms of advertising. Unless you think that all the gross national product will be advertising, you have not created anything in production.


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