Ep. 181 Don’t Blame Robots for Low Wages

23 March 2019     |     Tom Woods     |     9

Krugman starts off more or less all right in this one, arguing that robots aren’t the reason wages aren’t higher. But then he goes off into cloud cuckoo land, blaming the problem on a decline in labor unions. We also discuss the controversy about the connection (now broken, say some) between productivity and wages.

Krugman Column

Don’t Blame Robots for Low Wages” (March 14, 2019)

Contra Column

The Link Between Wages and Productivity Is Strong,” by Michael R. Strain

Related Link

The Motor Carrier Act of 1980 (the deregulation of trucking)

Podcast Episode Mentioned

Lew Rockwell interviews Naomi Wolf

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  • JimD

    Good discussion by Bob Murphy of the trucking issue.

    Discussion of the gap between productivity and wages was less clear. Murphy suggested it was due to leaving the gold standard. Woods suggested there was no gap, it was a measurement issue. So which is it?

    • Kristian

      From what I gather its not accruing to capital: see Behind the Gap between Productivity
      and Wage Growth: DEAN BAKER, and a lot of what I’m seeing is the problem is two different index’s are being used to measure productivity and cost of living. Cost of living is CPI based whereas a lot of the gap folks will at the same time use a personal consumption expenditure index for consumption growth, CPI actually outpaces PCE. The conservatives read into this as well we are using false comparisons and consumption and productivity have to equal out. Whereas ironically the CPI index growing faster doesn’t necessarily have to mean that to Dr. Murphy’s point a just as likely explanation is people who get freshly printed money get to consume without producing. See Decoupling of Wage Growth and Productivity Growth?
      Myth and Reality
      João Paulo Pessoa and John Van Reenen https://www.heritage.org/jobs-and-labor/report/productivity-and-compensation-growing-together#_ftn16 https://www.nber.org/papers/w13953

      • JimD

        Excellent comment. You should have been on the podcast!

        • Kristian

          Haha that’s probably going too far…The thought just occurred to me when Dr. Murphy brought it up in the podcast I had never considered the monetary inflation explanation but his point makes so much sense in the context of the PCE CPI controversy.

  • https://www.facebook.com/gene.balfour/about?section=overview Gene Balfour

    Tom and Bob,
    I will be on Contra Cruise and hope to speak with both or either of you about the current state of technology and it’s application to manufacturing and distribution processes. The examples that you both discussed regarding technology advances were far too simplistic to be useful for an economic analysis in 2019 and beyond. I can help you both to get up to speed on this topic for future discussions if you are willing to make the time for our discussion.

    Gene Balfour

  • davegrille

    The government may strain wages,but technology is no the problem.

  • Thomas Schreiber

    Interesting that you never explained why Krugman’s assertion that lack unionization was a major factor in USA’s stagnating wages in the face of rising productivity, while unionization did seem to have provided nations such as Canada & EU countries much lower rates of wage stagnation. Could it be that you’re just in favor of return to the gold standard?

    • http://www.TomWoods.com Tom Woods

      Unionization obviously can’t contribute anything. It can help small sectors of the labor force (in the short run), but at the direct expense of nonunion workers, who are dehumanized with words like “scab,” etc. And it’s not even a zero-sum game: the “benefits” to the union workers come at the disproportionate expense of other workers and society as a whole.

      And in a global economy, unionization is a loser.

      The prosperity of American workers, before there was much of a welfare state and in a country where even at its height no more than one third of the labor force was unionized, has zero to do with unions.

      Bob and I want the separation of money and state, not a “return to the gold standard” (although the gold standard is stupidly and ignorantly demonized by people whose arguments can be smashed in two minutes).

      • Thomas Schreiber

        I think you’ve championed free markets proposing that consumers benefit from competition thus creating better products and reasonable pricing. So, I fail to understand why you don’t see, that as opposed to benefiting ONLY unionized employees, union won wages/benefits create an atmosphere of competition for labor and push those seeking labor to meet or exceed union won gains IF they wish to avoid becoming unionized OR losing their lower compensated employees to employers with higher paid unionized compensation. Further, you completely ignored Krugman’s point that the EU nations he cited had the percentage of unionized employees similar to the percentage of unionized US employees in the 50’s, 60’s, & 70’s when productivity gains were reflected in wage gains; that in those EU nations productivity gains and wage gains still seem to affect each other.

        Your desire so have a separation of money and state may seem good to you, but I’d like you to provide some historical examples of successful empires/nations/states where money & state were separated.